Hard money lending

[Maxine Attobrah]

Hello All,

I am interested in becoming a hard money lender but I don't know where to start. I have googled a bunch but i seem to keep being referred to lending club or other peer to peer lending sites. Is there a way to lend money with out those sites these days and do I need a lot of money to start?

[Paul Balyoz]

If you have done flips before using Hard Money, then you have that paperwork to start from. If not, talk to other investors in meetings about getting a copy of paperwork that they've used when they borrowed Hard Money. Those forms can be a starting point to develop your own Promissory Note and so forth. Definitely have a lawyer look over any forms you modify for your own purpose, to make sure you have everything covered. Remember that as a Hard Money lender, doing your due diligence on the investor property and repair efforts is important, to feel confident they are buying it at a good price and are planning reasonable repairs before eventually selling the property or refinancing it. I currently always require 20% down unless I've worked with the investor on many properties in the past. If you loan everything and the investor came in with nothing, they could be motivated to just "walk away" when repairs get difficult, leaving you with a house that you've paid too much for; you have to think thru scenarios like that. I like to look at the project as if I were doing it; does the flip make sense to me? I have to understand the neighborhood and type of tenants in that area, to feel comfortable loaning money on the project. That's how I got started with Hard Money lending.