Are there genuine Hard Money Lenders out there?

Question

Hello All,

I keep coming across all of these "Hard Money Lenders" who claim to lend you money only to find out it is actually a course that takes your money (thousands upon thousands of your hard earned dollars and many times all of your savings over a lifetime) and basically leave you hanging with all of their red tape and empty promises about you being successful!

Yes you probably can tell I am annoyed by this. Why are good things always tainted by crooks? And yes I call them crooks and predators, preying on people that truly want to be successful, but don't know how to go about doing it.

SO after my little rant, my question is this...Are there true hard money lenders out there that simply loan you money to get property, fix it up, sell it. After which, you give them their money plus interest and you move on with your life, or borrow more money to do more flips?

Jeff S. · Answer

As I think you're finding, @Redento. Johnson, your best bet is to stay off the Internet when looking for private/hard money.  Like most aspects of real estate, really business, lending is based on relationships.  The safest way to develop these is face-to-face and local real estate clubs are the easiest way to find the greatest concentration of lenders.

This is a list of 41 real estate clubs between Ann Arbor and Detroit from Meetup.com.  With the amount of money floating around now, it would be hard to toss a rock into any of these clubs and not hit a lender with whom you can have a real conversation.

Do a search here on how to vet or check out a lender and you'll find actionable threads with lists of specific questions you can ask, as well as what to look for, and how to approach a lender.  This works both ways and is exactly how we find our borrowers.

With a standard process involving published lending criteria, face-to-face meetings at a few flips in-work, and always lunch or dinner, we ensure we know exactly to whom we are loaning to and we make sure they know us.  If we do not know, like, and trust you; and vise versa, there is no loan.  There is nothing we do that you can't, Redento.  Borrowing, like lending, should not be a crapshoot.

With a well planned and well though out vetting strategy, there is no reason to become cynical or frustrated when looking for lenders.  The first step is to keep it local, which means avoiding the Internet.

Redento. Johnson · Answer

Wow, lots of information. I appreciate all the input. I will start with Meetup as suggested. Definitely not trying to bypass any processes. I am fully open to learning and slow to hard knocks. With all of this powerful info out here, it should be pretty hard to make a big mistake unless one simply refuses to see the signs. Thank you everyone for your input, I was a little frustrated, but not anymore.  You guys and gals are totally awesome, like a bunch of big brothers and sisters looking out for the newbies. I love BiggerPockets!

Adrien C. · Answer

yes-  I sell to investors who use two legitimate hard money lenders. I believe both are local to the Chicagoland area. I would contact some investors in your local reia group to see who doesn't it locally for you.

David Malik · Answer

As a financial intermediary, yes, there are as I represent my share and we exercise due diligence in the process of partnering with one or the other. Many investors choose not to use someone like me because they believe that it will be cheaper to go direct to the lender. Well, that is not always true.

Then there are newbies who don't understand how finance works in general and HM specifically. Understanding the lender's underwriting criteria is important and asking as many questions from them or me that you need is also important. Let's be clear. The HM lender has the right as any other kind of lender to refuse to participate in your venture regardless of how great you believe in yourself or said venture. They have their share of losses as well. That is the game. They want to do all they can to limit their losses.

Account Closed · Answer

@Joshua Martin has it right. Yes there are both hard money and private lenders out there.

Networking, networking, networking. Get yourself hooked up with a couple real estate groups in your area. Try meetup.com as a place to start. Ask lots of questions, especially "what are your terms"? If you don't understand the terms, ask for clarification. If you get a run around, RUN the other way.

Good luck.

Jacob Pereira · Answer

There are actually a lot, and if you start actively investing and networking, you're bound to run into a few. But, as @Jay Hinrichs mentioned, be prepared to put in some of your own money until you've proven yourself.

Unless you need cash on very short notice or you're doing a non-conventional deal you're usually better off looking for conventional financing, though.

Marques J. · Answer

Hello,

Limaone is great. I have closed 2 loans through them recently. 10 percent of purchase price down. 100 percent rehab covered in draw system. Arv appraisal is required. 2.5 points with 9 to 12 percent interest. You need 12 or more deals done to get 9 percent so most likely 12. 11 month no PPP loan.   I highly recommend them.

Jay Hinrichs · Answer

depends on what your looking for.. if your looking for a unicron lender to lend you money like you see on the internet  zero down 5% pay me when you can.. ( you see those all over the internet BP facebook etc) of course those are all scammers of some order

any major to minor metropolis has local HML with offices etc.

rates are typically ( depending on were you are in the country)

1 to 5 points

9 to 15% interest

20 to 30% of your own cash in each deal until you prove yourself by successful projects.

If your looking for no money down you can try Do hard money in Utah I hear they will actually do no money down at 5 points or so and 18% interest.. with 2500 .  up front with no gurantee of making a loan.  and they may not loan in MI  but you can check with them.

If you want a quasi hardmoney JV  deal... Gorilla Capital in Eugene Oregon does these they are competition to do hard money.. they don't charge up front.. but will fund majority of the deal and will work with newer investors... Tell them J referred you .. you will go to the top of the list  :)

Kyle Tanner · Answer

The meetup list was helpful!

Joshua Martin · Answer

you have to go local. Just from networking I've found three in my area all at comparable rates, all legit. I'm sure they're out there, but I haven't even heard of these scams your talking about.

Best of luck,

JTM

Are there genuine Hard Money Lenders out there?

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