Ok Patrick, Any thoughts on the feed back I received from Linkedin?
Extremely frustrated!!!!
Wayne Jewell Real Estate Investor
Hi, newbie investor looking for a true private lender (not hard money lender claiming to be a private lender). I have spent months listening to the so called big hearted RE gurus claiming that they are here to help you but in reality are just looking to sell their system or cd on where to find lenders & not at a cheap price either. The hard money lenders want at least 20% down and want an excellent credit score and not to mention the over the top rates. Maybe I'm dreaming, thinking that there are lenders that just look at a deal based on it's profitability.. Does any one have advise or resources they are willing to share??4 comments
K.C.
Mortgage Broker with Dominion Lending Centres, Muskoka-Orillia-Barrie
Find a good mortgage broker.
Mike
(Lending Consultant: Small to Medium Sized Businesses | Commercial Real Estate, Hard Money, Private Equity)
Wayne I think you are dreaming. What is your financing expectations? 100% financing? Not going to happen especially as a newbie.
Roger
Owner, Bortnem Services LLC
I think you are also confused by some of the terminology. Private lending is a very broad category that includes almost all types of lenders who are not a chartered bank or large commercial enterprise that have access to Federal Reserve or Wall Street funds. The rates are all over the board as well. The "hard" in Hard Money comes from the nature of financing a project such as yours - not any specific rate. Your project does not conform to any normal bank's underwriting guidelines and therefore is difficult or "hard" to do. The lender, if and when you find one, is going to base the decision of if, and how much, to lend based on the "hard" asset value of your prospective property. He will also evaluate your track record of success (to be determined), your skin in the game (you don't want very much), and today's value of the property you're buying - not the ARV price you hope to get after doing your first rehab. No experienced lender will want to invest 100% of your acquisition cost because if you run into a serious surprise that drastically changes your rehab costs, you might walk away. If the project no longer works for you it won't work for your lender either after the costs of foreclosing on your deal and waiting however long it takes in your state to perfect a foreclosure - all the while paying property taxes and exorbitant insurance costs on unoccupied property. Meanwhile your lender sacrifices the opportunity cost of not having the money at work in a successful project with an experienced rehabber who is happy to pay a double digit rate of return because he understands leverage and has an efficient process that gives him a much larger pile of profit by borrowing a portion of the cost instead of limiting himself to only what he could handle with his own capital. Your best chance to do what it seems you want to do is to find an equally unsophisticated friend or relative with money and try to do a joint venture and split the proceeds on some basis you can agree on. Best wishes to both of you.
Wayne Jewell
Real Estate Investor
Thank you for your comments. You certainly opened my eyes. Guess what the gurus are teaching is not real, there is no such thing as a private money lender...I do feel you are over complicating the private money vs hard money thing though. Private money is just that...money from a private individual willing to invest his/her money. Hard money is private money but with added fees to it. A broker secures private money offering the investor 4%-8% and then lends that money to a RE investor at 12-16% plus points. Looks like I will have to figure out another way to get involved in real estate investing.
