Joffrey Long
From Joffrey: Here's my "take" on the market - and my question:
Will hard money continue to get cheaper? We see a continual pattern of huge amounts trust deed investment dollars chasing a smaller number of loans.
Comment from Hans: I am seeing that also- but not reliable source of funds to close quick and aggressive.
Rates in the single digits, costs near as low as what banks charged, and longer term loans. The old "Limbo Dance" comes to mind: "How low can you go?" (If you're too young to remember that, it's probably a good thing.)
Comment from Hans: We are not seeing single digits here in Fla yet but there are private small time investors, (aunt Mildred types), coming into the market at 10% no points or low points- however, they are slow, require too much stuff, cant close and are not aggressive enough. Nevertheless, they are hurting us at our 12.5% to 13.5% loans starting at 4 points because, even though they cannot close near as aggressively, they poison the well for our higher costs if you know what I mean.
We are closing deals every week starting at 12.75% to 13.5% and starting at 4 points for 3 to 5 years. But we have several brokers bringing us deals for people who really need to close fast and may have some problems. They know we can do it and sell our higher rates.
And, we are extremely aggressive in getting it closed, no application fees, we do our own CMA and require no appraisal, no credit, no pre-payment penalty, no escrow of taxes, no upfront fees, we will do construction draws on a weekly basis and are not afraid of rough property. And, most importantly, we can also close tomorrow!!!
Example- closed a deal today for a first time borrower for us- he had better rates from a small private lender but stood there and told us the small lender was too slow- does not return calls, etc. We got the loan, $125K, 13%, 5 points- (part of that was to the broker who brought us the deal), and no pre-pay penalty. We inspected the property on Monday and we closed today- that is less than 3 days.
The guy is now bringing us all his deals.
These people need to close so what is a couple points in the interest rate if they cannot close.
We do not have a hard time placing our money but are always looking for deals.
We also closed a $150K at 13% and 4.5% points for 5 years.
Year to date we have closed over $3 million- I wish it were more- but have not had to go down yet.
