All Forum Posts by: Corey Dutton

For those who have only taken out loans at the bank, the process of obtaining hard money commercial loans can be quite a different experience. Because these loans don’t have the same requirements as bank loans, they can close much faster. But in order to actually get hard money commercial loans closed faster, here are a few tips to follow:

1. Get a full list of documents needed to close from the hard money lender: Every hard money lender has a different list, so ask for it and start sending the lender the items on the list as soon as possible.

2. Don’t provide the lender with everything and the kitchen sink: Only provide items on the list provided. Too much info. can slow the process down rather than speed it up.

3. Anticipate lender concerns: Have you been declined by another lender already? What were the reasons for the decline? Make sure the hard money lender knows all of the possible concerns or questions that could prevent the loan from getting closed.

If you follow these simple rules you will get your hard money commercial loans closed faster. Are you, or someone you know, pursuing hard money financing? If so, please share this. 

A private money loan is any loan from a non-bank source of financing. Auto loan financing is one type of private money loan and a hard money loan used in real estate investing is another type. Because these loans do fund much faster than bank loans, it is good to know a private money lender. Below are just some of the reasons why you should know a few private money lenders:

1. Bad Credit Nightmares: If you have bad credit, knowing a few private money lenders is a must.
2. Fast Real Estate Acquisitions: Good real estate deals don’t wait for bank financing. Because private money lenders fund quickly and with no frills, they can operate similar to cash in a real estate acquisition.
3. Inventory or equipment purchases for business: Private money lenders will step up to provide credit to small business owners when banks will not.
4. Buy Outs: Often it is cheaper to pay interest on a loan rather than keep a bad partner in an investment. Private money loans are commonly used for this purpose.
5. Repairs to real estate owned: Private money lenders will lend on repairs, improvements, construction, etc. whereas bank lenders are more tight on issuing these types of loans.

Having good relationships with private money lenders is key to creating opportunities and solving problems. What else would you add to this discussion as to why someone should know a few private money lenders?

When searching for loans for rental property, even the most seasoned real estate investors may encounter a labyrinth. Not only are there multiple options to choose from, but there are various qualifications requirements that make it even more confusing. Before you start the process of looking for loans for rental property, ask yourself the following four questions:

1. 1. Am I looking for a loan for one rental property or for multiple rental properties?
2. 2. Is the property vacant and in distress, or is it rehabbed and rented?
3. 3. What is the max loan to value I can get on a loan for rental property and will it cover what I need?
4. 4. Can I provide full documentation to a lender, e.g. tax returns, credit report, etc?

These are just 4 questions to start with when starting your search for loans for rental property. Very often, it is not your home mortgage broker or community banker who will provide the best advice in regard to your investment properties. Consult with several individuals including: other real estate investors, private money and hard money lenders, and even a commercial mortgage banker, depending on the number of investment properties you currently own.

(Article Source: http://privatemoneyutah.com/loans-for-rental-property-allow-investors-to-leverage-portfolios/ )

From a recent post about loans for rental property, a real estate investor just starting out often asks, how do I get a loan for a rental property? The answer is simple: cast the net out wide and consider various options. Ask yourself a few questions before getting started:

1. Do you understand all of the alternatives?
2. Do you have a need for speed?
3. Are you seeking a loan for more than one property?

It is not as straightforward as it seems to get a loan for rental property. There are many alternatives out there, and every one has different requirements.

Particularly when starting out, consult with other real estate investors who have financed their rental properties with success. Don’t rely on just traditional bank routes for real estate financing either, because there are many options to consider. Unfortunately this is uncharted territory for some real estate investors, and for this reason, loan scams are quite common in the financial services industry. Wasting time and money with these loan scams can result in a real estate investor losing a property. Without an in-depth knowledge of how real estate financing works, it’s best to consult with another experienced colleague in real estate regarding various alternatives. What else would you add to this discussion regarding how to get loans for rental property?

Trust deed investments have been growing in popularity among retirees, and most rapidly in the markets that saw the fastest recovery after the 2008 meltdown. Particularly in one’s own real estate market, where one is comfortable with values in general, a trust deed investor can easily spot a real estate transaction that makes sense to lend on. And rather than owning the real estate themselves, trust deed lenders can instead make a loan on real estate and earn a handsome return.

Retirees who count on regular income, particularly those located in California, Arizona, and Nevada, have flocked into trust deed investing in recent years for reliable monthly payments. The tremendous growth in private money lending has also been indirectly fueled by bank qualification standards, which have remained stubbornly high in the post recession lending environment. Borrowers who cannot qualify for bank loans are seeking out private money loans from trust deed investors. Private money loans aren’t just for the desperate, or those with bad credit scores. These loans, also called hard money loans, fill a multitude of purposes and are a vital current of credit in the economy. Private money loans are assisting real estate investors to transform vacant, run-down buildings into gorgeous real estate that generates revenue. These loans are also being used to finance inventory purchases for business owners, while others may be used purely for their speed of funding. With so many uses for these non-bank loans, it’s no wonder that trust deed investing has grown so rapidly in recent years. 

To become a trust deed lender, often called a hard money lender, it is important to get started slowly and with diligence. So what is a trust deed loan, also called a hard money loan? A hard money lender is a type of private money lender that uses “hard” assets as collateral for loans. The most commonly used asset for these loans is real estate. In order to become a hard money lender, there are four important things to consider:

1. 1. Do you fully understand how trust deeds work in the State you’re lending in? Further do you understand the foreclosure laws in the State you are lending in?
2. 2. Do the new laws in the State you are lending in allow you to make loans without a license?
3. 3. In what form will you lend your funds? E.g. as an individual, as an IRA, as a business entity?
4. 4. If real estate is the collateral for the loan, are you comfortable owning a piece of real estate should a loan foreclosure occur?

So how does one become a hard money lender? Start by carefully considering the questions listed above and many others, and certainly consult with an attorney. By taking careful, slow steps in the right direction, you can find good loan opportunities and create a win-win with real estate investors who are in need of loans.

Thanks for your comment Ken V. What would you say about the best way to submit a hard money loan? 

From an article in the Scotsman Guide, traditional mortgage brokers often make mistakes when submitting hard money loans to hard money lenders. Because traditional brokers are well versed on how a bank lender likes to see a loan package, they often make mistakes when submitting loan files to hard money lenders. These mistakes can often slow down the loan approval process and loans can actually take longer to fund! Make sure you aren’t making these common mistakes in your loan submissions:

1. Make sure the loan meets the requirements of the hard money lender before submitting.
2. Tell the story of why the borrower needs a hard money loan.
3. Don’t be tempted to overload the lender with too much information.

Read the entire article from the Scotsman Guide at the link below. What are some other common mistakes you’ve seen traditional brokers making in their hard money loan submissions?

(LINK TO ORIGINAL ARTICLE:

http://www.scotsmanguide.com/Commercial/Articles/2015/01/Steer-Clear-of-Hard-Money-Mistakes/ )

Posted by Corey Curwick Dutton, Hard Money Lender

Are you unsure of how to find hard money lenders? Never trust the ‘paid’ lists when trying to find hard money lenders. Such “pay to play” lender lists are often inaccurate, as they tend to include loan scammers and time wasters. If you want to know how to find hard money lenders talk with local real estate investors, ask local real estate agents, or find a local, dedicated hard money broker who is on a first name basis with all of the local hard money lenders. How else do you find hard money lenders in your area?

Posted by Corey Curwick Dutton, Hard Money Lender

Thanks for sharing your story on how you are using a hard money loan to finance your own buy and hold investment property. It helps to have a real world story to corroborate my example. Much appreciated!