All Forum Posts by: Riaz Gillani

Thanks @Cameron Braig Appreciate the brevity

Bigger Pockets Community....

Newly turned LO here (previously processor, then underwriter). I want to start a mailing list for investors / brokers alike to keep them in the know of what we're offering. 

Any tips on increasing clickthrough rate? 

Also, any advice on where / how to secure emails for the list? Are there any "Do Not's" you'd advise against? 

My list is far too short at the moment.

Thank you in advance.

@Joe S.I'm still open to ideas well.

But, celebrate the small stuff. Accept compliments (especially those that affirm your efforts and not the results). And definitely identify and challenge your negative thoughts. They're not just a part of life. 

Hey Mikielle,

Hard money is a great resource for flipping. It actually gets its name because it's theoretically "Hard" to pay back. And understandably so - a typical hard money loan is Interest Only for 12-36mo, at around 9-10%. Balloon payment at maturation. But the exit strategy is generally to "flip" or to refinance and hold. 

The process is pretty straightforward and its benefits quickly become apparent. 

(1) Qualification - the lender doesn't look so much at the worthiness of the candidate as much as she does the asset. This is done with an appraisal to determine the "As-Is" Value and "After-Repair Value." The ARV is a valuation provided by an appraiser who considers the AIV, Proposed Renovations, and Comparables. The lender will then have a cap on the Loan-To-Value, Loan-To-Cost, and Loan-To-After-Repair-Value. That cap or "MAX LEVERAGE" is generally determined by the borrower's credit score and experience. Naturally, a more experienced borrower, with a high credit is a lower perceived risk. But, first-timers and average credit are not disqualified.

(2) DOC Collection - The lender isn't rummaging through tax returns or verifying the income of a candidate. As mentioned earlier, they'll want the background information on the candidate as well as their Scope of Work (itemized list of proposed renovations). But for assets, they'll just want to see proof of the down payment, closing costs, and 4-8mo of ITIA reserves. Usually in the form of 2-3mo of bank statements (to make sure the funds are wholly yours and not contingent on being repaid). Insurance, Entity documentation, title, etc. are all still required. But you're looking at a 30 day process or so on average. 

(3) Flexibility when it comes time to Repay - For a 12mo bridge, there's generally no PPP. When renovations are done, you can refi into a long term loan or sell at your leisure. Longer term loans, like a 24mo Bridge, may require that you stay in the loan for at least 6mo. But, if you've opted for such a route, you'll most likely be sticking in the loan for at least that duration...

There's more. But, I'd start with the above and start reaching out to verifiable lenders. 

Best of luck!

@Account Closed - There's a ton of value in establishing a relationship with a lender. As you show your ability and desire to close - they'll have no choice but to reward you with lower fees. 

But, you certainly don't want to force deals with said lender. Truth be told, they may not be the best fit for a specific deal. Maybe adept on a bridge - but behind the pack on the rental side. 

BP Com,

If you're like me - you are fed up with the stigma surrounding hard money. The notion that they have absorbingly high rates and low LTV feel outdated.

Are you at 3 and 1? No...but I think the notion that it'll empty your pockets stems from a lack of a concrete definition. I'm wondering what your definition of Hard Money Lending is.

Here's mine:

Hard Money Lending - The practice of offering a loan, by a non-bank institution, wherein the focus is on the collateral rather than the worthiness of the borrower. At the expense of a higher rate, the borrower seeks to benefit from the shortened approval process and 'exit' freedom...

Looking forward to hearing yours...

Hey Bo,

If this is your first property, you may want to take a step back before reaching out to the selling agent. You could have this already taken care of...and if so...skip past this first part. But, what's your exit strategy? Is this a buy and hold or are you looking to flip? You'll then want to consider how you plan on financing your purchase. Are you paying in cash? Will you go the conventional route (mortgages bought by Fannie Mae / Freddie Mac) or are you instead looking for a private mortgage?

If a hold, will you be self-managing the property? If you're an OOS investor, have you familiarized yourself with the costs of property management in your target market? What about the tax assessors and insurance providers in the area? This is especially important given in-place tenants. Something could go wrong Day 1...

A quick list of docs you'll want is the rent roll + Income and Expense Sheet / T12 (this may not be available for a 4-Unit- standard with 8+). But, pay less attention to the bottom line numbers and instead plug in their line items to calculate the NOI by yourself...

Unfortunately, very few people calculate NOI the same. But you can across your different leads and compare from thereon.

Still, you are correct in that you'll want to approach a turn-key investment differently. As being occupied, find out what the current lease amounts are. Are they in line with the property type. Are there comparables to potentially raise those rents? What's the term on the in place lease agreements? You may want to perform some RENO...

Then there's the property itself! Has it been inspected for environmental hazard? Is it being used in accordance with zoning? What's the life remaining on the structure, roof, etc....

Unfortunately there isn't a one size fits all checklist. Soon, you'll have your own that works for your strategy and underwriting process. 

Hope that helps!

@Atchut Neelam

Like some others have mentioned, it depends on the underwriting guidelines of your lender. In my hard money lending experience, we require the personal guarantor (or individual signing on behalf of an entity) to own at least 20% of the entity. However, a resolution must be signed by all members that gives the signer the authority to bind on behalf of the entity. 

Also, non-guaranteeing members with at least 20% ownership will have their background pulled (0 x 30 x 12, No Foreclosures / Bankruptcies in the last 2 yrs).

@Curt Bixel Hey Curtis,

Less advice, more so an option to consider..financing via private, DSCR lenders. The mortgages don't always show on credit reports and don't use DTI for qualification. Strictly asset based lending.

Your credit score of 800 would ensure the lowest possible rate as well.

Hope that helps!

Probably attribute more time to developing self worth. 

Grades are great, so are achievements. But what are they worth if you don't think you deserve them...