I'm the owner of USA Private Money and wanted to defend these comments about paying an upfront fee to be pre-approved.
If you can prove you are an experienced investor then I agree...you should NEVER pay an upfront fee, you should shop your loan and find a lender you like and one that can perform consistently for you. We are a direct lender with Wallstreet money behind us and we'd be happy to see if we can earn your business.
On the other hand, If you don't have any experience and you want someone to help you get pre-approved WE ARE THE ONLY COMPANY I KNOW OF THAT OFFERS TO PRE-APPROVE YOU UPFRONT. What does that mean? We underwrite you personally as the borrower, then we collect borrower documents and entity documents upfront and make sure you have everything done correctly, then we issue you a legitimate pre-approval letter that you can use to lock down your deal with. We built this solution for the companies that sell the fix and flip mentoring and coaching packages ...and over the past 6 years, we've taken over 30,000 calls and helped thousands get pre-approved and move forward with confidence to fund their first fix and flip loan.
So what company do you know that processes a file and underwrites you as the borrower upfront? No one did this except us! Until recently, a large Wallstreet lender is now charging $700 upfront...why? It cost money to have an underwriter pre-approve you and process your loan and what if you never do a deal? It's a waste of time. And if you call one of the 5,000 lenders out there they will tell you to call them back when you have the deal under contract...well that's too late.
Why you ask? Let me tell you.
1) You have to move fast on good deals
2) What happens if you lock up the deal then call the lender and they say we can't fund your deal because! Believe me we've heard all the reasons why they deal won't get funded. Don't you think it makes more sense to ask those questions up front?
When do you want to learn how much you have to put down? When you get pre-approved or when you are under contract? We'll what if you need to close in two weeks because that's what ALL the lenders tell you the timeline that they can close the loan in...it's a LIE!!! Most deals do NOT close in 2 weeks. So now what...you got it...hard money...here's what that looks like...
If you use true hard money and you must put 20-30% down and pay all of the rehab out of pocket. And yes that deal can be funded in about a week. Let's make sure we are communicating...So on a $200K property that means you come in with $60K down and $40K of rehab...that's $100K down? Do you have that money? Probably not!!
What if you could do that same deal with 40-$50K down? Which way would you go? All-day long you'd pick the $50K. Well to get the $50K down you need to get pre-approved, get all your documents in to us so we have a fighting chance to close your deal in 2-3 weeks with what we call "Smart Money".
Now let's just be a reasonable pragmatic investor for just a moment. So if you were buying a home for your family would you call a loan officer and get pre-approved? Let me save you some time...NO REAL ESTATE AGENT ON THE PLANET WILL PUT YOU IN THEIR CAR UNTIL THEY KNOW YOU ARE PRE-APPROVED! Why? They don't know what you can afford to buy. So why in the world would you be making offers on homes that you have no idea if you are NOT pre-approved? I'll tell you why...because NO ONE OFFERS TO PRE-APPROVE YOU! (We do!!) So if all Real Estate Agents demand a pre-approval is it not done with hard money or private money? Because it's a manual process! There is NO AUTOMATION to hard money or private money lending and the only way to know if you are for sure pre-approved is to collect all documents and verify upfront what the lender will require to fund the deal.
Still not convinced??
I can tell you 20 things that could go wrong with your deal...Doing a fix and flip is the riskiest real estate deal you will ever do! There are several things that can and do go wrong and it starts with having a legit deal analysis calculator that can tell you in 1 minute or less if the numbers work. If you want access to our deal analysis calculator message me and I'll send you a copy.
Here are just a few reasons you MUST be pre-approved!
-Have you been charged with a crime in the last 5 years? If so, watch out most lenders will decline your loan.
-So you found a good deal but it's in a rural area? Most lenders will not fund your deal!
-Do you have at least 25K of projected profit? If not most lenders won't fund your deal!
-Do you live out of state from where your deal is? If so, most lenders won't fund your deal!
-Is your rehab budget more than your purchase price of the home? If so, most lenders won't fund your deal!
-Is your deal in a high crime area? If so, most lenders won't fund your deal.
-Is your deal in a declining real estate market? If so most lenders will not loan what their matrix says they will.
So there's 6 of the 20 questions we ask when we are pre-approving you...what about the other 14 questions...do you really want to put earnest money down on a home hoping that you get it right or would you like to know with a high level of certainty that you have a real chance to close the loan and have a company that has funded over 2,000 loans help you get pre-approved upfront and then evaluate each deal you want to make an offer on before you get stuck and lose your earnest money or worse get stuck in a bad deal.
Our pre-approval fee of $1,000 for a novice investor and it's the cheapest part of you deal that you will spend and we'd argue that it's the best $1,000 you will ever spend.
Here's the deal...as the owner of USA Private Money I've got 20 years' experience in lending and real estate investing. I've personally wholesaled over 3,000 low priced homes and have funded over 2,000 loans. I've learned the hard way how to do a lot of things in real estate and the blunt truth is anyone that tells you that you should not pay a professional to help you...well...maybe you should give us a call and see if we know what we are talking about and make your own decision. I'm a firm believer that money follows value. If you value what we offer you will hire us, if you don't, you won't.
All the best,
And remember...WE HAVE YOUR FLIPPING CAPITAL :-)
