All Forum Posts by: Andres Saias

Hello Laura,

Private lending can be an attractive option for funding property investments, offering certain advantages and considerations. Here are the pros and cons to keep in mind:

Pros of Private Lending:

1. Faster Approval and Funding: Private lenders often have more streamlined processes, allowing for quick loan approvals and funding compared to conventional mortgages. This can be crucial when time is of the essence in securing a property.
2. Flexible Terms: Private lenders typically offer more flexibility in terms compared to traditional banks. They can tailor loan terms to fit specific investment scenarios, including repayment schedules, interest rates, and collateral requirements.
3. Accessibility: Private lenders are often more willing to work with individuals who may not meet the strict criteria of conventional lenders. This opens up opportunities for real estate investors who may have a less-than-perfect credit history or unique investment strategies.
4. Less Stringent Documentation: Private lenders generally require less documentation compared to traditional lenders. This reduces the paperwork burden and speeds up the loan application process.

Cons of Private Lending:

1. Higher Interest Rates: Private lenders may charge higher interest rates compared to conventional mortgages. The increased risk associated with private lending and the potential for faster approvals contributes to these higher rates.
2. Shorter Loan Terms: Private loans typically have shorter repayment periods, often ranging from a few months to a few years. This shorter timeframe can increase the pressure on borrowers to secure alternative financing or exit strategies.
3. Higher Fees: While there is no fixed industry standard, private lenders may charge additional fees, including loan origination fees or administrative costs. The 1% fee you mentioned is not uncommon, but it can vary depending on the lender and the specific terms of the loan. Direct Lenders usually charge between 1%-2%. 
4. Limited Consumer Protections: Private lending falls outside the regulatory framework that governs traditional mortgage lenders. Consequently, borrowers may have fewer legal protections and recourse in case of disputes or fraudulent practices.

Verifying Private Lenders:

To mitigate risks and ensure you don't get burned, it's essential to conduct thorough due diligence. Here are a few steps to consider:

1. Research the Lender: Look for reviews, testimonials, and online presence of the private lender you're considering. Check their track record, experience, and reputation within the real estate investment community.
2. Seek Recommendations: Ask for recommendations from fellow investors, real estate professionals, or local real estate investment associations. Their insights can provide valuable information on reputable private lenders.
3. Verify Credentials: Check if the lender is licensed or registered with relevant regulatory bodies, such as state financial authorities or associations for private lenders. This verification can offer some level of assurance regarding their credibility and adherence to industry standards.
4. Conduct In-Person or Virtual Meetings: Whenever possible, arrange meetings or video conferences with potential lenders to establish a personal connection. This allows you to assess their professionalism, expertise, and willingness to address your concerns.

Remember, every private lending arrangement is unique, so it's crucial to review all terms, conditions, and risks associated with a specific lender before proceeding. Consulting with a qualified Mortgage broker might be a great help. 

If you have any other questions or need a broker referral DM me. As a private lender, I work with several good ones. 

Hello Ashley, 

Many hard money lenders give new construction loans. You might be able to find a HML that will provide you with a land loan however it might be difficult, and then refinance into a new construction loan for the 3 single-family homes once you have the zoning and the permits.

Buying the land, changing the zoning, and getting the approved plans out of pocket is the easiest way to go. I do recommend however you find several lenders and discuss the project before doing so. To see if they can fund the deal once you have your plans approved.

Another way to go is to get a mortgage broker so you don't have to figure out all of this yourself. Just make sure you find a good one. 

If you need any referrals or have any additional questions just DM me. 

Traditional and hard money loans are two entirely different products with different guidelines. If you're curious about how to get pre-approved, reach out to several lenders with a project scenario that you'd like to do.

The amount of money you need for a project will vary depending on your specific situation. Traditional loans may not fund rehab costs, while hard money loans will cover 100% of the rehab costs and ask you to put down a certain amount for the property's down payment. On the other hand, conventional loans have lower rates.

I recommend analyzing what loans you qualify for and then see which is the best option for your project.

Here are some additional details about traditional and hard money loans:

• Traditional loans are typically offered by banks and other financial institutions. They have more stringent requirements than hard money loans, but they also offer lower interest rates and longer repayment terms.
• Hard money loans are typically offered by private lenders. They have less stringent requirements than traditional loans, but they also offer higher interest rates and shorter repayment terms.

Ultimately, the best type of loan for you will depend on your specific financial situation and your project goals. If you're not sure which type of loan is right for you, it's a good idea to speak with a mortgage broker.

If you have any questions about hard money loans just DM me. 

It depends on what you need. Banks may be cheaper than private lenders, however, they're also less flexible and take longer to close. If you are a first-time investor, I'd recommend using a mortgage broker so you get the best deal possible, but please note that this will make your closing costs higher as brokers charge 1%-3%  of the loan amount at closing.  I know a few that work with my company, please let me know if you'd like me to refer you to someone. 

It's common, as Shawn and Justin mentioned they do this so they don't lose their contacts in case they switch companies. However, if you have doubts just ask for an in-person meeting or ask him which company and call. How's his pricing?  

 These are two options, you can also use bigger pockets. Just look for them in the build-your-team button. 

Hi Arron, 

Fix and flip loans shouldn't take more than 21 days to close if you provided everything the lender asked for. If you're not confident about your lender for whatever reason, I'd recommend looking for a new one. There are several good ones out there who are pretty efficient, look for online reviews and reach out to other investors on bigger pockets to see what they recommend.   

Hello Steve, 

Because it's five units and mixed-use you won't be able to fund it as a residential loan, only commercial. Hard money is an option, but this type of property is tricky, apply with several lenders and the bank. 

Looks like a good deal, nicely done. 

Hello David, 

I agree with my colleagues, if the deal is time sensitive stick with your current lender. Chase might take longer than promised as banks aren't very flexible with their guidelines. Erik also makes a good point when suggesting a mortgage broker, it will make your closing cost a little higher because of his commission but he'll get you what you need whether that be lower rates or faster loan approval.