Loans with Private Rehab Hard Money Lenders

 Creating an investment property deal for a   rehab hard money lender, first choose lenders who are facilitating loans in that mart area in which you plan to invest.  Next, identify the types of properties that meet their guidelines and are inside an accepted LTV.  Once you have that information, focus only on the areas of the geographical area that lie in  the more desirable locations  . 

 Locations which have less vacant homes  , lower crime rate, and are areas that have a lower “days on the market” prior to sale date.  In other words, how many days it takes on average to sell a property in those market areas.    That information is available from a local realtor or real estate agent and is founded on the multiple listing service or realtors board listing of all properties in the area.   For example, in one area, a property may, on average, take 180 days to sell, when in another it may take only 120 days on average to sell.  This is very authoritative  to demonstrate the viability of your loan to a private lender  .  

 Real estate owned by banks and government agencies are where you will focus   to find particular properties.  The Ultimate REO Report is popular with investors as a way  to find these properties.   To begin evaluating these investment homes  , it is much better to begin with a short list of at least 10 to 20 properties that you can review.  Most of the sources in the Ultimate REO Report will show you which are available, and which are “under contract” or which are newly enrolled as bank owned or government owned listings .  

By beginning with 10 or 20 properties, there is less likelihood that you will get emotionally attached to any specific property and you be better able to rate each property to determine which deals may be more profitable.  After you have boiled that list down to 3 to 5 subject properties then it is time to contact the lender again and request a proof of funds letter that you can attach to your offer.   The lenders who will provide a proof of funds letter will in all probability be able to verify the letter if necessary and then be ready to recieve your completed loan package.  Again, it is important to make sure that the property is a match for the lenders loan program and when you request a proof of funds letter the lender may ask you to summarize your loan submission.  

The Hard Money Lenders Blueprint  is the resource used by investors to ensure that the Loan Package is properly prepared and complete with all required corroboration. It is much easier to complete subsequent Loan Packages after creating one Loan Package by following the proper guidelines and the steps for submission.  Because lenders estimate that 50% to 70% of hard money loan packages are incomplete or improperly prepared, it is important to  avoid having your loan application delayed or denied due to improper presentation or incompleteness.    

Once you have completed your Loan Package , contact your lender and you can e-mail it or fax it.  In addition, it is always best to immediately follow up with the lender to make sure that the Loan Package has been received.  Some lenders require that you have the propety under contract prior to submitting for a preliminary approval.  Other lenders will give you a preliminary approval  and do not necessarily require you to have the property under contract. 

 In today’s market conditions, Agents selling bank owned property   frequently attempt to pit one investor against the other to bump the offers on the property up, but the fact remains that given the inventory of available bank owned and government owned properties, it is really the investor who is in the drivers seat when fashioning that “best and final offer”.  Banks want these properties off of their balance sheets.   The same holds true for earnest money deposits. Always pen some type of contingency into the contract to protect your earnest money deposit in the event that for some reason the deal is not closed and funded by the contract deadline. 

The best contingency is not  “subject to funding” because that contingency causes the REO Agent to imagine you don’t have money to close even though you have a proof of funds letter attached..   A better contingency is “subject to approval by buyer’s consultant”.  Then put a sensible time period on it, such as three weeks.    Should the REO Agent question you about who that decisionmaker is  , you can say, you have anadvisor who reviews the property and that he needs a reasonable time to do that.  During that time period you can also have an inspection done and pull out of the deal if necessary . 

 It is normal that   participating private hard money lenders can complete funding within 24 to 48 hours if they are truly interested in the funding the deal.  Occasionally, it may take a few days but usually delays will be caused by an improperly prepared Loan Package.   Once the property goes to the title company for closing make sure you are available to provide additional information or documentation to insure that the deal is closed and funded.  The Private Money Lenders Source has the top 300 private hard money lenders who loan on residential and commercial investment property, nationally locally and regionally.  The Ultimate REO Report is a resource used to source deeply discounted bank owned and government owned property. The Hard Money Loan Blueprint is the resource used by investors to prepare Loan Packages.

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