Posts Tagged ‘rehab hard money’

Non-Owner Occupied REO Purchases Funded by Hard Money Lenders

Wednesday, August 31st, 2011

Foreclosure investment properties going to auction off, there are times when the property does not sell.  The bank or financial institution then has to buy the property.  The property then becomes what is known as real estate owned or  REO.  From this point, the bank then has to market and sell the property to remove it from it books.  Usually a bank will retain the services of an real estate brokerage which specializes in REO property in the area wherever the property is placed.  Banks and conventional financial institutions are not organized for the purpose of owning or maintaining real estate, the bank then relies on the REO agent to find desirable buyers for the property.  The bank or financial institution has an REO Department and all offers on the property are funneled to that department for consideration.   The offers are then accepted, rejected, or counter offered. 

Because many of the properties that have gone into foreclosure have been occupied by owners who could not afford to make payments on the underlying mortgage, and the property is sometimes in poor condition .  This means that the buyer of such a property will have to purchase the property and then make repairs and upgrades to bring the property into a saleable condition.  Because banks and mortgage companies know that such properties are usually not of interest to direct homebuyers , the banks are prepared to deal with private investors who will purchase the property and initate repairs or a full scale remodel of the subject property.  Eager private rehab investors will take on these propery investments by using rehab hard money lenders.  These lenders will loan a percentage of based on the after repair value of the property or what is referred to as ARV.  The banks rarely offer financing on these properties to investors.  Therefore, investors will usually borrow addtional finances called rehab hard money  to enable the investor to finish the rehab project and then prepare the home for a conventional homebuyer qualification and loan funding.

Most of the REO inventory is being moved this way.   though homebuyers are buying some of the REO properties, it is generally one to two day funding that attracts banks to accept a deal on the property.  Rehab hardmoney funding is generally handled in a quick closing process.  It usually takes no more than 24 to 48 hours for the entire dealings to be accomplished.  These private money lenders will develop relationship s with the same real estate investors and over a period of 12 months may do as many as 10 or 12 deals with the same investor, as the investor develops a proved track record.  Investors who submit excellent loan packages to hard money lenders are usually ready to do multiple deals which require subsequent funding.



Taking the Mystery Out of Private Rehab Hard Money Lenders

Tuesday, July 5th, 2011

There’s no enigma to getting a loan from a private hard money lender.   Ever wonder why successful real estate investors are able to do 1 or 2 deals month after month ?

By modeling what pro investors do.

Edit this texThere are four basic stepst

Step 1-

Don’t just sit on the sidelines.

Investors who are getting it done are submitting loan packages to private hard money lenders. They might submit the same property to several lenders to get it closed. They might submit several deals each and every month.  They make a couple of good offers aweek, each and every week.

Step 2-

Don’t fall in love with the property.  alternatively, fall in love with getting steady deals done.

disbursal month after month trying to find a lender who will fund that one property that you think is so great.  Swinging for “home runs” for $100,000 instead of going base for hits like $10,000, $20,000 or more.  Working against the grain.  none of these approaches work. Instead, learn lender conditions and what kinds of properties they are lending on, including for rehab hard money, and go get those properties that match up .

Step 3-

Do your homework.  

Poorly prepared with incomplete documents usually don’t get approved, and if they do get approved , sometimes it just takes too long and you’ve already lost the contract.  Lenders can usually help you get your loan closed in just a few days once they get a complete package.  Some can do it in as little 1 to 2 days.

Step 4-

Keep your eye on appreciating geographical areas so you can establish a database or card file, of qualified, loan approved end buyers . 

Once you have a lot of buyers who you know who are looking for property now, you can flip your property faster and get on to your next deal. The private hard money lenders will love you! And all the time you’ll be building a bigger and more profitable buyers listt . And you’ll be building solid relationships with private hard money lenders who will back you .

So, don’t let “analysis paralysis” to cause your business concern bogged down.  Don’t “out-think” yourself. Not every offer you make is going to get accepted  and not every loan package you submit is going to get approved but if you copy success you’ll get many , many offers approved and many, many loans approved, and many, many properties sold.

And that is just successful investors do .  And they make a lot of money doing it. The Hard Money Loan Blueprint shows you package a loan request to a private hard money lender and to submit for a private hard money loan .  Once you understand the process and what the lender needs, you will have much more success, because you’ll be doing it the right way, without guessing .

Loans with Private Rehab Hard Money Lenders

Thursday, June 30th, 2011

 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.

Hard Money Lenders and REO Investing

Wednesday, June 29th, 2011

Today we want to talk about how to approach  REO properties when using private hard money lenders.  Properties owned by banks are called REO and are also owned by  , government agencies, or other mortgage or financial institution. Each REO usually has an assigned REO Agent which is assigned to handle all offers made by interested parties.
The REO Agent is really just a regular real estate agency or real estate agent who works with that particular bank, government agency, or other mortgage or financial institution.  

Sometimes however, the REO Agent, tries to be, should we say, more than that.   Just a friendly reminder about business etiquette  . An REO Agent should present ALL offers to the bank, government agency, or other mortgage or financial institution who the REO Agent represents.  The bank,goverment agency, or other mortgage or financial institution cannot give the REO Agent  the legal authority to decide on offers  .  

 Agents do not have such broad powers with their clients and it would be not within their licensed authority   if they try to reject, counter offer, or accept offers.  The REO Agent can work directly with their client bank as much as they want to and make as many recommendations as they want, but in the end, only
the designated official in the REO Department of the particular bank, goverment agency, or other mortgage or financial institution can actually make such a decision would be more like a power of attorney .

Recently, real estate investors have been encountering many overzealous  REO Agents who think they have been granted the power to make their client’s decisions for them by employing a variety of strategies:

Not accepting from you  an offer at your offer price.

Discouraging you  to submit an offer with your contingencies.

 Citing reasons for you not to write an offer   because your lender has asked for an inspection of the property.

Discouraging you to submit an offer because there are too many offers.

 Making it seem unlikely   you to submit an offer because the other offers are higher or better or too many.

 These acts are not with the domain   for licensed real estate agents and can lead to losing a license. Sometimes an REO Agent is trying to be helpful and their advice or recommendations are since.  It is up to you to filter the information you get and make decisions accordingly. While we try to develop relationships with REO Agents  and deal with them in a very pleasant manner, as real estate investors, we cannot allow them to walk all over us, so to speak. So don’t fall into that trap and here is how to handle it.

 Here’s how to handle it: 

YOU: Is the property under contract?

REO Agent: No it is still available.

You: No?  Well I have an offer I am forwarding to you to submit to your client for a decision, where do I send that?

REO Agent: Tell me about the offer ?

You: I prefer to put it in writing .  What is your fax number, or should I send it direct to your  client’s REO Department?

Once in the REO Agent’s hands , they have a fiduciary duty to send it on to the client. If they don’t submit it to the client they are
violating the state laws because they cannot just make a decision to reject your offer without the REO department approval .

Try not to be intimidated by the REO agent.  ï»¿  Most are very helpful and genuinely interested in seeing deals get done.  Some are not so helpful. Your private hard money lender needs to have time to inspect the property and do their end of the transaction correctly.  Don’t just plug the lender in at the last minute. ï»¿  Get the rehab hard money lender involved early on while the deal is going through.  And whatever you do, don’t just leave the lender hanging out there in the cold because you will need the lender again or permit the agent to make it difficult for the lender to do their job.  
Instead, remind the REO Agent that this is going to be a win-win for everyone, including the lender. Here’s what an REO listing agent said recently about bank clients and the asset management companies the banks hire to dispose of the REO’s on a forum:

They would rather go with an offer they have on the table especially in a declining market and asset mgrs. work on bonuses they get a bonus based on closed transactions in a month and make no money if the transaction doesn’t close). Despite what agents are saying here, there are no games, the banks and asset mgrs and listing agents want these assets OFF the books.

Sometimes REO Agents attempt to sell    ï»¿ to their own clients so they can collect commission on the selling side also, so one option is to get on board and ask the REO Agent if they can represent you as the buyer’s agent. This tactic is often overlooked and can solve the problem because there’s more incentive to push your offer.  The REO Agent representing the seller is prohibited from soliciting you for representation as the your buyer agent.  But if you ask that’s another matter.  If the specific REO Agent can’t do it, or  wants to make it more arms length they sometimes just have another Agent from the same brokerage handle you.  Same result, more commission for the realty agency.

Remember, the commission doesn’t come out of your pocket. It comes out of the bank’s proceeds on an REO. So, there are many ways to get a little more aggressive with your REO offers. Any REO Agent that is dodging offers is really a waste of your time to work with with.  You can get someone else from the same firm or contact the actual bank or mortgage company that owns the real
estate and ask who to send your offer to.

Also, don’t fall for the game of- -Just give me your highest and best offer.  It doesn’t have to be in writing, just tell me verbally.

Your response to this is: I submit all of my offers only in writing.  If your client wants to make a written counter offer, that is fine, but my offer will only be in writing, as it should be.

Often times, going down to the very lowest priced  properties in a region will subject you to the most abuse and be the biggest waste of your time. If you are working with a solid private hard money lender they couldn’t care less if you move up to higher priced properties as long as the LTV is right, according to their lender guidelines.

It is true, in fact, that the higher priced properties have fewer offers.  ï»¿ Going from a $15,000 property to a $45,000 property for example may increase your net profits when the property is sold by 2, or 3 times and the higher priced property may be easier to market, position and sell faster.  So, the absolute lowest price properties may not be your niche.

The Ultimate REO Source gives you the top 60 direct sources of bank owned, government owned, REO and foreclosed property.  You can search and locate property in these databases in just mere seconds, by area, property type, price range, etc. and get
full information on who to contact, to make an offer. Combined with the Private Money Lenders Source, investors have the best opportunity to obtain hard money lenders support for their deals.  Most investors are now using these type of resources to expedite the funding and closing of deals.

Hard Money Lenders Deal Making Requirements

Saturday, June 11th, 2011

Deals that are ready for private loaner financing include residential non-owner occupied properties and commercial properties, including multi-family, retail, multi-use, office and others. Is your investing concentrated on these types of deals?  Typically, private hard money lenders are willing to fund 60% to 70% loan to value.  They are seeking properties that have a substantial quick sale value, meaning that the property itself could be rapidly sold at market at a price near the principal amount of the loan. The quick sale value can be determinative when a lender considers an investors deal.

Highly desirable properties have several key qualities such as , they are in neighborhoods with comparatively low vacancy rates, and they are properties that are desirable and in demand by home buyers or commercial interests.  Not every property is workable for a private hard money loan.  Therefore the investor seeks properties that are uniquely situated from a value perspective and have a low loan to value essential for funding.  In other words, investors seek properties with minimal risk and substantial return. The investor’s exit scheme details how the property equity will be monetized.  Today’s investor typically seeks deals with a minimal of $10,000 net profits potential.   Some profits can be realized in a per deal profit of more than $25,000 on some of today’s bank owned and goverment owned property.

Private hard money loans are made mainly for the function of purchasing property for resale. Many investors use private hard money lenders to fund these deals for a period of up to 12 months.  Private moneylenders have conditions to enable properties to be funded that need repair or rehab work and provide special funding for that purpose.  Otherwise known as rehab hard money the funding is designed for the reason to help an investor complete a property rehabilitation project.

There are diverse means of repayment.  Many private hardmoney funders allow the investor to make interest-only payments and some permit the investor to make no payments for the length of the loan, although interest is accumulated.  Many investors who are doing a rehab are able to take vantage of the no-payment option and to instead concentrate additional finances into the repair or rehab expense budget.   The private hard money lender evaluates the investor’s loan package to decide whether or not to fund the property from a simple risk evaluation viewpoint. 

The investor’s exit strategy is cautiously considered to realize that the private hard money lender is able to have the principal and interest of the loan returned within a reasonable time-frame and with minimal risk to the lender.  When an investor submits a loan package that is incomplete or inadequately documented, the lender cannot approve the loan for funding .  Therefore it is in the investor’s interest to ensure that the loan package is properly prepared and complete prior to submission.  By some lender accounts, approximately 50% to 70% of all loan packages are either uncompleted or improperly documented.    It is not difficult for an investor to remedy this problem if they follow the proper guidelines for loan package preparation.

Referred to by investors as a must have resource, the Private Money Lenders Source for investors because it details the top 300 private hard money lenders who loan on residential and commercial investment property, nationally, regionally,and locally.  Investors are able to evaluate and match their deals to the lenders programs and deal direct with the lenders.  The Private Money Lenders Source is the most cost-effective way for an investor to build relationships with active lenders for both residential and commercial hard money, saving investors literally hundreds of hours of time.  In addition, other resources are available to help investors source REO, bank-owned property and prepare loan packages as well as create a solid buyers list.

Property Flipping and Hard Money Lenders Loans

Thursday, June 9th, 2011

As more and more banks place bank-owned property for sale, a new breed of investors is snapping up these properties at more or less ridiculously low prices.  The LTV’s on some of these properties are as low as 25% of the market value and are being sold primarily to investors who are using private hard money lenders.  Individuals purchasing owner-occupied housing is part of the REO properties which are now held by banks, it is apparent that the banks choose to sell the properties at discount to investors because the closing and financing times are much quicker, fashioning it more feasible for financial institutions and government agencies to recover loan-loss based on prior lending

Real estate investors approach these private rehab hard money lenders for funding based on the value of the property LTV.  Hard money lenders are ready to loan because the extremely low LTV values advantageously reduce the risks associated with such types of loans.  Since rehab hard money lenders are primarily asset based lenders, This type of match has enbled great progress for lenders and investors in the residential arena. However, it is expected that we will see more private hard money loans being made in the commercial arena as well in the near foreseeable future. The bank, governement and financial institution REO property has been bought and resolde at wholesale prices, reducing further levels in the housing stock.

We can expect to see more private hard money loans to to fund these types of deals as more and more hard money lenders enter the market.  Private money is raised from investors seeking a well above average return by having the funds loaned out on property that is securing the loan.  The private hard money lenders programs differ from conventional bank loans in that the loans are made faster, less emphasis is located on a buyer’s credit and most emphasis is placed on the value of the property asset and ultimately what the investor’s plans are with the property whether it be buy and sell or rehab and sell.

The Private Money Lenders Source is an indespensible resource for a private real estate inestor because it contains virtually all of the best lenders in the nation who loan on residential and commercial investment property.  These loans are being made nationwide, regionally, and locally by these private lenders and enable the real estate investor to deal direct.  www.OPMCredit has been providing resources to real estate investors since 2006, and as the market has changed dramatically, new resources have been developed including the Hard Money Loan Blueprint, the Ultimate REO Report, and even a system for developing multiple streams of motivated real estate buyers.  

Utilizing the investor resources that both seasoned and beginning investors now have available, the can apply to hard money lenders with confidence, knowledgeable that their loan packages are propertly prepared.  More loans are approved when a lender receives a complete loan package that is prepared according to the standards for private hard money lenders.  The Hard Money Loan Blueprint was developed by studying the programs of 300 private hard money lenders in order to serve real estate investors in submitting a better loan package.  According to private hard money lenders, it is estimated that 50% to 70% of loan packages submitted by private investors are incomplete and lacking the documentation requirement for loan approving.  The Hard Money Loan Blueprint has created a new standard for real estate investors .


Increasing Rehab Hard Money Lenders Funding

Thursday, May 19th, 2011

As more real estate investors focus aid to rehabbing bank owned property.  The number of REOs, otherwise known as bank owned property or government owned property has increased dramatically during the past two years.  More often than not, these REO properties are in less than average government and bank properties are not in the best consideration.  Many times the property has been held in a drawn out foreclosure process which has left the property in need of repairs and even extensive remodel.  Private hard money lenders have been willing to fund purchases of these properties because they can be acquired for considerably less than 50% of the real value.  Because the property is going to be rebuilt, the after repair value is well within the guidelines to receive rehab hard money loans from a private hard money lender.  In the past, banks made loans on these types of properties however, because the banks now hold such large inventories, the banks are unable to finance the properties and instead prefer to have them taken off the banks balance sheet.

Investors who rehab residential and mixed use commercial property can generate anywhere from $10,000 to $50,000 or more per deal because after the property has been rehabbed the property can be wholesaled to another investor or retailed, at a wholesale price, to a homebuyer.  This means that the property is unlikely to sit too long which reduces the risk to a private money lender.  Unlike commercial property, there is forever demand for single family residential property.  In comparability, some of the existing commercial inventory is sitting unoccupied because there is no suitable use in the current state of the economy for that property.  For good example, office buildings that were geared for small line of work offices are sitting with high vacancies because people are unable to get funding to start small businesses and instead opt to operate from a home office which has lower overhead.

The time to come of property rehabbing looks bright because not as many construction developments are underway and some rehabbed properties have greater appeal to buyers because of architectural considerations, square footage, and localisation.  Most restate investors have discovered that finding rehab properties in excellent neighborhoods will insure that the property will sell promptly and at a fair price and gain margin.  Private hard money lenders have developed loan programs that include addtional finances for rehab that are sometimes placed in escrow or can be drawn upon during the rehab and construction process.  This enables the lender to monitor advancement to ensure that the property is remodelled to be move in ready.

Realestate investors have discovered that lenders will permit them to take out one loan at a time until the lender proves themselves by successfully completing the project and repaying the lender within the agreed upon timeframe and according to the terms of the loan.  Once the investor has done that,  the lender will in general allow the lender to do more than one project at a time, provided that the property meets the lenders conditions and program requirements.  Rehabbers sometimes use professional remodeling companies and sometimes have a team of freelance contractors that they work with to get the job done.  The team may include a painter, carpet layer, electrician, carpenter, sheetrocker, and other skilled professionals.  Working as a team the project can be completed on time and successfully sold for profit.

Rehab Hard Money and Non-Recourse Funding

Thursday, May 5th, 2011

Both real estate investors and hard money lenders want to reduce risk.  One way for an investor to do that is to create an LLC or Corporation for the specific deal .  This is still an advantage for a borrower who can only obtain investment property financing a private hard money lender because of poor borrower credit . This type of loan can be a NON-recourse loan which means, that you as the investor is not obligated on the loan .

Some private hard money lenders require that the transaction be structured this way because the “entity” is clean, meaning it has no liens, judgments, or other issues that could possibly cloud the title of the property.   Another way for an investor to set up a non-recourse hard money loan is to put the property intot a self-directed IRA, which also defers the tax on profits and can be an first-class way to build retirement. A 3rd way for an investor to set up a NON-recourse hard money loan is to set up a title holding trust or a land trust. Remember, private hard money lenders are asset based lenders.  There are many ways to get more or less the need for putting cash into the deal, including cross-collateralization, pledged notes secured by other properties, buying right at the correct LTV, potent exit strategies, pocket buyers, etc .

The entity type you opt for your deal can give you greater flexibility.  For example, an self directed IRA can be “assigned” a contract by adding the words “and or assigns” in the contract to buy the property or the written offer made on behalf of a self directed IRA.  This has been a great strategy also for deferring income tax on “flip transactions” because profit goes back into the designated IRA .

Both commercial real estate and residential real estate portfolio transactions  with limited recourse or non-recourse should consider the options associated with setting up practicable investing entities.  These entities cost little to set-up and give a real estate investor a considerble quantity of protection and versatility in investing strategy.  It is not strange for an investor to set up a different entity for each different property. 

Investors have learned to create flexibility in thier offers and will use an “assignable” clause in the purchase contract to acquire the property so as not to create a red flag for the seller.  Rehab hard money lenders frequently will consider non-recourse in the commercial segment of the investing market for income producing property .

More Private Hard Money Enters the Real Estate Market

Monday, April 18th, 2011

The home investing market looks upbeat in many areas of the country.  Homebuyers have always been and always will be a unwavering factor of the market.  Real estate investors are now utilizing rehab hard money lenders to help them acquire properties at discount prices.  Some REO properties are being discounted to less than 50% of market value.  Banks are doing all they can do to get the properties off their books and are helping serious investors acquire the properties.  Most of the properties are resold to other investors wholesale or purchased by home-buyers at below market prices.

New private investors to enter the real estate investing market, now is a good time. However it is important to make excellent buys on property on substantilly lower than market offers.  Banks are willing to accept these offers because they do not want to be in the business of maintaining these properties and because of regulatory restrictions, the more properties a bank has under it’s ownership, the less money it can lend.  So expect to see more banks making it easier for investors to acquire these properties .

The banks are represented by REO agents who represent the banks as sellers in these transactions.  These agents help the bank issue offers.  Investors presenting offers usually have to present a proof of funds letter with the offer in order for the bank to accept the offer and put the property under contract.  Private hard money lenders will generally release these letters for serious investors in order to help them complete the contract and take the property to financing and closing.

Private individual investors learned that private hard money lenders can provide various types of flexible lending programs which include no payment, interest only payments, and flexible terms with options for extensions of loans.  Properties that are compliant with  to the lenders program conditions, it can be a win win for a private hard money lender to work backing private investors .  Financial backing is expanding from private hard money lenders than through normal bank programs for investors and we expect that to continue into the the next few years as the available housing market continues to improve.  The Private Money Lenders Source from has provided viable  options for real estate investors seeking private money .

Submitting to the Right Rehab Hard Money Lenders

Wednesday, March 16th, 2011

When submitting deals, are you submitting to the correct hard money lenders programs ? Even more significant, are you speaking their language? The most successful real estate investors invest their time sagely.  They also make certain that they are matching the right properties with the right lenders programs

By applying to the correct lender and submitting  the correct property to the proper private hard money lender, chances are that you can get your rehab hard money deal funded quickly and easily, usually in 24 to 72 hours. But what happens when you bring your deal to the wrong lender?  Or possibly you just don’t seem to know what you are talking about and your deal isn’t presented properly?

The lender will drop you like a hot potato . You wind up wasting your time and the lender’s time.  So, how do you avoid the defeat and get your deals done fast? First, know your lenders.  Learn the lender programs and what type of properties they are presently financing.Know your deal and prepare your loan package correctly. If you want to invest in a specific  geographical area, know all the private
hard money lenders who do business there.  
Some lenders only work with a few lenders but you should really know who all of the private hard money lenders who loan money in that specific geographical area.  It’s a combination of know who and know how. Why is that so important?  Because when you know your lenders, you know their lending conditions, which helps you avoid spinning your lender’s wheels and wasting your lenders time.  

Lending conditions tell you everything  If you have a single family residential investment property, ostensibly you don’t bring that deal to a commercial private hard money lender.  And the same thing goes for residential private hard money lenders, they are not interested in funding the types of properties that are not in their portfolios.

Investors learn to bring their best deals to the lenders who want those types of deals now, not later. If you know 10 dissimilar private hard money lenders who loan in that area, you can comparing the terms of all of them and you’ll be in a much better perspective to get your funding.  Can you submit your deal to more than one lender at a time? Absolutely, it’s your business.  And it’s probably not a good idea to tell a private hard money lender that you’re shopping your deal to 5 other lenders.  Always keep your options open so you will always have funding alternatives to get your deals done timely.  

But always be gracious to your lenders.  Thank them for their time, and the opportunity and ask if they would like to see some of your future deals.  Buiild relationships and you’ll soon see your business and profits growing.  Whatever you do, don’t burn your bridges. Never argue with a lender or tell them they don’t know a good deal when they see one.  These lenders have substantial experience and know what types of deals are better than others . If the deal isn’t a match for both of you, the deal is not a match, simple as that.  But that doesn’t mean your next deal won’t be a match.  Maybe it’s just short of a bedroom to qualify or it’s in the wrong part of town, or the LTV is a tiny bit too high.  

Next time, a different deal and a fresh start. That is, if you speak their language.  If your loan package looks “amateurish” or “sloppy”, or is incomplete, you’re lender will treat you like an amateur.   They may not pick the phone next time you call.   Or they may not send a reply to your e-mail.  Why, because they have too many good deals to look at and they don’t have time to waste.  Nothing personal, it’s just business.  You don’t have to put yourself in that position. Make sure you are proud of each and every loan package you assemble.  That loan package is your bread and butter.  Lenders want to work with real estate investors who are easy to work with.

Private hard money lenders don’t want to spend their time tracking down documents.  They want to get the deal done. Make sure your Lloan package is correctly prepared the first-time If your deal is the greatest there is but you are difficult to work with, you’ll in all likelihood not get far. 

How can it be beneficial  How many advantages are there of knowing your lender?  Points and fees can vary widely among different lenders.  So, once again, knowing your options can make your deals much more profitable.  And suppose you have a property that needs a rehab? Again, know who are the rehab lenders in that geographical area and don’t waste a scrap of your breath trying to convince a private hard money lender to become a type of lender they are not .  

As soon as you understand the lender’s conditions, you are in the sweet spot.  You now know exactly what types of property to look or that have the greatest likelihood of getting funded. If you’re doing it the other way, it’s like climbing up a mountain or swimming against the stream.  It’s alwasy better to know the lender programs and first find the money.  Then finding property that can be funded can be easilyrealised.  The Private Money Lenders Source was developed by poring over the lending programs of 300 of the top private hard money lenders for residential and commercial investment property.