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What Exactly Is a Hard Money Private Money Lender?

15 Mar 2012 | No Comments | posted by Corey Curwick Dutton | in Hard Money

Private Money is the Key for Success in Today's Market

There are two kinds of groups who have a growing need for hard money loans: commercial borrowers not eligible for bank loans, and real estate investors looking for foreclosures.

Hard money or private money to some is getting more popular by the minute as conventional (bank) financing for the real estate industry is still fairly scarce. As a wise borrower, there are rules to learn first before getting a hard money or private money loan.

When banks and brokers are not able to lend money to borrowers, the only option are the private money lenders. These days and with the economy, the demand is high particularly in places in GA, Chicago, NY, and NC.

What is a private money lender exactly? It’s the type of lender that doesn’t use conventional, bank standards in order to qualify a borrower for a loan. Evaluating credit history, income, and debt levels is typically of banks while the private hard money lenders will just provide a based on the value of the asset being used as collateral for the loan.

Real private hard money lenders are hard to find and their interest rates may not be as accommodating as compared to banks. But these lenders are the best option when the traditional financing from banks is not available or when a borrower is in need of a fast loan.

To read more ‘Hard Money 101‘ or to read about ‘Common Scams in Hard Money,’ click here

Hard Money Loan Success Stories

26 Feb 2012 | 2 Comments | posted by Corey Curwick Dutton | in Success

Contact us about our rehab loans

People use hard money and private money loans to accomplish a variety of goals and objectives. Most people who work in the private lending industry have some great success stories about their clients. Please share your own success story, or a story about one of your clients, below in the comments section.

I will tell 2 of our stories here and hope they inspire you….

Belinda – A first time real estate investor, Belinda was presented with an opportunity to purchase a small, mixed-use commercial building from a family friend. The building was fully rented and had good cash flow. The family friend had to sell the property quickly and was willing to sell it to Belinda far below market value. But only if she could come up with the cash in one week. Belinda’s credit has been hit, but she had enough cash reserves for a down payment. Because she was getting such a low purchase price on the building, we gave her a commercial hard money loan and she brought in the down payment. We were able to close within a week to satisfy the seller, and Belinda was able to get into a positive cash flow investment. Not too shabby for a success story eh? Read more..

New Private Lender Loan Programs for 2010

27 Dec 2009 | 2 Comments | posted by Corey Curwick Dutton | in Private Money

Many of my private lenders have already unleashed their loan programs for 2010.  Many of these loan programs have more favorable interest rates than some programs we’ve been seeing in 2009.  And with all types of real estate being offered at 35 to 55 percent of its value, hard money even turns out to be cheaper than getting a partner involved in the investment, or worse yet, in a tug of war with a family member.

I was surprised to learn about a new distressed construction program and a stated income loan program for top-tier professionals.  Although not offering the lowest interest rates, these programs are evidence that investor confidence is improving in these harder to service areas.  Private money and hard money lenders are more liquid and looking for new loan options.

See below for some of the loan programs that my private lenders are making available in 2010.

As we head into 2010, any thoughts on where the values of real estate are going? Can values only go up from here, or do certain real estate sectors still have further to go in some regions?  Please contribute to this discussion.  I’d love to hear your thoughts on investing and lending in 2010.

Posted by Corey Curwick on December 25, 2009

 

2010 Private Loan Programs:

 

Eastern and Midwestern States:

OH, NY, MI, NC, TN, PA, IN, IL, MO, KS

Property Type – 1-4 family residential

Loan Amount – $50,000 to $500,000

LTV – Typically Maximum of 70% of as completed value.  Will consider slightly higher for strong client.

Interest Rate – Typically 9.5%

Points – 5% – 6%

$400 documentation fee

Credit Score – Minimum Middle Score of 680

Require Spousal Guarantees

***In Michigan, 700 mid credit score, minimum cash deposit of 10%, and maximum LTV of 65%.

CA, AZ, NV, OR:

Property Type  SFR’s, apartments, income producing

Loan Amount (sweet spot) 50k-500k and will look at deals up to 2M

LTV (as it relates to credit score) 60% max.

Interest rate and points as per loan term 12.5%, 4.5-6 points, 1-2 year term, no prepayment penalty.

Western States:

Residential and Commercial: OR, WA, CA, ID, NV, UT

Commercial only: CO, AK, HI

CONSTRUCTION FINANCING:

We typically require the land to be free and clear. (650 minimum FICO) Max loan amount is around $2m. Loan amounts between $500,000 and $2,500,000. Typically we’ll do the construction loan but will want to be taken out through immediate sale of the property or a refinance by another lender.

COMMERCIAL & RESIDENTIAL REAL ESTATE:

  • Residential Loan Amounts up to $1 MM
  • Commercial Loan Amounts up to $2 MM.
  • Commercial: Well-located, multi-tenant, income-producing properties including: apartments, shopping centers, retail strip centers, mixed use, industrial, and office.  (No single tenant commercial or owner user properties such as restaurants, non-flagged motels and hotels, and convalescent/skilled nursing facilities).
  • LTV ratios will normally be in the 50 to 65% range.
  • 55% or less LTV, 60 to 65% or less LTC (Total costs include:  land cost, soft and hard costs, construction interest, points and closing costs).
  • 9.99% to 11.99% interest only, 4.25 to 4.75 points to us
  • Loan Terms up to 5 years

Utah ONLY:

Loan Program #1: Residential properties only.

  • Short-term 1 to 2 unit residential, non-owner investment property.
  • High Credit Score = Highest LTV ( 720+ Score = 80% to 85% LTV ).
  • Max Loan Amount $400,000.
  • No appraisal required.
  • Loan Terms: 30 to 90 days.
  • Interest rates from 12% interest only.

Loan Program #2: Residential and Commercial

  • Loan Amounts up to $400,000.
  • Up to 60% LTV.
  • Loan Terms up to 7 years.
  • Interest rate 14%.

California Only:

  • Hard Money 50% or less LTV on NOO 1 – 4 units and commercial income properties.
    • 9.95%, I/O, 12 – 36 month terms, 4 – 5 pts, 0 – 12 month prepay.
    • Purchase / Rate & Term Refinances/ Cash-Out Refinances
  • Conventional Fannie Mae 1 – 4 unit rehabs for owner-occ OR investors. Finances the lesser of 75% loan-to-cost or loan-to-after-repaired value (for purchases. refinances are AIV). Low ARM and fixed rates.
  • Commercial income property loans — apartments, office, retail, mixed-use, storage. Institutional 1sts, or private 1sts and 2nds — doing lots of equity loans as 2nds these days.
  • Direct Lender Fannie Mae, conforming loans: We are a direct lender in CA for conforming, conventional, A-paper deals. Our rates are competitive, but aren’t geared towards low-cost at this point.  Where we excel is in fast closings, since we underwrite in-house, and we control the appraisers who are in our AMC, limiting appraisal problems inherent with everyone else. Therefore, we’re a good source for deals that need fast closings at competitive rates, but not no-cost lending.
  • USDA Rural 100% financing: SFRs in 14 northern counties in CA qualify completely for the program. Other designated “spots” in other counties available, but they’re rare in L.A., Orange, San Diego, Riverside, and San Bernardino, as well as the 7-county area around San Fran. The program provide 100% financing for qualified buyers of an owner-occ SFR who meet HUD median income guidelines.
    • NO mortgage insurance. Good rates, though slightly higher than traditional FHA or conventional.
  • Residential Lot Loans: 25% down on improved, residential-zoned lots for full-doc, A-paper borrowers, purchase and R/T refi only — no cash-out. Rates in the upper-5.00% range, 30-yr term with 3-year balloon, 1.25 – 3 points.
  • Super Jumbo Financing:
    • 80% LTV to $2MM, 40-yr amortization + interest-only — 3/1, 5/1, 7/1, 10/1, 15+25 ARMs only
    • 90% LTV to $1.1MM with 10% seller-carry 2nd — same terms as above
    • STATED INCOME — 65% LTV, 12-24 mos PITI reserves, 700+ FICO, must create depository banking relationship with lender, self-employed or top-tier professionals only. Purchase preferred but will consider rate/term and cash-out. This is a really, really nichey product with lots of requirements.
    • 15 and 30-year fixed to $2MM. 75% max LTV to $900k, reduced LTV thereafter.

CA Only:

Loan Amounts $200-$400K

Loan types- Non-owner occupied residential, commercial properties, and rehabs.

LTV as high as 75-80%.

Interest rate ranges between 10.99-13%