Wholesale Hard Money Lender
Finding a wholesale hard money lender is extremely difficult since hard money investors typically charge high retail interest, not wholesale interest. The reason being that they have borrowers over a barrel. People who are looking for hard money are typically tied to lower credit scores, or who need money real fast to tie up business opportunities. It can often take a month or six weeks to secure commercial funding from a bank, and that is often an eternity when a very hot business opportunity suddenly appears on the horizon. So why would the typical hard cash lender settle for twelve percent money when twenty percent or more plus three or four points is a common deal?
Hard cash lenders are ruthless in their zeal to maintain the upper hand in the lending agreement process. These private investors will typically fund sixty to seventy percent of a needed amount to make the deal work and in many transactions these investors want the borrower to put up assets of their own to secure the remainder of the agreement. When borrowers are willing to put up business real estate or a personal home as surety, the financier gets even more comfortable with the agreement. And in almost every case, if the borrower pays off even a wholesale hard money lender borrowing agreement early, there will be penalty points to be incurred for the borrower. With the population quickly rising and more and more of our lives being relegated to just a number, it can be easy to think that no one really knows us or cares. But Jesus made an amazing statement of God's individual concern for each of us when He said, "Are two sparrows sold for a farthing? and one of them shall not fall on the ground without your Father. But the very hairs on your head are numbered." (Matthew 10:29-30)
A wholesale hard money lender borrowing agreement is called upon to get people through tough times so that a business can be saved, an alluring piece of property can be bought or a project undertaken. In almost every case, the agreement is secured by some asset. The savvy lender will never give a loan for the entire amount of the property because of security reasons. In the event of a foreclosure, there is still some value with which to bargain a payoff. Typically, a wholesale hard money lender borrowing agreement will be used to seal a real estate deal of some sort. But since lenders are always looking for a way to make more profit, very expensive nontraditional properties such as an aircraft could be figured in the mix.
A businessman has been looking for a certain aircraft for two years, but the model is rare and out of his price range. Suddenly a broker calls and tells him a plane in Atlanta has just gone on the market for seven hundred and fifty thousand dollars, far below value. It will likely be gone within a few days. It will take weeks for the man to get a bank loan, so he calls a wholesale hard money lender but the investor's credit requirements are too high. He ends up at a private cash investor who only lends at retail interest prices and who doesn't care about the business man's credit score, but wants the potential owner to put up forty percent of the loan value through equity in his personal home. The loan will be for six months so the potential owner will have time to find conventional funding for the plane.
But in most cases a wholesale hard money lender, when they can be found, will be involved in real estate deals. And because it is this type of transaction, that the hard money provider is almost certain to be a local person living in the area. For example, if a home builder wanted to buy land for a new development, the builder will probably ask around at local banks and at mortgage and title companies for the name of a private cash lender. Since private lenders do not have the restrictions on them to which banks must adhere, the actual demands of the contract may differ from lender to lender. In all likelihood, the agreement will be made if the investor knows the land personally and the builder agrees to very tough terms, such as high interest rates, four or more points, and a time limit on the loan; probably not for more than eighteen months. And if there is an early payoff, the borrower may pay another point for an early closure penalty on the agreement.
Since a wholesale hard money lender is as rare as a monsoon in Arabia, expectations ought to be focused either on a retail money investor of hard cash or another funding source altogether. Because the whole banking industry has been recently turned upside down, the best bank lending agreements will only be for those with angel like credit scores. There will be a dearth of no money down loans and twenty percent of the cost will be the normal requirement for borrowers to add to the lending agreement. This will make a wholesale hard money lender even scarcer than five leaf clovers. The retail interest investor will have more control than ever in a hard cash market.
Residential Hard Money LenderA residential hard money lender is a lending company offering a specialized loan with real estate backing. Backing from a financier is based on assets. Normally the asset is real estate that is occupied although it can be unoccupied. The advance is a hard money loan because it involves the fast transactions involving the obtaining of the finance and the potential quick sale. Because of the quick-sale transaction, a higher interest rate is involved. The interest rate is higher than other financing methods and mortgages. A residential hard money lender is able to provide the advance because of the financial backing of private investors. The financial agreement is based on quick sales, such as house flipping, or refers to financial distress such as a foreclosure, bankruptcy, or unpaid taxes.
Investors have a perfect opportunity to secure their money with a residential hard money lender. The investment is secured by the property being invested in and not by a persons credit score. When the investor invests with the financier, the funds are secure through the transaction and the land or property becomes the collateral needed. A normal loan ratio is up to 65 to 70% of the value of the property or land. Thus, if the value of a piece of land were $10,000, the advance would be for up to $6,500 to 7,000. Often times, a person looking to flip a home will find homes on a HUD list, in foreclosure status, or from a tax sale. These properties are far less than their value and a credit from a residential hard money lender is perfect for the scenario. For a private investor, a credit of this magnitude is a safer investment than investing in stocks or other financial methods.
Investors want to know that their money is secure. First, the loan to value ratio (LTV) allows compensation for a creditor if the need arises for them to sell the mortgaged property. Second, higher interest rates also protect the financier and backer. Looking at the $10,000 piece of land, a residential hard money lender obtains the funds for the borrower from the benefactor. The property sold in a foreclosure sale for $5,000. The investor provides the full amount. If the borrower immediately defaults on the financial assistance agreement, the creditor can resell the land for the value or more and make a profit for him or herself and the backer. Online calculators can help a person requiring a credit to know what type of payment is paid on various loan types, thus helping to deter a default. Regulations for loans, backers, and financiers will differ from state to state.
Finding a residential hard money lender on the Internet is easy. The Internet holds a variety of financiers. Because finding a creditor is easy, a person seeking financial backing should be aware of a few tips to make the process easier and safer for him or herself. First, a person seeking funds should find a debtor within close proximity to the land or property in question. Sticking with a local company to borrow from is a wiser strategy. An individual should never seek funding from a person or company that is out of the country. Should any problems arise, the debtor would be stuck because laws and regulations vary for overseas institutions. A debtor, who finds a financier out of the country, could find himself or herself paying money yet still receiving foreclosure notices on the new property. Second, a debtor should never give money to begin the transaction of a credit. Third, an attorney or third party should oversee all transactions. Not only will this step help protect the borrower but having another participator could also protect the rights of the lender as well.
To obtain the services of a residential hard money lender, a person should treat the first encounter as an interview. The lender and potential borrower need to determine if the services offered are in alignment with the services needed. Compatibility is the key. Most businesses will offer a free consultation. Before beginning a consultation, the responsibility of the potential debtor is to obtain information about the potential giver. The borrower should also attain references from the potential giver and follow up with the contacts. Referrals by word of mouth are also a great source of help. The word of mouth report could provide positive or negative feedback about the history and transactions involving the lender. Positive word of mouth recommendations should prompt an individual to place their trust and business in that particular lender.
In the consultation, a residential hard money lender should be forthwith in providing any information that the client is requesting. At this point, the client should understand that while the lender may look at the persons credit report, the score on the report will not determine the loan. The financier is looking for stability in residence and other factors pertaining to whether repayment of the debt will occur and occur on time. The discussion between the lender and borrower should include some of the following topics: prepayment penalties, terms available relating to years of repayment, interest, cost, etc, the need for outside appraisals, refinancing options, and information pertaining to the funders involved with the company. Be thou prepared, and prepare for thyself, thou, and all thy company that are assembled unto thee, and be thou a guard unto them (Ezekiel 38:7).
Because private funders back financiers and debtors do not sell credits to other markets, the person covering the advance has money available immediately. The process for a financial backing application will not be long and does not usually need more than 10 days for approval. The advance covers a multitude of property types, such as, land, commercial property, and residential property. As long as the person needing the advance is prepared for different terms for different loans and the borrower and lender needs are met, a suitable agreement can be reached.