Hard Money is a diversification to an already used income stream.
Loan Officers don´t use it as much as they could out of some unknown reason? Not quite sure if it´s education of products
or fear of telling someone about a 12% rate,
The rates are obviously a difficulty to the product but I found it to be a process more than an issue. I have and will
continue in this region as it ads a HUGE opportunity where there wasn´t any.
NOD´s, NOS, Foreclosures have a place w/ HM lenders but mostly the purchases of dilapidated or below market values
and land is what I am seeing. Commercial HM is landing around me at an unprecedented pace.... :)
Hard Money is a tool that has its place and it can lead to a pipeline for next season if you plan it that way. Learn the
credit needs of how to exercise your clients way out of the HM loan you have them in and get a bonus loan when the time
is right to refi into a conventional.
Problems will always arise and people will always need a quick fix....Hard Money is an opportunity and a solution all in one.
5 Comments on hard money ~ loan
The 12% os ok, it's the 6 - 15% origination and the 90 or 180 day terms, and exit terms that I have a problem with. Most deals I've looked at for clients are truly vultures.
I am just trying to create my niche, and in the process met a lot of fake, clusters, etc on the way. I have to tell my fellow professionals, and clients that their are some certain guidelines, and programs for us to meet before we fund any of the deals (hard money).
I've seen some harsh terms on hard money. Yes, hard money has it's place and I will utilize it if I see benefit in the loan for my client. But to Keith's comment, 6-15% origination is purely wrong and won't be a part of my work ethic or that of any individuals in my company...
Let me explain why origination fees are materially higher than a conventional loan product. The answer's quite simple: The market isn't as large.
What's that mean? A true trust deed broker in California will charge between 3-5% origination fee because he/she doesn't have BILLION of dolars in which to lend. I have about 100 investors, only 10 are really active trust deed investors (over $1,000,000 in loans). I figure that I have about $25,000,000 at my disposal but I compete against all the other trust deed brokers in SD county.
If I lend $6,000,000/year hard money it's a good year. When you consider that I pay 2% to the originating broker , my margin is about 3% on the money. Not a whole lot of coin for a highly specialized market.
Foe more information about the trust deed industry, check out the California Mortgage Association. I joined last month and really built a network.
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The 12% os ok, it's the 6 - 15% origination and the 90 or 180 day terms, and exit terms that I have a problem with. Most deals I've looked at for clients are truly vultures.