i would like to be a HML sometime in the future, would i need to have a broker's license for this?

Alvin & sammy.

There really is no difference between Hard Money and private money. The only difference is usually Hard Money is associated with a broker who is getting points off of you.

Aaron,
Take a pill and calm down. Your lenders charge points cause that is how you get paid. The money sources I deal personally bypass you the broker so no points just 10-11% depending on LTV. I also do deals with some of them on a partner basis. They front the money and I find the deal taking it from purchse to rehab and finally sale.

No Paul, that seems to be the misunderstanding here. Hard/Private money lenders charge points themselves before I charge anything for brokering services. Its really rather pointless for a broker to try to get involved in a hard money deal because after the lender charges 3 points there's no room for me to charge anything. I offer hard money sources as a courtesy in hopes that I can refinance them into better terms later down the road.

This is great stuff! It's interesting to see the different people and their beliefs. Take a look...

"You will never get a HML with no points."

"3-6 pts is a bargain!"

"You would be surprised where you can find Hard Money!"

"Okay maybe your best friend will give you $200,000 and not charge you any points."

"HML should only be thought of as the last resort."


...wow, so neat. Nobody is right or wrong, I just encourage everyone to take a look. I'll just comment on a couple.

"You will never get a HML with no points." -Double negative and the effort is made only to emphasize what can't be done. How about this... what if I can find someone of retirement age who is just interested in sitting at the beach and sipping margaritas while his money is hard at work for him. He might be open to not charging points and increasing his rate instead.

"You would be surprised where you can find Hard Money!" - Here is an individual who is open to possibilities. My impression of this person is that they tend to create opportunities out of thin air.

I'll keep you guys posted on my findings. Ciao!

I'll try to make it simple and sweet according to the best of my knowledge. Somehow... I hope that I can contribute...

First of all, HML & Private are pretty much the same... both terms are used interchangeably and loosely. HML make their returns on charging higher interest than others, normally 10%-13%+ and do have to follow certain guidelines, i.e., Dept. of Corporations. Private money on the other hand can set their own rules and you play by their own game. Private money is usually a pool of investors that have a collective interest in loaning out money. They can set commitment points up in the front and charge some in the back if need be. They can also charge outrageous fees or no fees... a friend can be called a "private" investor.

Basically, a Private lender can come after you and 'break your leg', whereas a HML can not... they can come after you by foreclosing

Hope that Helps,

i've found there is no "usual" description of a private money lender. it can be a pool of investors or a rich doctor up the street looking to invest some money.

Wow!

Hard Money lenders are not all institutional... some are not even entities by personal choice. Hard Money and "professional" Private Money are about the same thing. Many have guidelines they work from, particularly with newer clients. Many do allow for flexibility with clients who have demonstrated credibility. Some are open to wide variations in "deals" and some have interest in Equity positions although not typical for most.

Some DO NOT CHARGE POINTS. Most Professional Hard Money and Private Money lenders have the ability to make adjustments to get desired "deals" to work.

They are NOT lenders of Last Resort... often they are the most desired lender, again depending on the specific "deal".

Best sources are developed and often more local than national. You can develop better working relationships that way. Some HML are more touchy feeley and like to "see" what is going on even if they don't have an Equity position.

HML come in all sizes and have varying criteria. They are most often considered "PRIVATE" by most State banking laws and are not subject to the state banking rules and regulations. You can not paint them all the same color but you can select those that can change colors to fit your specific deal.

watch out for non conforming sub prime lenders pretending to be hard money lenders. if they ask you for paystubs, tax returns, credit check, bank statements, etc. theyre trying to see if you can fit their lending criteria and still charge you 8-12 points and high interest rates.

a real hard money lender wont even ask you for these items. a real hard money lender will ask for:
1) LTV 65% max.
2) Appraisal subject to completion.
3) First lein holders position.
4) Exit strategy

if youre going to jump through hoops then youre not dealing with a hard money lender.

Thats not always true Alvin... I have several hard money lenders that will give more favorable terms if the borrower can show he has the ability to repay. That could be with paystubs or lottery winnings or any number of creative things.
- 70% LTV is easily attainable in CA and 80% is out there if you know where to look.
- I do hard money 2nds all the time
- Only loan amounts under $50K charge 8 points, 3-4 is the max for 1st TD, I've never even heard of 12.
There will always be hoops to jump thru, hard money just doesnt have as many.

Last time I checked Hard Money loans were based solely on the properties LTV. Never have I or any investor I know been asked for personal information to verify income or anything other than a satisfactory appraisal on the property on a Hard Money Loan.

Once you start asking for W-2's, Tax returns etc...well then it is a standard loan and not when others in the industry call hard money.

Glad I don't deal with you cause I don't jump through hoops for hard money as it is all LTV. The hard money lenders I deal with look at the current appraisal and the repaired value appraisal based on my rehab breakdown and the avg days on market for similiar properties in the area.

Well Paul, I'm glad I dont deal with you either since you often dont know what you're talking about. I'm sure central Illinois is on the cutting edge of real estate lending.

Well Aaron I did 112 residential and 7 commercial transactions last year and developed a 45 home subdivision. In addition I am a builder who built 19 custom homes last year.
I buy on average of 10-15 rehab properties a year to fix and resell and own alot of rental properties in 4 different states. I have been in this business for 17 yrs and hold a BS in Finance and a MS in Real Estate Developement

How about you?

Cutting edge lending....that definately ain't you!

Yet anyone that been in this business for more than a year knows there there are new lending products coming out all the time. You obviously dont know how to take advantage of such products. Maybe you should go back to school. Finance is kind of different now than it was 15 years ago. Phoenix University has inexpensive classes and you can study from home.

I already have a masters so I doubt I need another and Finance priciples remain the same it is just the products that differ.

If this new product requires w-2 info and such then it is really more of a standard or conventional loan than Hard Money which was my original point.