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Scram Scams!

I got asked the question on Facebook about what to look for in a hard money lender on how to avoid scams.

Well, the easy answer is just to use us www.dohardmoney.com. Then you don’t have to worry about those things. HOWEVER, if we are not in your area then there are several things to looking for:

1. Member of BBB. At least that gives them a governing board that looks after them.

2. Somone that is a member of the National Hard Money Association. I am a founding Member.

3. Recent Deals funded. You need to see that they are really doing lending and not just taking your money and running.

4. Client Testimonials. You want to see what other people have to say about them.

5. Look for the rates, and terms to be set on their web site for the world to see. To many hard money lenders are going to get every penny they can out of you depending on the situation. We believe prices should be consistent.

There is not a big concern for the borrower in hard money. If the lender will give you the money there is really not a way for them to scam you. Read the documents and make sure you know what is going on and what the terms are posted on their web site.

We also offer two 30 day extensions for a borrower. This is at the option of the borrower not at the option of the lender. So if the borrower wants to, they can extend two times without needing the lenders permission. This is built right into the note.

I hope this helps.

Hurry Swerve to your RIGHT!! Take the next exit and see what is happening at DHM!

I love change. It is good I am in the business that I am in. Real estate provides the avenue for change like none other. I have found in my life that whether it is good or whether the changes that are happening are bad, shaking things up at least keeps things interesting.

With that in mind, we have been doing some soul searching here and have been thinking what kind of changes would you as the investor want. Past policies of ours have made sometimes obtaining a hard money loan from us difficult because, all though we definitely want to loan money to you (how else would be make money?) we still have to be able to protect ourselves. But we often times were forgetting that in order to keep with our mission to Change the World, we have to bend sometime. So, with that in mind, here are our bending exercises that we will be doing. By the way, if you don’t see these updated on the website now, they will be within the next week.

1. We now have no loan minimum. Previously, we used to do loans from $50,000 to $250,000. Now we will accept any loans up to $250,000. Take a look at our Residential Loan Fees on our website to get the full details of our terms and fees.  We don’t ever want to hide anything.  We always disclose what we are lending.  We want you to go into the loan with your eyes wide open.

2. We will now accept loans for “Unique Properties” the following constitutes unique properties: properties that are 900 Square Feet or less, Properties with less than 2 beds, on or near a commercial corridor, around or across from rail road tracks or around or across from a major street, road, highway and or freeway system. For these type of loans, as they are more risky in nature, because of that the percentage on the Adjusted After Repaired Value will be lower than other types of properties.   You can view that information on our flowcharts.  Go ahead and click on the link to see more.

3. We will not decline a loan unless it doesn’t meet our initial criteria (for example you have a judgement or bankruptcy, or your property is rural, commercial property, etc.). Even if the loan amount we offer is not what you request, we can still do the loan, you can just come in with the difference in loan amounts.

There is more that will be happening with our site within the next month. I am so excited about the changes. They are going to help you as the investor become more skilled in what you do and provide you with a bigger profit in the end. The one thing that I am proud about with our company and our website is that we don’t hide what we do. We spell out everything as clearly as possible so you don’t come into the loan with rose colored glasses on. Now, there are always caveats to every rule, you should always read the fine print. Don’t trust the x-ray glasses that come in the cereal box; they don’t really work. But for the most part, the information above is what you see is what you get. We look forward to working with you. Happy Investing.

Does a credit score REALLY count?

I was talking to my younger nephews who are trying to get a job. They are at that age where they need some date money and instead of trying to beg it off of me with odd jobs here and there, I told them to get a job. Then I was thinking later, right now, it can be somewhat easier for them to get a job, mind you not necessarily a really high paying job, but a job nonetheless. However, for most other jobs in the market now a days, they check EVERYTHING! It used to be, past jobs, references, and an interview, but now, they even check your Credit Score.

So, does a score REALLY count? Well, for some things, yes, it does. If you are applying for certain jobs, they won’t hire you if you have a bad credit score. You just don’t show reliability nor responsibility. Nevermind that your score went down because you were involved in the tech jobs ten years ago when they had huge layoffs and you couldn’t get back on your feet, so you couldn’t pay your bills, etc. etc. etc. That doesn’t matter to them. Well, you are in luck with DoHardMoney.com. What we are looking at is the property. We will still check your credit score. But what we are looking at is not the number, but instead if you have any active judgements or active Bankruptcies. Because, all though we are more lenient than a conventional lender, we still have to protect ourselves somewhat.

Now, with that being said. Let me tell you about our points and how that will relate to your credit score. You can view our Terms and Fees on our website under the Residential Loan Fees tab, but basically for credit scores under 620 the interest rate will be at 18% plus 1 additional point will be added to the origination points. Origination points will be added to the principle at loan commencement. That’s about it, for your credit score and how that would affect you. If you have a judgement, get it expunged. Once the Bankruptcy has been cleared for a year, we would be happy to lend to you. Good luck and Happy Investing.

Let's Talk about Proof BABY!!!

So, I’m back. In our last talk, we discussed the process and I briefly touched on our Proof of Funds Letter. Well, I was thinking more on this and I thought, you know, this is such a great thing, we REALLY should talk about it more.

With that in mind, I introduce to you – the proof you are going to give to your sellers, banks, or anyone who wants to know if you have MONEY!!! So, you are asking yourself, how can DoHardMoney, just randomly give me a letter without ever me speaking to them on the phone. Well, when you go on our website requesting a Proof of Funds letter (sometimes you might also have it called a pre-approval letter) it will ask you for your name, your email address, the address of the property, and then an “approximate” loan amount, we don’t ask for a specific amount as most of the time you will want to borrow or get approved for more money anyway and the seller shouldn’t even be concerned about if you are approved for more than what you are offering to them. It will then generate a letter. This information that you have supplied to us, gets stored in a database. If a seller, bank, etc. calls us to confirm that we do indeed have the funds for you as the borrower, we can easily pull up your name and confirm the information. It is as simple as that. You can utilize this tool for as many properties that you have. I think this is unique to DoHardMoney.com, so embrace it.

You see, we don’t make money, unless we can lend money. So, there is no concern that you won’t be approved for a loan; as long as you follow our criteria and if needed provide additional funds, then we can provide the loan. It is up to you whether you want to accept the loan or not.

Have you viewed our goal on the front of our webpage?

Our Goal: To help Real Estate Investors make a profit of $26,000,000 by Dec 31, 2012

Keep an eye on it, it is moving, and I want you to be a part of it.

What is the process?

So, you know now all about pre-qualifications – THERE IS NONE. Now, let me tell you about our process. It is quite simple actually. It starts out with you going out and getting the “property under contract”. WHAT DOES THAT MEAN?? Well, really all that means is where the buyer (you) and the seller have executed a purchase contract. Sometimes in order to do this you may need a proof of funds, well the beauty of our program is we can provide that for you. All you need to do is go under our Residential Loan Fees and we have a link that will take you to a Proof of Funds letter. This is a great letter. It will provide you the proof you need to show either a seller, a bank, or whomever you are trying to purchase the property from that you do indeed have the funds available to purchase the property. But I digress.

Now the process. You now have the property under contract, you are then going to go to our website (By the way, we are updating it and you are going to LOVE the changes that you will be seeing in about a month) and click on the Apply For Loan tab. Here is where the MAGIC begins. You will begin filling out the application for a loan. Now unlike a traditional bank, where you are signing away your first born (or so it feels like it) our application is only a few pages long and mostly we are just trying to gather information about the property. As you recall in our last message, remember the loan is about the property, not about you. So, from the time you give us the application it takes 2-4 days to get the evaluations completed. The evaluation fee has to be paid at the time of application. That is why you don’t submit a deal until you have a fully executed contract. We are using a nationwide independent 3rd party company to do the evaluations. They will send out two evaluators at separate times to review the property, take interior/exterior photos, make and comment about rehab work and the estimates for that work. They will then complete our internal form we require. The evaluators have to be paid for their work and that is what the fee is for. Now before you ask, no they aren’t appraisers, we don’t use appraisers, nor do we require an appraisal. This isn’t a traditional loan. Nor can we use previous evaluations that you may have had done. During the time these evaluations are being done we need you to get us all the required information to complete the loan. Once we have the evaluations back we can close 48 hours after that. Typically the hold up is with the title company (you choose) waiting for the title report to be completed, closing protection letter or wiring instructions and the hazard insurance agent. In some cases we are also held up waiting for the borrower to get the require documents in to complete the loan. We only have control over 1. The evaluations. They take between 2-4 Days 2. Approval and Docs. We can get that done in 48 hours. Everything else is up to you as the borrower, the title company and hazard insurance agent. We can move very, very fast.

That is the basic process. Happy Investing!!

What the Customer Wants to Know

We are constantly updating our website. We go back and forth with our developers, arguing about what would be best for you to not only keep you interested but mostly to EDUCATE you. What better way to have you use hard money then to have you understand what it is we do exactly. So, here we go. Here are some of the common questions that I receive daily. This information is on our website, (Now you are probably thinking why would we repeat this information if it is allready on their website??) however, I think perhaps, it just needs a better explanation or maybe just a different viewpoint.

One of the questions that I receive A LOT is what are our pre-qualifications for our loans. Well, you see, here is the great thing about DoHardMoney (because not all Hard Money Lenders do this). We are not a BANK. We aren’t CONVENTIONAL (**gasp**). We are not going to take the average 30-60 days to get you your loan. We get all of our money from Private Lenders. In fact, if you have your property under contract, and you can get all of you paperwork in check for us, we can get your loan turned around in 48 hours. So what do you have to do to get the loan?? Here it is:

1. We lend based primarily on the property, not YOU.

2. You have to have the property under contract. We can’t speak to you until you have that first.

3. Make sure it is in the States that we Serve. We list them all out on our website with the Counties underneath. We make no exceptions on this.

4. Make sure it is within our pricing, up to $250,000. No exceptions.

5. No outstanding judgements, or active bankruptcies within a year.

That’s about it. We have specific types of properties we won’t lend on, but basically what we DO lend on are Single Family Non-occupied Homes, Condos, Twin Homes, Town Homes and Lofts.

Again, we loan based on the property not you. So, we don’t need your taxes, we don’t need your proof of income, etc. Take a look at our Frequently Asked Questions, I think you will be pleasantly surprised.

Celebrate!

Even the elusive Dale Begg-Smith from Australia celebrated when he crossed the finish line. This guy has no emotion and does not like the press at all. In fact on the medal podium it looks like he can’t wait to get out of the spotlight. But the second he came across the finish line he looked like a kid in a candy shop. He celebrated in his own way. When you finish your rehab and retail, celebrate. Now don’t get ahead of yourself, let’s define finish. Finish is when you have the check in your hand and your hard money lender has been paid back. That is the time to celebrate. Don’t make the mistake of spending the money just because you have the property under contract. Problems happen, in real estate nothing is a sure thing. Lenders go out of business, people don’t fund, buyers lose jobs, inspectors don’t like the house, the list goes on and on.

So once your Hard Money Lender is paid off and your check is in hand it is time to celebrate. I like to set a goal when I originally purchase the property. Nothing crazy just something to represent the hard work, for example taking my wife to a really fancy restaurant, getting a new chair for the house or something small, but something you would not normally do. Don’t overdue it, be conservative. But do something fun and Celebrate. By the way, if by some slim chance Dale Begg-Smith sees this post, for the record, the world saw you smile when you crossed the finish line and congrats on the silver medal. I hope you took some time to celebrate!

Last Mogul Field

Once the second jump is done there is still a mogul field that cannot be overlooked. You can see the finish line right ahead but if you focus too much on the finish you will hit a Volkswagen size hump and fall over. This will ruin your chances of a finish let alone the hopes for a medal. This last mogul field is overlooked because it is a bit smaller than the others but it’s important – it will make or break the race.

This last mogul field for a real estate investor is finding the buyer. In reality if you have done everything else right up to this point finding the buyer should not be too difficult don’t spend the money until you have it in your hand. My philosophy is very simple. A. Be the 3% under the other comparable homes in the area B. List with a quality agent and don’t skimp on the Buyer agent commission. I would get a discount from the seller’s agent but make sure the buyer’s agent gets a full 3% commission. Make sure to put in your contract the amount that the buyer’s agent will receive. Most contracts just state the total commission that is paid. Create an addendum to the listing contract that shows exactly how much the buyer’s agent and seller’s agent will receive C. Have the house better than everyone elses. I don’t care what market you are in, if you are the lowest price house and the nicest home in the area you will sell, fast. That is the key. Sell Fast and get on to the next deal. There is a cost to hold the property, not just the cost of your money, but there is an opportunity cost on the next deal that you may miss, or something else you can do with the money. Holding the property also comes with risks. Too many investors think you can always start high and come down over time. This is stupid! Price for what the property is going to sell for. Too many investors think that some idiot from another state (like California) is going to come and pay more than what the property is worth. Price the property for what it is worth and then discount it 3% and you will have buyers coming. In some cases you will get more than the asking price because you may end up with multi offers. Yes you heard me right multi offers in this market place. The key is if you are the best home at the best price people will fight over it.

The Last Mogul field is easy if you have the right strategy and you don’t plan on a Jet engine to push you faster to the finish or plan on some idiot to over pay for your property.

Jump to Last Impression

The second jump is the last chance for the medal contender to make up for lost time by getting some distance or by throwing down a serious trick for some added points. Having a good knowledge of the race you have ran so far and how well you landed your first trick will help you.

Your Rehab needs to give people a reason to STOP the car. I used to think that outside landscaping did not sell a house. Boy was I wrong. If people don’t like the outside you will never get them in the inside. Now don’t overdue it! Again look around the neighborhood. You only need to be the same or a little better than you neighbor. I make up for this by doing little or nothing in the back yard. If they like the front yard and they like the inside they can do their own work to the back yard. You have to know when to throw down a serious trick and when to just go for the speed. This is a serious judgment call that can not be overlooked.

You don’t have a second chance to make a first impression. As a real estate investor you have to look at homes the way buyers do. Buyers are looking for the best home, for the lowest price in an area they are happy with. Although you may not think that you are in competition with homes in other areas you are wrong. Buyers are thinking am I willing to drive an extra 15 minutes to work if I can have double the size home? Or would we rather be in the city and have a smaller home but no commute. In being successful you need to look at what buyers are looking for in a home. Simply, you need to be the nicest home with the lowest price in your area and the home will sell. Homes sell every day and your home will sell if it is the lowest home and in the best condition.

Time Counts

Pick up the speed. After the first jump comes, the longest set of mogul’s begin. During this time contender’s focus on keeping their knees close together and increasing the speed without losing control. This is a difficult balance of control and lack of control.

When you are in the middle of your rehab you need to pick up the speed. You also need to keep things under control. Time is a Gold medal when it comes to Mogul Free Style skiing just like Time is Money when it comes to a Rehab and Retail Investment. Too many investors act like they have all the time in the world. You should have guys on top of guys in the home working. I can have an entire home completed in 30 days. Our average basic rehab takes 2 weeks. Our more detailed takes 30 days and on some occasions 45 days. Every day costs you money.

We set a completion deadline for all of our repair guys from carpet to paint and everything in-between. I like to give my repair guys a bonus for getting properties done before schedule. So we all agree on the completion deadline. I then look at the cost of my hard money per day. I then give 25% of my per day cost as a bonus if 100% of the property is completed in that time frame. And I mean 100% of my contracts say no leaky faucets, no loose screws, no door handles or cover plates off, 100% complete. In model home ready condition. If they go over the deadline they pay 50% of my per day hard money cost. For example if the per day hard money cost is $100. Then I give them a $25 per day bonus for early completion and a $50 per day penalty for not getting the work done. Why is there a difference? Because we all agreed on what the completion deadline can be. So anything before that is really a gift to the workers. Anything after that is really a cost to you as the investor.

Pick up the speed, time will cost you Gold in your pocket just like the lack of speed can cost a Mogul Freestyle skier a gold medal.