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It’s been a few weeks since I’ve been able to carve out the time to write about trends in the marketplace that are affecting or could affect private lenders and fix & flip investors.

2012 has been a banner year so far at DoHardMoney.com and my time has been eaten up by streamlining our business processes and systems along with training new employees as we expand to meet demand.

Which I’m pleased to announce that we have a new full time loan consultant who is handling the insane amount of applications we receive on a weekly basis.

There’s a lot to talk about with how the market has been increasing hard money loans, but I want to focus on an article I just read over at DSNews.com.

Realty Trac just released a report that shows short sales for January of 2012 are up 33% from the same month last year.  What’s even more interesting is that these short sales are selling at a 21% discount to homes that are in foreclosure.

And with the robo settlement a couple of months in the rear view mirror, the timeline to closing on short sales is rapidly shrinking.

All of this data has Daren Blomquist, VP of RealtyTrac and author of the report predicting, “…2012 could be a record year for short sales”.

Another interesting tidbit is that the amount of foreclosure proceedings initiated hasn’t been dropping in the slightest, with another 100,000 of them started in March.

So what we have here is a perfect storm for real estate investors (and those that fund loans for them).  It’s exactly what we are seeing in my office day in and day out.

It’s funny being in business because as soon as you fix one problem, there’s three more sitting right around the corner waiting for you to attend to.  And of course, there’s always “good” problems and “bad” problems…

… I have to admit that the majority I’ve been facing so far this year are in the “good” category.  The problem I had of being able to meet the demand of getting back to people who apply for loans from us has been solved.

Now I’m running into the problem of needing more investor capital to fund these loans!

The unique thing about our model is that we NEVER touch our investor’s money… all we do is underwrite deals and present them to our investor pool.  Then it’s up to the individual investor to decide if he/she wants to fund.

We schedule closing and give the investor wire instructions to the title company.  Then we fully service the loan.

It’s a win/win scenario for all parties involved.  Our current pool of investors is collectively earning upwards of 15% on loans they fund through us as well.

If your opportunity eyes have been piqued by this, what I’ve done is put together a detailed video that you can watch for free on the next page.

Click here to see the video

Assuming you feel this could be a good fit for you, you’ll be able to request a free meeting with me to discuss this further and answer any questions you might have.

That’s an interesting question which is being thrown around quite a bit lately.  I had a chance to read an article on this topic today over at Biggerpockets.com that was really interesting and I wanted to quickly share my thoughts regarding what the author discussed.

There’s approximately 100,000 monthly real estate transactions happening with cash right now – with the vast majority being done by investors.  And because these cash deals get big discounts many people feel this is driving housing prices down and repressing the the housing recovery.

First I want to point out that there’s huge opportunity in the fact that 100,000 transactions are happening with cash each month.  I can tell you with certainty that the bulk of these people aren’t doing these cash deals with their own dough.

Which means they need to get the private money from somewhere…

The second thing I wanted to point out is that I completely agree with the author in that cash buyers are fixing the problems with housing and once the inventory starts to run dry, prices will start to rise.

What really needs to be monitored is how long it will take for the inventory to be eaten up.  I predict that we’re looking at another 2-4 years tops before we are back to pre-recession inventory levels.

With the government’s plan to sell off their REO inventory soon, it may accelerate that time frame because they hold about 50% of the properties classified as REO right now!

You can take advantage of this trend and make a killing right now, without having to actually own any real estate…

My team and I have put together a short video that shows you how a select group of our clients are doing exactly that – getting returns of 16.78%… 18.17%… and even 22.33% having control of investment properties without any of the ownership risk.

You can check out this free video by clicking here

Hello and welcome to the second installment of this series where I am answering your most important questions about investing in real estate.

We had a great response to my test run last week, so I’m going to keep doing this as long as there are enough people that find value to it…

Last week we talked about hard loans and if a low interest rate was all you needed.   You can click that link to read the blog post if you missed it.

Today we are going to discuss a question that poses huge problems for many people trying to break into the real estate investing game.

“How can I find money to fund the repairs on fix and flips?”

We get anywhere from 250-300 loan applications each month.  The majority of these never get to closing because the potential borrower was mis-informed about how hard money lending works.

So let’s dig deeper into that for a moment so you have a good understanding.  Hard money lenders will only lend based on the after repaired value (ARV) of the property.  And the max any lender will go up to is 70% of the ARV.

That is the total amount they will lend for both purchase price and rehab costs.  Then on top of this, you need to have money to pay the points and fees on the loan at closing.

In order to get 100% financing for both the purchase price and rehab costs, you have to be buying a sweetheart of a property, where you are buying it at a low ARV.

And even if you are getting an awesome deal, the points and fees at closing are going to be at minimum $2000.  Most newbies don’t realize that they will need to come out of pocket at this point and they don’t have the cash to close.

The other situation is where people aren’t buying the property at a low enough ARV to get 100% financing.  They have a “gap” between what the hard money lender will give them and what they need to purchase and rehab the house.

The fallacy is that while yes, there is 100% financing available, it does NOT mean that you won’t have to put up any money out of your own pocket.

Well, I’m totally broke, what can I do?

Here’s a strategy that only the savviest of investors know about:  combining hard money lending with private money lending.

Usually the gap that investors need to cover isn’t very much.  What you can do is approach a family member, friend, etc. to stake a claim into your investment.  What they do is pony up the gap funding and get an appropriate percentage of the profits in return.

If you work this angle right and successfully complete your flip, you’ll have enough profits that you can go into your next deal with the cash you need to cover the gap yourself.  Then you won’t need to rely on private money lending any longer.

Another way to find private money lending sources is through the internet.  There are quite a few places out there that can connect you with a private investor who is willing to cover your gap.  Just be on the lookout for scams and make sure you understand the terms of your agreement.

Lastly, at DoHardMoney.com we are working on developing some relationships with people who specialize in gap funding to help our investors get deals closed.

We expect to be making some announcements about this after the first of next year.

I’m going to leave you with this final thought…

Funding isn’t the main problem that is keeping you from making it in real estate.  In fact, it’s simply a symptom of a much bigger problem.  A problem that will guarantee you never succeed in real estate if you don’t recognize it and do something about it right away.

I put together a video that uncovers this success killer:



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