Anyone Use Hard Money?

[notty2307]

I am looking at an auction property, and have kicked around the idea of using hard money, but have never done it. I have a friend (of a friend) who is loaded, and we pitched the concept of using his money on a couple of deals. He is very open to this, and I am pretty sure that he would go for it. I have been scouring the internet looking for a sample hard money contract that I can modify or at least take a look at, but can't find one. Does anyone know where I could find one, or does somebody have an example they could email me? Any help would be greatly appreciated!!

[waynelong]

Typically hard money is a loan on property valued well above the amount you need to borrow. As a lender he would just need a deed to secure debt or whatever you use in your state to secure a loan.
Most hard money lenders will lend up to 70% of the value not based on your credit but based on the value of the property. If they have to foreclose they have made 30% on the money or probably more like 20% because of the costs involved in foreclosure and resale.

[Ryan Ward]

I am not sure which state you are in as it matters how the promissory note will be drawn up. You should have a real estate attorney do this for you. A typical hard money loan will be simple interest only with a rate of around 15% and a balloon payment after 12 months. At least this is what I have seen. I have seen them go higher than 70%, but, you are asking for trouble with these guys as rates are higher. If your friend is willing to do this, the loan will be secured by the property and he will hold title as the lender until the loan has been paid. You may be able to negotiate a lower rate or higher ltv. If I were him, I might just by it myself as we all should by almost any property if we can get it at 70% of the value.

[Mike Colpitts]

Notty: There's a couple of questions you may want to ask yourself and talk over with your friend before you go the route of hard money, which is usually regarded as the last option or school of last resort for purchasing property. Hard money has been called "Loan To Own" for obvious reasons and is really the last option!

The first one might be: Could your friend get a conventional loan at a lower rate or could you to buy the property? The second question is What type of profit is there in this property and along with that is it profitable enough to pay the higher interest on the mortgage and still come out way ahead?

Whatever the case have an attorney draw up the agreement to handle it if you go the hard money route.

[jkirschenbaum]

Spam

[waynelong]

What are your terms??

[Sam Dodd]

You need an attorney.

[Jnazareno]

go to a Mortgage Broker, they will usually have a list of people with plenty of money..
if you're in the bay area maybe I can Lend you some hard cold $$

[moolah]

In many cases, the only viable alternative to using a hard money lender is to bring in an equity partner and give away a percentage of the deal. One needs to ask the question however; "Is the expensive funding worth it in order to save giving away a piece of our real estate or company?" The answer is inevitably a very simple ROI analysis that shows that in the long run, if there is a large capital growth component to the project, the cost of the hard money loan is far less expensive than sharing the expected EBITDA growth over the next two to three years with partners. On the other hand, having lived through a downturn in the market over the past few years, sponsors have to be very certain that their business plans will play out as expected so that the sale or refinance events take place to replace the expensive hard money loans. Many developers had to turn over the keys to their hard money lenders because their market expectations did not play out as expected. Caveat emptor - buyer beware.

[moni.james]

A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution.Hard money is great for beginning investors who may not have money or for those who have bad credit and cannot qualify. Investors also use hard money when they need to purchase quickly.
There are hundreds of hard money lenders waiting to lend you money. It could be your next door neighbor. The best way to find hard money lenders is to talk to a mortgage company and ask for referrals.You can also call a title company or a real estate agency. They deal with buyers and sellers of houses every day. Shop around until you find the best one that will fit your needs

Good Luck!!