Posts Categorized: Hard Money Tips

38% of Homes Bought in 2011 Were Bought With Cash

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In a study performed by Hanley Wood Market Intelligence, it was found that 38% of the homes purchased in 2011 were bought with all cash. This is slightly higher than 2010, during which 34% of all homes purchased were bought with cash. By comparison, only 19% of the homes purchased in 2006 were paid for with cash. There is a lot of speculation on the reason for the high percentage of all-cash purchases but one could easily arrive at the conclusion that much of the cause lies in the tight lending guidelines being used by the banks. It could also be caused by the volume…
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Why Buy During the Winter?

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Many people do not shop for houses during the winter because they have other things to do or because they don’t want to deal with bad weather while looking at houses. While this is understandable, it may cost you money if you fall into this category. Why? As we all know, prices are determined by the market. When there are more buyers, prices will tend to be higher. Conversely, when there are less buyers, prices tend to be lower. If you think about it, it makes sense that if no one else is competing with you for a house, you are more likely to get…
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Were You Improperly Harmed by a Foreclosure?

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There was an interesting article last week in the Santa Rosa Press Democrat that described actions that can be taken if you were harmed by an improperly handled foreclosure. If you qualify, you can request an independent foreclosure review. If the review finds that you were financially injured due to errors, misrepresentations or other deficiencies in the loan servicer’s procedures, you may entitled to receive compensation. There are specific requirements that must be met in order to be eligible so not everyone who lost a home in foreclosure will qualify. For starters, the loan servicer who handled it must be one specifically named on the…
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Loans for Foreign Nationals?

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private loans interest rates

We have been asked several times recently if we could do loans for foreign nationals. For some reason, this seems to be a hot topic. It is probably due to the lack of financing available for deals that fall outside the box that the bank loans must fit into. Combine that with the fact that there are a lot of people who have money and want to invest in real estate when it is at or near the bottom of the market and you have a need for things like this. Now to answer the question, yes, we can do loans for foreign nationals as…
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The Flexibility of Private Money

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private loans interest rates

Since most people are accustomed to conventional lending, they are surprised when they find out how flexible we can be on our underwriting of loans. Please don’t assume that we can do anything regardless of how bad the situation is. The deal still has to make sense. But this is the thing that separates us most from conventional lenders and banks. For example, banks want proof of where your down payment is coming from and how long you have had it. They also have restrictions on gifts for down payment. In many cases, if you receive a gift, you have to prove not only that…
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What About Owner Occupied Hard Money Loans?

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One of the most frequent questions we are asked is if we will do hard money loans for owner occupied homes. We only loan on owner occupied homes if the funds are specifically intended for business purposes. This means that the loan funds are used for a business need and not for a personal, family or household use. Examples include a loan to expand your business or a loan to put a business office in your residence. If you have checked around, you have undoubtedly found that most hard money lenders will not do owner occupied loans. Why is that? Mostly, it is because the…
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Is Credit Important When Getting a Hard Money Loan?

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You might think that because hard money loans have traditionally been equity based, no one should or would care about credit. While this is true sometimes, there are instances where credit does play a part in underwriting a hard money loan. For example, if there are two borrowers applying for similar loans and one of them has good credit while the other has bad credit, it is not uncommon for the one with good credit to get a slightly better interest rate and to get approved more quickly. Really, it depends on the investor who is going to provide the money for the loan. Some…
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When should you avoid a private money loan?

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The short answer is that you shouldn’t use private money when it doesn’t make sense, although that answer doesn’t really tell the whole story. To expand on that, there are various ways to figure out if private money will help or not. First, you need to run the numbers. This will tell you without any emotion whether it will make sense or not (and this applies to most financial transactions). If you are buying a property to rehab and flip, you have to know within a good degree of accuracy how much the entire project will cost and how much you can sell the property…
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Where is the real estate market going now?

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While no one knows the answer for sure, based on research I have done, I can say that I don’t think we will see much in the way of price changes in Sonoma County for the next few years. Some people say that we will have another big drop in prices but I don’t expect it. These people reference the number of new foreclosures that will hit the market and that there will be a flood of them. However, the banks don’t want to release a large number of properties all at once because it will devalue their inventory as well as devaluing the remaining…
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Hard Money Uses

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While most people who have anything to do with real estate have heard of hard money, there are still many who can’t imagine a use for it. Who can blame them? The rates and fees are higher than banks charge and they require a bigger down payment. So, why would anyone use it? Actually, there are many reasons. Maybe the property is in poor condition or has problems with permits. It could be that the borrower has bad credit or can’t prove income to the satisfaction of the bank. Regardless of the reason one would look for a hard money loan, there is a very…
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