the secrets of hard money made easy

THE SECRETS OF
HARD MONEY MADE EASY
THE SECRETS OF
HARD MONEY MADE EASY
Written by Merrill Kaliser, Esq.
City of Dallas, Texas
Co-authored by Michael Hoffman, Esq.
City of Dallas, Texas
SELF PUBLISHED
The Secrets of Hard Money Made Easy
THE SECRETS OF
HARD MONEY MADE EASY
© 2011 Merrill Kaliser and Michael Hoffman, City of Dallas,
Texas
All rights reserved. No part of this book may be
reproduced or transmitted in any form or by any means
without written permission from the authors.
The Secrets of Hard Money Made Easy
Table of Contents
Chapter 1: Hard Money Loans - What and Why?……………………5
Chapter 2: Who can be a Hard Money Lender?…………………….15
Chapter 3: Why do you want to be a Hard Money Lender?.......19
Chapter 4: How does a Hard Money Lender Analyze a Deal?…24
Chapter 5: Borrwer looks good and property looks good. What
next?............................................................................................32
Chapter 6: Servicing the Loan……………………………………….…….37
Chapter 7: Borrower defaults……………………………………….…..…40
Chapter 8: Should I be a Hard Money Lender or provide
money to a Hard Money Lender for a HML?..................42
The Secrets of Hard Money Made Easy
List of Illustrations
Exhibit 1………………………………………………………………………..6
Exhibit 2………………………………………………………………………10
Exhibit 3………………………………………………………………………13
Exhibit 4………………………………………………………………………29
Exhibit 5a…………………………………………………………………….30
Exhibit 5b…………………………………………………………………….30
Exhibit 6………………………………………………………………………34
The Secrets of Hard Money Made Easy
Introduction
This is a must read for anyone interested in creating passive
streams of income. It takes the mystery out of Hard Money
Lending and shows the reader how they can become a successful
lender themselves.
THE SECRETS OF
HARD MONEY MADE EASY
This book is a resource for anyone who wants to create truly
passive income from investments secured by real estate. The
authors, Merrill Kaliser and Michael Hoffman, are licensed
attorneys in the state of Texas, founders of a regional Hard Money
Lending company, owners of two title fee offices and they manage
a large real estate fund that purchases, rehabs and sells distressed
residential properties. In addition, they are mentors and teachers
with collective experience unparalleled in the Hard Money
Lending industry.
The reader will be treated to unique insights into Hard Money
Lending, and will learn about the pitfalls and the windfalls of the
lending business. This book is a supplement to the courses taught
by the authors. They teach their students how to generate a return
of 10-24% annually through Hard Money Lending
Your financial future, and the financial future of your family, can
dramatically change with a new way of approaching real estate
investing. That change begins here!
Lynn Andris
Real Estate Investor, Mentor, Radio Show Host;
and a mom who has changed the financial future of her family
with the insights, mentoring and advice provided by Merrill
Kaliser and Michael Hoffman.
The Secrets of Hard Money Made Easy
Contributors to this Book
Merrill L. Kaliser, Esq. –
Licensed attorney in the State of Texas; co-founder of Longhorn
III Investments, LLC (Hard Money Lender); co-operator of two
title fee offices in Texas (Dallas and Houston), co-manager of 3565
Texas Realty, LLC.
Merrill’s experience as a corporate, bankruptcy, commercial and
residential real estate attorney; coupled with his experience as a
Hard Money Lender and real estate investor, brings unique insight
to the analysis of Hard Money Lending. Merrill regularly speaks
on radio shows and provides monthly lectures to investors looking
for mentoring and education.
Michael L. Hoffman, Esq. –
Licensed attorney in the State of Texas; co-founder of Longhorn
III Investments, LLC (Hard Money Lender); co-operator of two
title fee offices in Texas (Dallas and Houston), co-manager of 3565
Texas Realty, LLC.
Michaels’s experience as a litigator and operating title fee offices,
coupled with his experience as a Hard Money Lender and real
estate investor, brings unique insight to the analysis of Hard
Money Lending.
4
Chapter 1:
Hard Money Loans – What and Why?


What are Hard Money Loans?
Why do we have Hard Money Lenders?
What is a Hard Money Loan?
Okay. You have heard (or maybe not) of the terms “Hard
Money Lender” or “Hard Money Loan”.
What is a Hard Money Lender?
What is a Hard Money Loan?
Why is it “hard”?
What does all of this mean?
Is there easy money out there?
Ironically, “Hard Money” is the easiest money to find and borrow.
This book will walk you through the step-by-step analysis a Hard
Money Lender uses when deciding to issue a Hard Money Loan.
First, a Hard Money Loan (“HML”) has been defined as “a
specific type of asset-based loan financing through which a
borrower receives funds secured by the value of a parcel of real
estate.” (Wikipedia). How is that any different from the financing
provided to you on the house you live in, your homestead?
Presumably, your home is not in distressed condition and is not as
much of a risk (if you ignore the last three years) to the banks.
HMLs are typically issued at much higher interest rates than
conventional loans and are primarily based on the future value of
the house rather than the current value of the distressed house.
This is asset based lending. Because the house is distressed, the
value (in the conventional lender’s mind) is more difficult to
calculate and the loan is perceived to be more speculative and
higher risk.
The Secrets of Hard Money Made Easy
A HML is generally based on the after-repair value (“ARV”)
of the house in contrast to the actual value (“AV”) of the house. A
conventional loan is typically based on the AV which is quite
simply defined as the value of the house “as is” at the time the loan
is made either using the contract price or an appraisal of
comparable houses.
The ARV, on the other hand, is calculated based on the
value of the house after the estimated repairs are made on the
property. This ARV is usually determined by an appraiser who
searches for comparables of similarly distressed properties that
have been rehabbed and sold in the same neighborhood within the
last 3 to 6 months. We will discuss the calculation of ARV later. As
you can see in Exhibit 1, there is a huge difference in the amount a
conventional lender will loan on a house versus that of a Hard
Money Lender, assuming that the conventional lender would even
entertain a loan on a distressed house.
Exhibit 1
Acquisition Cost of Asset
Rehab amout on Asset
Total Cost of Asset w/ Rehab
ARV of the Asset
Amount Lent
Amount out-of-pocket
$
$
$
$
$
$
Conventional Lender
50,000.00
20,000.00
70,000.00
100,000.00
35,000.00
(35,000.00)
$
$
$
$
$
$
Hard Money Lender
50,000.00
20,000.00
70,000.00
100,000.00
70,000.00
-
In Exhibit 1, our buyer finds a distressed home that is
listed for $50,000 and in need of approximately $20,000 of repair
work. After the anticipated repairs are made, the house should be
worth $100,000 (ARV). Assuming that a conventional lender
would loan on this distressed investment property, they would
most likely lend based on the actual purchase price. With the
typical conventional lenders, 70% - 75% loan to value formula, the
investor would only receive financing of $35,000 (70% of contract
price) vs. $70,000 (70% of ARV) from the typical Hard Money
Lender. Remember, to complete the house and sell it at
comparable market value the investor needs approximately
$70,000 (acquisition plus rehab). Yes, you are correct, the
6
investor will come out-of-pocket approximately $35,000 for the
deal in order to avoid higher interest and higher fees. We will
discuss later, in detail, what those higher interest rates and fees
are and how they affect the investor’s out-of-pocket expenses and
profit.
Why do we have Hard Money Lenders?
Now that we know the basic difference between a HML and
a conventional loan, we need to know who the hard money lenders
are. You probably already figured out that a conventional loan is
issued by a conventional lender, and a HML is issued by a …..
Hard Money Lender.
What is a Hard Money Lender?
A Hard Money Lender can be an individual, a self-directed
IRA, a group of individuals, a corporation, a limited liability
company, a business…the list goes on and on. None of these are
regulated depository institutions, except for the self-direct IRA
which is subject to its own set of rules and regulations. In reality, a
Hard Money Lender is anyone or any entity that is willing to loan
money based on a distressed house having a higher ARV in 3 to 6
months. To simplify, a Hard Money Lender is lending on the
future value of the house. Higher risk yields higher returns in the
mind of a Hard Money Lender. The novice investor may think a
Hard Money Loan has greater risk; however, we will dispel this
notion. This book, along with our courses, forms and due diligence
checklist will show you how to minimize risks and capture higher
returns.
Wow!! You should be nervous! We are telling you that a
federally insured bank will lend money to a startup company with
no real property as collateral (knowing approximately 2 in 10
startup companies fail in their first year); however, it will not lend
on a house that has a value (or future value) of at least 30% more
than the loan amount. Additionally, the HML will be personally
The Secrets of Hard Money Made Easy
guaranteed by the borrower (i.e., a “recourse” loan1). That’s right,
generally, conventional lenders will not lend on distressed
houses.2 That is one of the most important reasons why we have
Hard Money Lenders.
Another reason Hard Money Lenders exist, and in our
opinion the most important reason, is the investor/borrower. The
investor/borrower wants to pick up that distressed property, rehab
it and either flip it or rent it. The investor/borrower has contracted
to acquire the house at a discounted price, creating a large equity
spread between cost and ARV. This equity spread encourages
investors to seek out Hard Money Lenders for funding instead of
tying up significant amounts of their own money in one property
or using their own self-directed IRA as funding. This is called
“OPM”. OPM is a very technical term for “other people’s money.”
Many real estate investors have significant amounts of cash and
other resources, yet they still choose to use OPM. By using OPM,
you keep your cash for other investments, emergencies, college
education for your children, etc., in exchange for paying a higher
interest rate and additional fees.OPM is another way of saying I
am using someone else’s money to finance my investment
property.
Let’s recap:

We have told you that it is extremely difficult to find a
conventional lender that will loan on distressed properties.
1
A non-recourse loan means that the loan is not backed by a personal guaranty.
It should be noted that there are some Hard Money Lenders that issue loans
without requiring the personal guaranty of the borrower. These Hard Money
Lenders are strictly asset-based lending. We, on the other hand, lend on the
asset as well as the strength of the borrower financial wherewithal.
2
If you are an investor reading this book, you already know that conventional
lenders will not lend on distressed assets; otherwise, you would not have any
interest in learning about hard money lending.
8

We have told you that if you actually find a conventional
lender willing to loan, the loan will most likely be based on
the actual value.

We also mentioned that there are higher fees and interest
rates associated with Hard Money Loans.
However, we haven’t discussed what HML fees are and
how they affect your return on investment (“ROI”). Are the
interest rates really that high, and fees really excessive? Yes. This
book is written by brutally honest Hard Money Lenders. Facts are
facts, and we will share with you the average fees and expenses3
associated with a HML versus a conventional loan, and why smart
investors still choose hard money.
We will not discuss using your own cash instead of
financing because if you were interested in that you wouldn’t be
reading this book. However, a brief point on using your own cash
– OPPORTUNITY COST/LOSS. If you tie up $70,000 of your own
cash in a single house, you have decreased three fold your
potential returns. You could have leveraged that $70,000 on
several houses by using OPM.
Exhibit 2 – Conventional Loan versus a Hard Money Loan for a
Buy/Rehab/Flip
The Secrets of Hard Money Made Easy
Acqusition Cost
Rehab Cost
ARV
Conventional
Loan
$
50,000.00
$
20,000.00
$
100,000.00
Hard Money Loan
$
50,000.00
$
20,000.00
$
100,000.00
Loan Amount
Additioal Funds Needed for
Rehab/Acquisition
Interest Rate %
Closing Costs %
Closing Costs Dollar Amount
Interest Payments for 6 Months
Total Out-of-Pocket
$
35,000.00 $
70,000.00
$
35,000.00
6.5%
2.5%
875.00
1,137.50
37,012.50
14.0%
8.0%
5,600.00
4,900.00
10,500.00
Sales Price
Closing Costs (10%)
Gross
Less Loan Amount
Net
$
$
$
$
Net Less Total Out-of-Pocket
$
ROI Cash on Cash for Buy and Flip
$
$
$
100,000.00
10,000.00
90,000.00
55,000.00
$
$
$
$
$
$
$
$
100,000.00
10,000.00
90,000.00
20,000.00
17,987.50 $
9,500.00
48.60%
90.48%
Exhibit 2 is an example of the difference between a
conventional loan and a HML on a buy, rehab and flip investment.
In this example, our investor is buying a home for $50,000 and
needs to put $20,0003 into the house to be able to sell it for
$100,000. We show the basic fees and expenses associated with
each type of loan based on averages. For clarification purposes,
3
This does not include maintenance, ultilities and/or unanticipated overages on
rehabs that may occur. We know it may sound ludicrous that the actual rehab
amount may be more than the estimated rehab amount, but its true.
10
closing costs are points, fees and other expenses4. A “point” is
simply a percentage of the loan amount (i.e., 1 point on $70,000 is
equal to $700). In our example, the investor could qualify6 for
$70,000 in financing by using a Hard Money Lender (70% of
ARV) vs. $35,000 (70% of the acquisition price) with a
conventional lender (if they are willing to lend on this house). One
lender will lend $70,000 and the other will lend $35,000. Without
taking into consideration points, fees and interest, the investor
using the conventional lender will be out-of-pocket $35,000 in
order to rehab the house.
In this example, we assume the house will be rehabbed and
sold within six months. Remember, the interest rates are annual
interest rates. If our investor is holding the property for six
months, the interest paid on the loan amount is cut in half (3.25%
vs. 7%). In our example, the interest rate for the HML is a little
more than double the conventional rate, but the amount of the
loan is twice as high. The points and fees typically charged by
Hard Money Lenders are 4 points and $1,000 in administration
fees. There may also be an appraisal fee, inspection fee and survey
fee. We have rounded the points and fees to 8% of the loan
amount. If you add the interest payments, closing costs and outof-pocket cost for rehab, you are left with the “Total Out-ofPocket” cost. The Hard Money Loan is less than one-third of the
conventional loan when looking at total cash out-of-pocket for the
investor. The closing costs are typically 10%; 6% commission to
the agent plus seller’s concessions and title fees and costs5.
4
Expenses may include, administrative expenses, loan document preparation fees,
survey fee, appraisal fee, any applicable title fees and/or expenses.
5
It is very important to note that closing costs, when the investor is selling the
rehabbed property can vary greatly depending on the commission charged by
the listing agent to the percentage give, if any, to the buyer as seller’s
concessions. We have seen closing costs range from 5% to 13%. It is critical to
the investor/borrower (as well as the Hard Money Lender if you have to take the
property back) to have your listing agent lined up prior to acquiring your asset so
that you will know what the commissions will or should be when making your
analysis to go forward with a deal.
The Secrets of Hard Money Made Easy
The bottom line is the return on investment. This is the
investors report card. In this example, our investor’s return on
investment is almost 2 times greater using a hard money loan.
They benefit by using 1/3 of the amount of cash that would be
needed for a conventional loan.
Let’s recap.

The investor/borrower can make twice as much profit on
every dollar she puts into the subject property using a Hard
Money Loan.

Our Investor used about 1/3 of her cash to buy and flip a
house by utilizing a Hard Money Lender.

Our Investor could have purchased three homes (assuming
same costs and expenses) and would still use less cash than
an investor purchasing just one house with conventional
funds, with a return of $28,500 (3 times $9,500) on
approximately $31,500 in total out-of-pocket.6
That’s right, the investor can use $6,000 less to make $10,500
more in profit on essentially the same cash7.
6
Keep in mind that we are not factoring in any carrying costs (excluding interest
payments) associated with the home or overages on rehab. These numbers
would be the same whether an investor used conventional financing or a HML.
The Closing Costs are a little greater than actual closing costs to cover carrying
costs during the 6 month period.
7
We are telling you from the borrower/investor’s perspective, she has the ability
to spread her risk on her $35,000 in the example above over three properties
versus one by using a Hard Money Lender. From the Hard Money Lender’s
perspective, the borrower has put 8% plus of her own money down, has
rehabbed the property such that the property has an ARV that give the Hard
Money Lender a 30% cushion if it has to foreclose and take the property back. If
the proper due diligence is followed, this becomes a win-win for both the
borrower and the Hard Money Lender.
12
In the example above, we have presumed that the
borrower/investor is buying, rehabbing and flipping the property.
Below is an example of the conventional loan versus a Hard
Money Loan in the buy, rehab and rent scenario.
Exhibit 3
Acqusition Cost
Rehab Cost
ARV
$
$
$
50,000.00 $
20,000.00 $
100,000.00 $
50,000.00
20,000.00
100,000.00
Loan Amount
Additioal Funds Needed for
Rehab/Acquisition
Interest Rate %
Closing Costs %
Closing Costs Dollar Amount
Interest Payments for 6 Months
Total Out-of-Pocket
$
35,000.00 $
70,000.00
$
35,000.00
6.5%
2.5%
875.00
1,137.50
37,012.50
14.0%
8.0%
5,600.00
4,900.00
10,500.00
$
$
$
ARV
$
Closing Costs to refi (2.5%)
$
Amount Refinanced (Assuming 6.5%
and assuming the conventional
could be refinanced)
$
$
$
$
$
100,000.00 $
1,750.00 $
100,000.00
1,750.00
70,000.00 $
70,000.00
Cash Out (Assuming this is possible)
$
35,000.00 $
Net Less Total Out-of-Pocket
$
3,762.50 $
12,250.00
In Exhibit 3, we demonstrate the costs and expenses
associated with a conventional loan on AV and a HML on ARV.
The example assumes that the conventional loan on AV will be
refinanced in six months on ARV and (a big “and”) the borrower
receives a “cash out” of up to 70% of the ARV less the original loan
amount (i.e., $35,000). Given these assumptions, at the end of the
six month period our investor would be out-of-pocket about
$8,500 less than if they went to the Hard Money Lender.
Remember, that is at the end of 6 months. If our
investor/borrower did not have $35,000+ in cash to pay for their
The Secrets of Hard Money Made Easy
rehab and remaining acquisition costs, they would only be able to
do the HML. Another way, from the investor/borrower’s
standpoint is to tie up $37,000 in the property for six months with
a conventional loan, while our investor/borrower who chose to go
with the Hard Money Lender only tied up $10,500. If other great
opportunities on distressed properties occurred during that time
frame, the investor/borrower that went with the conventional
lender would have missed opportunities unless they had an
additional $35,000+ to put down on each deal.
We cannot stress enough that the likelihood of finding a
conventional lender to lend on distressed houses is practically nil.
Further, the likelihood of a conventional lender allowing a
refinance on the investment property in six months without a prepayment penalty may be slim, as is finding another conventional
lender that will allow you a “cash-out”. If our investor/borrower is
able to find conventional lenders that can facilitate these
transactions, they should use them and send us their contact
information so that we can use them as well!
Finally, while we have provided financial and leverage
scenarios to demonstrate why smart investor/borrowers choose
Hard Money Lenders over conventional lenders; another reason is
time. The time it takes to get lender approval and actually loan
money to our investors/borrowers to acquire a home will make or
break a deal. Many times, the only leverage that an
investor/borrower has when making an offer to a seller is the
promise of closing the transaction within 3-5 days after the option
period (if one even exists). There are few, if any, conventional
lenders that can do this. Not every Hard Money Lender has the
ability to close a transaction in 3 – 5 days; however, our company
can and we know a few of our competitors can as well. This ability
gives our investor/borrower leverage with the seller. If the seller is
aware that our investor/borrower is pre-approved with a reputable
Hard Money Lender and can close in 3 – 5 days, the likelihood of
obtaining a lower acquisition price on the subject house is much
greater. The lower the price, the greater the potential equity for
14
our investor/borrower and the collateral for the Hard Money
Lender.
The Secrets of Hard Money Made Easy
Chapter 2:
Who can be a Hard Money Lender?


Individuals
Companies
Individuals can be Hard Money Lenders
In Chapter 1, we discussed what a HML is and the
differences between Hard Money Lenders and conventional
lenders. Anyone over the age of eighteen can become a Hard
Money Lender. Yes, this book leans towards the legal confines of
Hard Money Lending in Texas and the laws and regulations of
other states may differ. Generally, lending on an investment
house that is not used for homestead purposes by the borrower
may be done by anyone, subject to the legal requirements of the
state in which the house is located.
John, a 19 year-old college student who has $70,000 in his
savings account from either his parents for college tuition or from
mowing lots of lawns for investors with rental properties, can be a
Hard Money Lender. There is no magic number with respect to the
amount of money a Hard Money Lender needs to have, other than
having enough to fund the loan that the he has promised to make.
The example we use throughout this book, of a $70,000 home
(acquisition and rehab costs) with an ARV of $100,000 is our
average loan.. We know of individuals that provide $10,000 HMLs
and individuals that will loan $1,000,000+. The amount of money
an individual is willing to loan should be based on the amount of
money that individual can afford to give up access to for 6 to 9
(possibly longer) months, in conjunction with risk tolerance and
the level of due diligence they are willing to do on the
16
investor/borrower and the subject house. Currently, in the state of
Texas, individuals who are Hard Money Lenders are not regulated,
provided that they are not lending on homestead property.8
If it is that easy, why isn’t everyone who has cash sitting in money
markets and/or CDs acting as a hard money lender? That’s why
you are reading this book or have purchased our education and
mentoring programs, you are beginning to see the possibilities.
The truthful answer is that it is not that easy if you want to make
sure that you have minimized all of the possible risks. Most
individuals, who are not involved in real estate investing, don’t
have the time, knowledge or inclination to become a Hard Money
Lender (present company included several years ago). Okay, one
more time, the more risk adverse you are, the more due diligence
and criteria you will require on a HML (more work). The less risk
adverse you are, the less due diligence (i.e., less work); however,
the greater chances of defaults, foreclosures, etc.
Many of you may be older than 19, and have 401Ks or
IRAs. Most 401Ks and IRAs will not allow you to lend on
residential real estate because that investment is not part of the
trustee’s investment portfolio. When you put your retirement
money with a 401K or IRA they will only let you invest in their
investment portfolio. Bottom line, if they don’t make money off of
your money, you can't do it. This is where the self-directed IRA
comes in. A self directed IRA gives you more freedom to invest
your retirement saving as you see fit. Many allow for a wide variety
of investments including HMLs. We do not promote any
companies (other than our own) in this book; however, there are
two very good national companies that will convert your IRA to a
self-directed IRA. If you want more information about these
companies, please contact us.
8
Notwithstanding what we just stated, ALL LOANS will be subject to applicable
usury laws in your state and you are strongly encouraged to consult with an
attorney as to the usury rate and how usury is calculated in your state.
The Secrets of Hard Money Made Easy
Companies can be Hard Money Lenders
Companies may also be Hard Money Lenders. In fact,
without giving legal advice whatsoever, we prefer companies especially limited liability companies ("LLC"). Having a company
as a Hard Money Lender provides the legal protections of a
corporate structure (remember, we said this is NOT legal advice).
Another reason why people prefer to use corporate
structures such as limited liability companies, is for pooling funds.
Often, individuals will only have $10,000 or $15,000 available for
an investment. By pooling 5 individuals, each with $15,000, you
can form a corporation and lend out $74,00019. No, $15,000
times 5 is not $75,000. We are doing lawyer math here. Don’t
forget that you have to pay your attorney $1,000 plus to set up the
corporation or limited liability company. Just making sure that
you haven’t fallen asleep yet, we are only on page 8.
In our business we use a couple of corporate entities, our
investors use corporate entities and most of our competitors use
corporate entities. We all have different lawyers advising us, and
have arrived at the same business structure. Are we on the same
page? There are legal protections and tax benefits that heavily
favor using a corporate entity, instead of an individual, for Hard
Money Lending. Take that same example of John, who is 19, and
has more money than he needs. John can meet with an attorney
and spend $500-1,000 and form John, LLC and use his limited
liability company to lend $69,000 as a HML. That’s right, John
better find a borrower who only needs $69,000 instead of
$70,000 or else he may have potential legal problems with the
borrower.
This probably goes without saying, but we are going to say
it. DO NOT PROMISE TO LEND A BORROWER AN AMOUNT
OF MONEY THAT YOU DON’T HAVE! We really shouldn’t have
to explain this statement. Don’t do it. If you don’t have it, don’t
9
It is important to note that pooling of investors and/or solicitation of investors
to purchase securities may subject you to various state and federal requirements.
18
lend it. There will be a high probability that you will be the subject
of a lawsuit and be paying for your attorney’s children’s private
school.
Now, you know that you as an individual or you as an
entity, or part of an entity, can be a Hard Money Lender. Do you
want to know how much money you can make being a Hard
Money Lender? Your returns are dependent upon the state that
you live in, or the state that your lending entity is located in.
Please check with your local attorney for advice on the amount of
interest and fees that you can legally charge a borrower.
The Secrets of Hard Money Made Easy
Chapter 3:
Why do you want to be a Hard Money
Lender?


10-24% passive annual income
Do I have to do all the work or can someone else
do the work for me?
10 – 24% passive annual income
Why do you want to be a Hard Money Lender? If your
answer is that you don’t; you are lying. You would not have picked
up this book if you didn’t have interest in Hard Money Lending.
The truth is that we all want 10-24% passive income. If you can
turn $100,000 into $110,000 -$124,000 vs. $102,000 with a CD
or Money Market account you will, or you should, really want to be
a Hard Money Lender. Is it really “passive”? Not really; you will
still have to do some amount of work, or you will have to give up a
portion of that “passive” income to pay someone else to do the
work. If after reading this short book, you decide that you would
rather give your $100,000 to a bank that will loan to the startup
company that will most likely fail while paying you up to 1.5%
annually to hold your money and borrow against it, please contact
us and enlighten us on that decision.
Back to the good stuff - 10-24%. Why 10-24%? Why not?
These are arbitrary numbers. If you really want to go out and loan
5% as a Hard Money Lender, then do it. You will be the most
popular guy in the room until that $69,000 (this is just a number,
you might lend out $500,000) is gone. Then the smart guy sitting
20
next to you stands up at the investment club and offers loans at
13%. He is now the most popular guy in the room. Do you know
why? That’s right, he is the next person willing to lend on a
distressed house that no bank will touch. The investors in that
room are looking for properties with 20-40% equity after rehab
and acquisition costs, and they really don’t care what the interest
rate is because using a HML increases their overall ROI.
How do you get 24% passive income (i.e., interest on your
money)? If you are in Texas, you probably can't. Most authorities
believe that 24% is usurious on these types of loans. However,
there are some states that allow up to 24% interest on HMLs. The
typical interest rates on hard money loans in Texas are between
13% and 16.99%.
How is this passive income? It is passive income after you
make the loan. You don’t have to do anything assuming that you
did all of your due diligence and the borrower refinances or sells
the property prior to the maturity date on the note. You sit back
and collect your monthly interest only payments until the maturity
date of the note. Sound too good to be true? Technically, if you
follow the steps in this book, or our seminar, you would have spent
significant time performing your due diligence on the individual
borrower and on the property prior to making a loan. After, and
only after, analyzing the due diligence and assessing the risks,
would you make the loan. Then you can sit back in your electric
media room chair watching your favorite sporting event,or you can
figure out a way to make your next hard money loan!
Do I need to do all of the work or can someone else do it for me?
Guys and gals, don’t misunderstand us. You cannot receive
all the passive income without first doing some work. Many of you
will not want to do the work to get the passive income. That’s okay,
we can help you with this. Yes, here comes the plug for corporate
Hard Money Lenders. You can always place your money with a
reputable Hard Money Lender and have them perform the due
diligence.
Notice that we use the word place. There is a significant
different between investing in a company that issues hard money
loans and being the actual lender servicing the hard money loans.
While we will not provide the detailed legal analysis in this book,
The Secrets of Hard Money Made Easy
we can state that an investment in a company is simply an equity
interest and that equity interest gets wiped out if the company
does not do well – just like purchasing stock. On the other hand,
acting as a lender through a corporate Hard Money Lender, your
money is secured by a first position on the deed. The Hard Money
Lender (servicer) should perform all of the due diligence on the
borrower and the property, services the note, manages the rehab
escrow and takes care of most of the other issues that could arise
whether you are the actual lender or you have purchased a
membership interest in a company that is a lender.
It is possible, and probable, that the Hard Money Lender
will only provide you with a 10-12% return on your cash, but they
are doing all of the work for you. Further on in this book we will
discuss in detail all of the due diligence that should be analyzed
prior to making the HML so that you can decide whether you want
to do it on your own, or use a Hard Money Lender to provide the
due diligence and all of the servicing on the note.
Are most Hard Money Lenders the same? Good question,
who asked that? The answer is unequivocally, “no”. Be very careful
if you choose a Hard Money Lender to do the leg work for you. Not
all Hard Money Lenders are the same and not all Hard Money
Lenders are structured the same way. You should have two
primary concerns when choosing a Hard Money Lender.
First, the rate of return for the use of your cash. Everyone
wants the highest rate of return, but remember “pigs get greedy
and hogs get slaughtered”. We are not talking about breakfast
here, we are talking about maximizing the return on your
investment while minimizing the risks. Not all Hard Money
Lenders that provide a 14% return or higher on your money are
riskier than those providing a 10% return. In contrast, do not
assume that a company paying you 10% on your money is doing
any more to minimize your risks than the company that pays 14%.
Do your own due diligence on these companies (this whole due
diligence thing is starting to sound like a broken record player).
Second, you should be asking yourself, “how is the
company structured with respect to your investment?” Are you a
22
member in the company’s limited liability company (“LLC”) or a
shareholder in their corporation? If something happens to the LLC
or the corporation, your money is gone. That’s right, gone! Yes,
you can sue the company and file a claim when they are in
bankruptcy, however, remember, you are equity (an owner of a
piece of a company like a share of stock and your stock will be
worth the same as the shareholder’s of Enron) not a lender whose
interest is secured by a hard asset.
Other Hard Money Lenders are structured differently,they
merely act as a broker for your money and provide all of the due
diligence and the servicing. You are not investing in the company,
rather you are the direct lender on the loan and the Hard Money
Lender is putting the transaction together and performing all of
the due diligence. Why would the Hard Money Lender want to do
this for you? Money, money and more money. The Hard Money
Lender charges the borrower points and fees to cover the costs of
analyzing the borrower’s financials, the property and the
borrower’s exit strategy.
In other words, John comes to us (I mean the Hard Money
Lender) and says, “here is my $70,000 to put towards a hard
money loan.” John is told that he will be the lender on a loan that
has a 14% annual interest rate and a maturity date of 6 months.
Simply stated; John will make 1.17% per month, each month, until
the maturity date of the note. On the maturity date, John will
receive his principal back from the borrower (hopefully). But wait,
there’s more. John is the actual lender, meaning that John has the
lien on the property and is the payee on the note, not the Hard
Money Lender. If something happens to the Hard Money Lender,
John’s lien and note are unaffected. Starting to sound like an
infomercial yet? If you act now, the Hard Money Lender will do all
of the due diligence, facilitate the closing, and throw in free
servicing to ensure that payments are made promptly and timely
all for the very low price of 4 points and $1,000 in admin fees paid
by the borrower– no cost to you!
Awesome! Where do you sign up? Remember what we said
earlier, do your due diligence on your Hard Money Lender. Not
every Hard Money Lender was created equal. A few, like the
authors of this book (sorry, did it again - shameless plug), actually
provide all of those services at no cost to you. You could, however,
The Secrets of Hard Money Made Easy
opt to do your own due diligence and servicing and charge 18%
and no points to the borrower or charge them a certain interest
rate and points. If you become a Hard Money Lender on your own
be very careful with usury and consult your attorney for the
calculations of total annual percentage rates for your state.
Don't worry, you don’t have to make a decision yet. More
details are coming on the due diligence, servicing and resolutions
to good loans gone bad (no, this is not a Spring Break video).
24
Chapter 4:
How does a Hard Money Lender analyze
a deal?

Analyzing the Individual
 Financials
 Credit Score
 Employment History
 Cash Reserves
 Rental properties owned
 Foreclosure/Bankruptcy History

Analyzing the Property
 Executed Contract
 Rehab Estimate
 Comps (Sales/Rental)
 Location
 Loan to Own


Loan to ARV Ratio
Exit Strategy of the Borrower
Analyzing the Individual
While some Hard Money Lender’s solely look at HMLs as
asset-based loans and the “loan to own” approach; we’re different.
It is true, that ultimately, the most important item to analyze is the
property. However, we also analyze the borrower. This is
The Secrets of Hard Money Made Easy
especially important if the borrower is seeking to refinance the
asset after rehab.10
Currentlyseventy-five percent (75%) of our borrowers are
purchasing properties to rehab and rent versus rehab and re-sell.
If the borrower is rehabbing and renting, then the borrower will be
seeking conventional “take-out” financing or refinancing to
replace the higher interest HML. It is very important to
understand the conventional lender’s requirements for refinancing
the HML. We take the approach that every borrower will be
refinancing; therefore, we look at the borrower’s financials and
credit worthiness as well as the house.
The first thing that we do is have the borrower fill out a
1003 application. This is an application requesting the borrower’s
financial information as well as authorization to run a credit
report on the borrower. Upon receipt of the signed 1003
application (it is very important that the application is signed), we
pull credit through a credit reporting service that provides us with
three credit scores and a report on the prospective borrower. Our
minimum mid-score16 credit requirement is a 650.
Assuming that the borrower has a 650 mid-score or higher,
we then look at the borrower’s financials. We look at employment
history, lengthy of employment with current company and cash
reserves. The borrower’s cash on hand is the second most
important item in qualifying for a loan. We want to make sure that
the borrower has at least six months of interest payments sitting in
a cash or money market account. The obvious reason for this
requirement is the borrower’s ability to service the interest
payments.
10
Remember that the borrower should be able to refinance with a conventional
loan once the property is rehabbed and rented; provided that her credit and
financials meet the conventional lender’s requirements.
26
Many of our borrowers have multiple rental properties
which are disclosed on the 1003 application. We review their
rental properties for cash flow issues. For example: if a borrower
has three rental properties and the total monthly debt service is
$2,000 and the total monthly rent collected is $1,800, then we will
verify that there is significant cash on hand to cover the negative
cash flow on the properties and the interest payments on the
proposed HML.
Finally, if there has been a bankruptcy or foreclosure in the
last three years, we simply pass on the loan. It is important to
understand that there are Hard Money Lenders out there who are
not concerned with bankruptcies or foreclosures. They are strictly
loan to own. They only look at the property and ask, "If I have to
foreclose on the property would Iwant it?" Don’t misunderstand
us, we look at properties the same way (as you will see below);
however, we don’t want the borrowers thinking that this is a viable
option. At the end of the day, taking back the property and trying
to sell it takes time and during this time there are no interest
payments creating passive streams of income.
To recap,
 as a Hard Money Lender, it is very important to review the
borrower’s financial wherewithal as if you were the
conventional bank providing a refinance on the property. If
the borrower cannot qualify for refinancing on the property
today, it is unlikely they will be able to qualify in six
months.
Analyzing the Property
Here comes the fun part, “how to analyze a property.”
Location, location, location!! You hear that every day regarding
real estate. The location and condition of the property is
everything. Yes, you have to analyze the property as a “loan to
own” property. The goal should not be to take the property back;
however, if you have to take the property back, you want to make
some money on the foreclosure or deed in lieu (which we will
discuss later).
The Secrets of Hard Money Made Easy
Sometimes it will be painfully obvious, when you see pictures of
the property combined with the rehab estimate, that the project is
too big. Our general rule of thumb is that we are not in the
business of construction loans (i.e., if the rehab is more than 40%
of the acquisition cost, we are generally going to pass on the
property).
First, you want to see a copy of the executed contract so
that you know what the acquisition cost of the property is. Make
sure that you ask for any amendments to the contract as well.
Often the price is reduced after a rehab and you don’t want to be in
a position where you are loaning too much money on the house.
Second, have the borrower send you a detailed rehab
estimate. You don’t want the borrower to eyeball the property and
give you paint, flooring and roof totaling $20,000. It is important
to have an insured rehab company or general contractor provide a
detailed rehab estimate. Included with the rehab estimate should
be a proof of the rehabber’s insurance. If you are unfamiliar with
the rehabber, ask for references and pictures. Then check them
out! This is your money that you are loaning out and if you “loan
to own,” you want to insure that a quality rehab is performed
(there is a discussion pertaining to inspections coming up that
helps insure that the rehab is performed properly. Another reason
that a detailed rehab estimate is so important is that the estimate
will be given to the appraiser to assist the appraiser’s job of
determining the ARV - the number that you will base the HML
on). We have provided a sample of what a rehab estimate might
look like in Exhibit 4.
28
Some rehab estimates are substantially more detailed than
our example; however, Exhibit 4 provides enough detailed
information for the appraiser to see what will be completed on the
property and gives him the ability to run true comparables of ARV
to determine what the property should sell for after the repairs
have been completed. It is important to note, that the appraiser
may request a breakdown of the repairs in order to provide a more
accurate ARV appraisal.
Third, comparable sales and rents need to be reviewed
closely. Comparable sales and rents help to determine whether the
property is in a good location and whether the property is being
offered at a price that allows the borrower to realize a profit based
on purchase price and rehab costs. If the borrower’s exit strategy is
to flip the property, a red flag should pop up if the average days on
market for sales in the subject property’s neighborhood is over 100
days. It doesn’t necessarily mean that it is not a good property, but
it requires more due diligence. There could be 35% in equity and
the borrower may be selling the property at 10-15% below
comparable sales (“comps”). When reviewing rental comps, you
want to look for two things: (i) the days on market (the number of
days it takes from listing the property until leasing the property);
and (ii) the $ per square foot for rental price ($.87 per square foot
on a 1,000 square foot property should give you a rental comp of
$870 per month). We have provided some sample sales comps and
rental comps below for the same subject property.
The Secrets of Hard Money Made Easy
Exhibit 5A
Exhibit 5B
30
It is very important that you know how to read comps. If
these comps are for the subject property 614 Lynne with 1,836
square feet, then we need to analyze the numbers to determine
what comparable rehabbed properties have sold for $ per square
foot (“$/SF”) as well as days on market (“DOM”). When you see
comps that show properties sold at a substantially lower $/SF than
others, ask for the actual listings on those properties to see if they
are rehabbed properties or distressed properties sold “as is”.
Assuming that all of the comps in Exhibit 5A are rehabbed comps
(we would probably exclude the comp that has a pool), then take
the average $/SF sale of approximately $63 per square foot. Take
$63 times 1,836 (the square feet of the subject property) and you
can estimate the ARV at approximately $115,668.11 If the Hard
Money Lender is going to lend 70% of ARV, the approximate loan
would be $81,000 (subject to the actual appraisal). This gives the
Hard Money Lender an idea of how much to lend on this property.
With respect to the “loan to own” mentality, we (as the
Hard Money Lender) would want to know what type of rents this
property could get as well. Take the 1,836 square feet times the
average $/SF of $.67 and we have an estimated rent of $1,230
(round down to $1,200 per month).These are guidelines, prior to
seeing the actual appraisal, that assist Hard Money Lenders in
their decision to move forward on a particular property.
Loan to Value Ratio
The loan to ARV ratio is an arbitrary number. Because our
analysis includes the evaluation of the borrower, we typically will
lend at a 70% loan to ARV; provided, that (i) the acquisition costs
and rehab equal or exceed 70% (i.e., we will not lend more than
the acquisition cost and rehab cost); and (ii) we will not roll
closing costs (points, fees, expenses, etc.) into the loan amount.
11
Note that this is not the appraiser’s final number. This gives the Hard
Money Lender a ballpark idea prior to moving to the next step and
sending the property to the appraiser.
The Secrets of Hard Money Made Easy
Some Hard Money Lenders, that “loan to own” may lend at
50%- 60% of ARV because there is a higher risk of default when
they do not analyze the borrower’s financial warewithal. Other
lenders, may loan between 50-70% of ARV if the borrower’s credit
score is below 650 but above 600. The loan amount really depends
on the risk tolerance level. If you have a borrower with a 450
credit score and a property in a bad location with average DOM of
200, then we would suggest going to Las Vegas instead. There will
probably be better odds of making a return on your money there.
32
Chapter 5:
Borrower looks good and property looks
good. What next?






Financing Proposal to the Borrower
Find an appraiser and get the ARV ASAP
 Revise Financing Proposal if necessary
What does the title commitment say?
Have your Attorney prepare the Loan Docs
 Which loan documents should you need and
what is the purpose of each document?
Send Documents to Title Company
Once you receive a copy of the Executed
Documents you are ready to fund
Financing Proposal
We have pre-approved the borrower and pre-approved the
property. What are the next steps? It is time to send the borrower
a financing proposal. Remember, this is just a proposal and
subject to change. The financing proposal does provide the
borrower with an estimate of how much you are willing to lend
and what the expected fees, expenses and down payment are.
Exhibit 6 is a typical example of a financing proposal.
The Secrets of Hard Money Made Easy
Exhibit 6
34
This particular financing proposal does not have a rehab request
because the borrower is funding the rehab repairs with their own
money. Once the financing proposal has been signed, it is time to
forward all of the property information to the appraiser for an
ARV appraisal.
Appraiser
As a Hard Money Lender, you want a professional to
confirm the ARV of the house. Find a good licensed appraiser or
two (preferably one with good references and used by other Hard
Money Lenders and/or conventional banks) and send the contract
and the rehab estimate along with information giving the
appraiser access to the property. Once you have received the
appraisal, review it and determine if the ARV is higher or lower
than what is on the financing proposal. For example, if the
appraisal on the property in Exhibit 6 came back at $120,000
(unlikely if you have followed all of the steps that we have laid
out), you would adjust the loan amount to $84,000 as well as the
amount of the points.
Title Commitment
Most lenders and borrowers just glance over the title
commitment issued by the title company.18 You want to look at the
loan amount that is being insured as well as all of the items on
Schedules B and C. These are important because these items
reference liens, restrictions, covenants, etc. that run with the
property and which may have priority over your deed of trust. If
you are uncertain regarding any item on Schedules B or C, you
should contact your attorney or the escrow officer preparing the
title commitment for a detailed explanation.
In the majority of cases, a good title company will inform12
you over encumbrances, liens, etc., that need to be resolved prior
to issuing clean title.
12
Not every title company will do this. Many just send the title commitment and
you are out of luck if you miss a lien or encumbrance and they issue title around
that. We know from experience.
The Secrets of Hard Money Made Easy
Loan Documents
You have the signed financing proposal, the appraisal and
clean title from the title company, correct? Now, it is time for the
attorneys to protect your investment. Here is where we diverge
slightly and lean towards our good friends in Texas. If you are
reading this book and are lending money outside of Texas on
properties outside of Texas, then you should seek legal advice from
an attorney licensed in the state where the property is located
regarding documents to best protect your investment.
With respect to Texas (again, we are not providing legal
advice here), we recommend, at a minimum, the following
documents:








Affidavit and Designation of Commercial Property
Borrower’s Closing Certificate
Deed of Trust
Escrow Agreement
Lender’s Instructions to the Title Company
Notice from Lender’s Attorney to Borrower
Promissory Note
Warranty Deed
This is the standard loan document package that many
Hard Money Lenders use. The purpose of these documents is to
provide evidence that secures the Hard Money Lender’s first lien
position on the property. The Affidavit and Designation of
Commercial Property is to protect the Hard Money Lender in the
event that the borrower files bankruptcy and tries to claim the
property as her homestead. The promissory note should be selfexplanatory.
36
The Escrow Agreement is a very important document if the
borrower is borrowing money for rehab on top of the acquisition
cost. Generally, you are not going to feel warm and fuzzy giving the
borrower all of his $20,000 rehab money at closing. A Hard
Money Lender should structure this like a construction loan. As
repairs are completed, the borrower sends a draw request to the
Hard Money Lender. The Hard Money Lender forwards the
request to an inspector who then inspects the property to verify
that those particular repairs have been made. Upon verification,
the Hard Money Lender will cut a check from the escrowed rehab
account to cover the draw requests; providedt hat the draw request
is not more than the amount in rehab escrow. For a more detailed
explanation of the standard loan documents, feel free to contact us
or your attorney.
Once the loan documents have been prepared, they need to
be sent to the title company along with instructions that specify
what fees and expenses are to be paid for by the borrower and how
much money will be held back if there is any rehab financing. The
rehab holdback, or escrow amount, is set forth in the escrow
agreement.
After the title company has received the loan documents, it
will update the HUD and schedule a closing. A Hard Money
Lender should not fund money on a closing until the title company
has sent the Hard Money Lender a copy of the signed and
notarized loan documents. Again, DO NOT FUND until you see
those signed documents. Technically, the title company can hold
your money in escrow until the documents are signed; however,
we generally do not fund until we have signed loan documents.
The Secrets of Hard Money Made Easy
Chapter 6:
Servicing the Loan


Calendar Reminders/Payment Coupons
Maturity Date – what to do?
 Borrower Refinancing
 Extensions
Servicing the Loan
The loan has been funded and the borrower has started
their rehab on the property. Between now and the time the
property is sold or refinanced, there are two things to be
concerned about (assuming it is not hurricane season): (i) timely
receipt of payments; and (ii) rehab draw payments.
Timely receipt of payments is crucial. For most Hard
Money Lenders, the term on the promissory note will between 6 –
12 months with the first payment received 30 days after closing on
the loan. Your promissory note should set forth the date upon
which the interest payments are made. Guess what, 95% of the
borrowers will never read the note and forget to make their
payments. You can refresh the borrower’s memory in a couple of
ways by providing (i) payment coupons; (ii) email reminders or
(iii) Outlook calendar reminders for the recurring payments.
If these reminders are, shall we say, “unsuccessful”, then
you will need to refer to the loan documents to determine what
type of notice should be sent to the borrower for their tardiness or
missed payment.
The other item to be wary of is the rehab draw request.
You, as the Hard Money Lender, agreed to loan a certain amount
for rehab costs. Once the rehab request has been made for
completed rehab or a portion of the rehab, you should have the
38
property inspected and provide the rehab amount to the borrower
in an expedient manner. This is important for future business with
the borrower and, more importantly, you may have a legal
document that requires you to make the payment within a certain
timeframe after an approved inspection has occurred. One item
that you should discuss with your attorney is whether you want a
lien release (or partial lien release) from the rehabber every time a
rehab payment is made. Without providing legal advice, the lien
release (if drafted and executed properly) prevents the rehabber
from putting a lien for unpaid work or materials on the property
which may jump in front of the Hard Money Lender’s lien.
Maturity Date is Coming up
You have been servicing the loan and everything is going
well but the sixth month is coming up and no conventional lender
or title company has contacted you regarding a payoff amount or
verification of mortgage. What should you do?
You should pray that the house is still there and there are
not 22 people living in it operating an illegal business. We are
kidding of course. If we have not heard any news from the
borrower or a conventional lender regarding the subject property
by the 5th month, we will contact the borrower and inquire as to
the status of the property and how the exit strategies are moving
along. Our position, as a Hard Money Lender, is to try and stay in
contact with the borrower monthly. We will help them find
refinancing with conventional lenders if that is what they are
looking for.
If the borrower tells you that the property has been on the
market for 4 months and they want extra time to lower the sales
price and sell it, or that they need extra time to obtain refinancing
or get a renter in the house, then you, as the Hard Money Lender,
have a decision to make. You can either, take the property back
(through means that we will discuss in Chapter 7) or grant an
extension on the promissory note. Most Hard Money Lenders have
a provision in their notes that grants a three or six month
extension, solely at the Hard Money Lender’s discretion, for an
extension fee.
The Secrets of Hard Money Made Easy
While the granting of an extension fee is subjective, we
would caution you to review the payment history of the borrower
as well as the condition of the property and whether it is rented
before making the decision on either taking the property back or
granting a 3 – 6 month extension.
40
Chapter 7:
Borrower Defaults




Extension
Foreclose
Deed in Lieu of Foreclosure
Continue monthly payments
Extension
What happens when the Maturity Date comes up and you
have not heard anything from the borrower? Don’t panic! The first
order of business is to contact the borrower. You, as the lender,
may choose to extend the maturity date of the note. Many Hard
Money Lenders will have an extension clause in the promissory
note that grants a 3 or 6 month extension on the note provided
certain requirements are met and that the borrower is not in
default. Typically, we see Hard Money Lenders granting a 3 month
extension for an additional point and continuing the interest rate
at the original interest rate or increasing the interest rate to 18%
until the extended maturity date
Foreclosure/Deed in Lieu of Foreclosure
The other option, assuming that an extension is not
justifiable or if the borrower has defaulted under the note, is
foreclosure. In Texas, there are two methods of foreclosure that
Hard Money Lenders prefer. The first is non-judicial foreclosure
(i.e., post the property per the requirements of the state of Texas
and have an auction on the property on the first Tuesday of the
following month). This process takes time, at least 30-45 days
provided that the borrower does not have a renter in the property.
If there is a renter in the property, there may be other legal issues
that you will need to discuss with your attorney. You do need to be
aware that at a foreclosure, if the property is bid up higher than
The Secrets of Hard Money Made Easy
the note, interest payments and attorney’s fees, the borrower will
get the difference. In reality, it is rare that this property would go
for more than the note at a non-judicial foreclosure.
The other option is to take a deed in lieu of foreclosure.
The borrower will need to agree to this in order for the borrower to
deed the property back to the lender. In this scenario, there is no
30-45 day delay. The downside of the deed in lieu is that if there
are other liens on the property, they will follow the property versus
a non-judicial foreclosure which may wipe out most of the liens on
the property.
We would strongly recommend that prior to foreclosing or
accepting a deed in lieu of foreclosure, you contact a title company
and have a title search performed to determine if any other liens
have been placed on the property.
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Chapter 8:
Should I be a Hard Money Lender or
provide money to a Hard Money Lender
for a HML?
The big question, after reading through this book, is
whether you want to be a Hard Money Lender or whether you
would like to provide money to a Hard Money Lender and have
the Hard Money Lender perform all of the due diligence and the
servicing on the loan. To simplify the question even more, do you
want to make 18% return on your money by doing all of the due
diligence and servicing, or do you want to make 10-14% on your
money by literally being a “passive” investor.
Both options are good options; however, the higher the
yield the more time and effort you, as the Hard Money Lender will
have to put into each loan. We provide consulting to prospective
Hard Money Lenders, private lenders, people with self-directed
IRAs and many others. We are available for consultation or you
may attend some of our paid seminars to obtain more details on
all areas of hard money lending as well as due diligence forms,
checklists, loan documents, etc.
If you have questions or need additional information,
please feel free to contact us:
Longhorn III Investments, LLC
17950 Preston Road, Suite 230
Dallas, Texas 75252
(214) 420-7300
Merrill Kaliser
Michael Hoffman
info@longhorninvestments.com
The Secrets of Hard Money Made Easy