How To Get Private Lenders & Hard Money
And so today we’re going to go on how to best use hard money, how to best use private money when you want to use them, what are the typical terms for them, and then my preferred method on how I actually leveraged both in this for those that are in my level up membership coaching.
𝐉𝐨𝐢𝐧 𝐎𝐮𝐫 𝐏𝐫𝐢𝐯𝐚𝐭𝐞 𝐅𝐚𝐜𝐞𝐛𝐨𝐨𝐤 𝐆𝐫𝐨𝐮𝐩
This is not going to be the same training. I have a level of membership coaching that I do every single Monday. So if you You’re interested in that, let us know you’re interested in the Monday coaching calls. Or in general, if you are interested in coaching with me, me holding your hand in the chat right now, let us know just say, Hey, I’m interested in coaching, and someone on my team will reach out to you and see if we’re a good fit. But we are going to be talking about money at a great coaching call with my students on Monday. This is like kind of the next part of money. And so let’s just review what hard money is for those that may not know hard money is exactly that they call it hard, because the terms tend to be pretty steep, kind of traditionally, you’ll see here, I used as the example, two points 12% interest, that’s an example, I can show you right down here in Phoenix, the hard money lending space is so competitive, that you know, usually they’ll charge you like a dock fee, like 100 $950, dock fee, and then they do 10% interest. Now, typically, hard money lending is anywhere from 80 to 90%. loan to value, meaning if you’re buying a home at $100,000, the hard money lender will lend 80 or $90,000 on that asset. Now, what is really nice about hard money lending, which I’ll say here isit is asset based lending. Right, so you don’t have to go get a great credit score, you don’t have to, you know, have a 750 credit score and all the other stuff that maybe banks will, right. And so for us in the real estate investing space, this is a highly utilized, you know, asset I’ve been using hard money for as long as I can remember. And so you know, you just need to make sure you find the right hard money lenders in your area. Where can you potentially find hard money lenders, you’ll find them in Facebook groups, you will actually find, you know, if you go to Facebook, and you look up lending in Phoenix, Arizona, or hard money, Phoenix, Arizona and you go look through Facebook, you will find groups and companies. But the best best best place to find the right hard money company, it’s going to be right for you will be through referral. You know, knowing someone who has used the company before that it was seamless, it worked well, their interest rates aren’t too high, their points aren’t too high, etc. Now, here’s one thing when looking at hard money lenders, I want to bring up I’m not as concerned about my 12% interest rate as I am about the points. I don’t like points, because if you think about the process of rehabbing homes, and by the way, you would use this primarily to either wholesale or rehab, right? You likely wouldn’t use this to buy a rental property. Okay. So you want to get to a place where you have a lender that doesn’t charge points. Now I have clients, students in my elite program, that’s another program I do coaching, they’re, they’re kind of big, well, it’s called elite for a reason, right? They’re doing a decent amount of flips, and have a pretty big business going. Again, if you’re interested in any level of coaching with me privately together, one on one coach or not one on one, but coaching with me, let us know, I’m happy to help. So one of my students is that three points and 15%. And that is just outrageous, right? Like that’s just too high. Like even if it was three points and 12%, I still don’t like it, I don’t care if it’s three points and 10%. I don’t like it, I want to get rid of points. And here’s the reason why you’re turning the money relatively quickly. And let’s just say from the time you buy it to the time you sell it and close escrow on the resale, it takes you 120 days, that’s four months, well, if you borrowed four months worth of money, the interest rate essentially is going to be, you know, irrelevant on the month to month basis. But if you’re borrowing let’s just say $200,000. And they charge you two points, you’re paying, you know, $4,000 when you buy that home, the mortgage, the mortgage, right, the monthly payment is nowhere near that per month. And if you broke that $4,000 up into the four months, you’re paying $1,000 a month, right for while you have that. So effectively, you’re paying like a lot more, right? The only reason why I can’t give you the effective interest rate is not knowing what you’re interested in what your payment is, but you definitely, you know, don’t want to be paying points, right? Because if you broke that out, even if you’re paying the hard money lender $1,000 a month will because you paid two points on the front end for a $200,000 loan, which is $4,000. You spread that out over the four months. You’re paying it Extra $1,000 a month across the board, why don’t you just take a 15% interest rate, and you might only be paying, instead of $2,000 a month, you would make that 1500 a month. Hopefully that makes sense. I know I’m going through it relatively quickly, because we only have so much time here, but you want to remove points the best you can. So that would be my number one criteria of what would be a hard money lender, I would want to use as someone that doesn’t have any points, or maybe just a dock fee. Like I said, In Phoenix, a lot of the lenders now is so competitive. These are typical rates, right, like 90% loan. So if I’m buying something for $100,000, they’ll usually lend roughly 90 grand, and then you know, 10% interest rate, right in a dock fee 950 bucks, just to put all the paperwork together, right? To me, that’s a great lender. Now I understand not all markets are like that. And you are going to have to try to work with different hard money lenders, but that’s where you want to get with a hard money lender. I also have hard money lenders based around my relationship, that they would fund 100% of the acquisition, because they know me, they’ve worked with me, they’ve lent me millions of dollars, they understand, you know, where I’m buying the asset, they’ve underwritten the asset, okay. So they’re just asset based lending, as I’ve mentioned.
So they took a look at the asset, they underwrote the asset. And then, you know, they essentially say, hey, Justin, I’ll give you 100% of this, because I think you’re buying it right. Okay. Now, they are a lender. So there are documents, and it’s, you know, we’ll get to what the documents are here towards the end of this training. But you know, they’re a lender. And so there’s documents you need to fill out and, you know, agree upon the terms and all of that. And so a hard money lender has a really massive use. Now, one thing I didn’t put in here is hard money lenders are starting to reimburse for rehab costs. So hard money lenders because of how competitive The space is. And because there are more and more private lenders popping up these days, hard money lenders are trying to stay ahead of the game and trying to earn your business. Well, one way that they have started to do that is by essentially you fronting the rehab cost initially. So for example, let’s use Phoenix, for example, if someone a hard money lender gave me 90% of the purchase price. And I had, so they gave me the 90 grand and buying the home for 100 grand, they gave me 90 grand, that means I need to come in with $10,000 for the down the down payment. But I have a $30,000 rehab also. So what will what some hard money lenders will do, and what you want to look for, hopefully, you guys are taking notes, if you don’t have notepad scramble really quick take a notepad down. What they will do is I will front the construction team 50% of my rehab. So if I have a $30,000 rehab that I have to pay for, I’ll give them 15 grand that should get them through all of the materials and start the labor portion, I then will have a the remaining 50% of that is broken out into two payments, one at a benchmark that we we both approve, and then the the other out of benchmark, which is really me walking the home and signing off on it. Right. So I will give the $15,000 which is 50% of the total rehab to the contractor they start working, I then will go back to the hard money lender once they get to that benchmark that we agreed upon, right? And I say hey, hard money lender, I’ve completed what was needed to complete to get to this next level of payment to my contractor, will you reimburse me for the first $15,000 that I paid them? And they will. And then you can pay them the second draw, pay the contractor the second draw, you got reimbursed for the first draw, you then can pay the second contractor the second draw? So essentially, you’re not necessarily out as much money, right? Because now you’re only giving the contractor say 7500. Right, because you recoup the 15. And then lastly, they’ll come through and say Hey, mister hard money lender, we fully remodeled this, all payments are ready, can I recoup the second draw? And then that way and get a recoup or get a payment for the last draw? Okay, so they will recoup the 7500 you gave on the second draw, you’ll recoup that. So again now, you know, you’ve recouped two thirds of it, and that last payment, you might have to pay the contractor to finalize it but then the hard money lender will repay you. Now what I will tell you about this not every single hard money lender does this. But these are the criteria that I think you need to know I don’t think you need to be asking your hard money lenders what their criteria are around this. I’ve also heard of hard money lenders who won’t go above like 75% loan to value I would just never use them. Like if they can’t get to at minimum, they’re not the hard money lender for me. Okay? So they lend very quick, they’re as good as cash essentially, I mean, I’ve hard money lenders out quite literally will fund next day, you know, I can’t give them a file at 5pm. And they’ll find next day per se, but they will find very, very quick. So hard money lender has a great utility. And in you need to be researching for them in your market. Now, let’s get on to my preferred method, which would be private money lending, right? So private money lenders, are your friends, your family or colleagues, people you just know. You know, again, people, it’s private money lending, they’re not a company, they don’t have a bankers license, they’re just lending you money on an asset. Now, those individuals typically do not have any points. And usually you can negotiate anywhere from 10 to 15%. Interest total. Now, what one thing I want to put in here? Oh, interest paid monthly, right. So one thing I want to put in here, typically cheaper, more flexible, deferred
payments. And what I mean by deferred payments, like private money lenders, I negotiate that I don’t do a monthly check, right? Like, I don’t want to have a monthly check, I have to cut so I just say, Can we defer payments to end a sale? So a compact it accumulates on itself, right? And so essentially, at the payoff, let’s just say I was the oldest private money lender $1,000 a month? Well, it took four months. So the payoff would be $4,000, more than they lent, because the interest was accruing, and just being added on to the end of the loan. So you can negotiate that much easier with a private money lender. Are there hard money lenders that will do that? Yes, not very typical. private money lenders is all a negotiation, they tend to be your family, or friends or colleagues or, you know, people that you’ve been introduced to that want to lend on an asset. Now, I like it, because they’re typically cheaper. They’re way more flexible. As I said, they will take you know, defer payments a lot of times and they’ll just wait for the payoff. And then when they submit the payoff, to get all their money back as the lender, they include an extra four grand in the example that I just gave you guys, and they made their money. And they’ll want to do it again. And again, and again. And more often than not, I can typically negotiate 100% financing, which would be 100% of the acquisition and 100% of the rehab, right. And so for me, that has a massive, massive value, right? So I prefer private money lenders the most. Now, here’s a secret sauce that I think a lot of, well, most expert investors, either currently utilized or have utilized over time. And that is leveraging both on a deal. So for example, there’s many of you out there, I’m assuming they’re like, oh, man, I have a lot of people that have like 20 grand or 30 grand, but no one I know has like 200 grand to lend on the property. And the rehab, I don’t have anyone that I could call to make that. Right. And so I get it, I’ve been there. And there’s many people that are still there, right. But a great way to do this is to have the hard money lender be in first position. By the way, the hard money lender will always want to be in first position, they will not subordinate to a second or anyone else and then have a private money lender in second position. So just like if you think about buying your own home, sometimes you buy a home and you have two loans on it, there’s a first position in a second position. And this is really what happened during the the crash in the meltdown back in Oh 809 whatnot was
you know, the seconds really lost there, but whoever was giving the second loan last year, but because there’s no more equity in the home, so seconds, you know, tend to be a little bit riskier for the private money lender, but that’s where instead of paying them 10% I might pay them 15% and have them make more money to be in second position because it is a little bit riskier. Now, the private money lenders don’t typically have enough like i’ve you know, someone has $40,000 Well, in the example I just gave you, I would use a hard money lender for $90,000. I would use my private money lender for the $10,000 down and then they still have another 30 grand that they can lend me on a $30,000 rehab or a $25,000 rehab. I would use that to pay for the rehab. Okay. And so, this is a great example of how to leverage this now. What I like to do is make sure the paperwork is Correct. So we’ll get to there in a second. But you know, you want to use the private money as a bridge loan, the bridge loan typically means the downpayment and rehab. Sometimes it might just mean the downpayment. For some of you, you might have a great wholesale deal. If you don’t know what wholesaling is, it’s when instead of rehabbing the property or wholesaling it, you actually buy it as if you’re going to rehab it. And then you actually just put it right back on the MLS, because it’s clean, doesn’t need a lot of work, great hotel deal. Well, in those cases, the hard money lender might lend you 90%, and then you go get a private money lender lend you the other 10. And you don’t even need rehab. Right. And so, essentially, you can use both. Now one thing you really, really want to make sure you’re understanding is you want to calculate all the costs here, because if you are going to use two different lenders, they’re likely going to be at different interest rate levels, which is totally fine. But you want to make sure you have enough money. If you have debt servicing every month, right debt servicing is that monthly mortgage check, you’re going to cut, if you need to do that every month, you need to make sure you have enough money to cover that. The nice thing here is a lot of times you can get the private money lender to come in not just the downpayment, not just the rehab, but they will likely even be able to cover the interest payments for the hard money for six months. Okay, and it’s all of it’s all negotiation, right. So this is all in negotiation on the terms that you you structure with your private money lender. So if you can negotiate that. So know your costs, know how much they need to have for the down, know how much they need to have for the rehab, and then, you know, understand what their monthly mortgages or the debt servicing on the hard money, let’s just say it’s $1,000 a month, and you need it for, you know, you estimate you be conservative estimate, you’re going to have it for six months. So you go and borrow enough to cover the downpayment, cover the rehab, and cover the interest payments for the next six months. Okay, so this is why I really like using both. Now for some of you, you might say, Well, my private lender wants to partner in this example, I would tell you to make your private lender, a lender, not a partner, right. And then this is where it gets to, you know, also understanding the paperwork. So the paperwork needs to be structured as such, if they are if you’re using only private lending. And they are giving you an interest rate, but they get none of the profit, then they are a lender, then you’ll want to use a promissory note deed of trust or a trust deed, otherwise known as a mortgage, right? If they are a hard money lender, they’re either going to have a mortgage trustee problem note, right, they’re gonna have a combination of these. And then the private money lender will likely have a combination of these usually like a trustee deed of trust or promissory note, Okay, now let’s just say the private money lender wants to do an equity share with you, hey, Justin, I’ll come in with 100% of the financing. But I want to get a piece of profit, then I would negotiate them and say, Hey, I can I can be open to that, let’s discuss what you’re looking for. But then I would structure as a partnership, not a lending borrower scenario. Because a lender has an ability to go back and do a
have a recourse against you, if there’s any losses. A partner won’t. And I mean, anyone can have recourse and anyone can sue someone for any reason. But if you structure the partnership correctly, then you say, Hey, we’re gonna, let’s just use the example, you’re gonna lend 100% of the money, I’m gonna do all the work, I’m the equity partner, you’re the capital partner, we’ll split it 5050 we’ll split profits 5050 if there is a loss, make sure you define that. If there is a loss, then you as the capital partner take 100% of the loss. Now, why would a lender go for that? Well, because if you’re gonna give them 50% of the profit, and if you’re buying, right, they’re gonna make a ton of money for lending their money, like, a ton, like to ROI ROI over the year potentially could be like, depending upon how you’re buying and how much profit you make, and all that like I’ve given when I first started I was doing so well. We’ve given lenders 100% return in a given year. 100%. That’s crazy, right? Like, that’s the most expensive money out there. There’s no more expensive money, right. And so to get that type of awesome return, then you have to have some decent risk, right? So if I’m willing to play that game with you, then you need to take the risk. Right? Otherwise, Mr. lender, I can just go to my hard money lender who’s going to charge me 10% interest. And I’ll work with my hard money lender. Does that make sense? So it’s all negotiable. If they want to do an equity share, then I would write up the agreement, the promissory note, the promissory note is what defines the terms of the loan, or defines the terms of the partnership. Right? And so, you know, and then you can, essentially, you would have a, I’m blanking right now, you’d have an operational agreement, operating agreement with the, you know, capital partner, right, the operating agreement states x, and usually that will define the terms as well. So you can absolutely play the game where a private money lender doesn’t come in with an interest rate, they just come in with equity, or I’m sorry, profit share. But then you need to be very clear about what the relationship is, you know, what do they get if we win and everything goes right, and then what happens when we lose, if I’m going to give away a chunk of profit, then I’m going to likely have him or her take the risk financially, and they have to take 100% of the cost if we lose, okay? If they don’t want 50%, and they’re a little bit more reasonable, again, all negotiable. Let’s just say they don’t take 30% profit. Okay, well, then maybe they don’t need to take all of the downside, if we lose, maybe we split the downside 5050, because they’re not taking so much out of my pot, if we win that, like I’m willing to take some of the loss with you then if we lose. So all that is completely negotiable, based around your relationship with them. But the key part of this training is you can absolutely use these two together. Together, the one part that isn’t terribly negotiable are the hard money lenders, they tend to have their terms, and it’s kind of a Hey, take it or leave it scenario, like they very rarely negotiate. Now, if you build enough rapport with them, and enough experience with these hard money lenders, they absolutely will start to, you know, more be more favorable, right? Like I have hard money lenders that will fund 100% of my acquisition, because of our relationship. Right? So. Yeah. So if there are any questions, I’m happy to open up the zoom call on that. If you have any interest again, in working with me, me coaching you, right in the comments in Facebook or in zoom? Yes, I’m interested in coaching, and then someone on my team will reach out to you and we can just have a discussion, just to see if I’m a good fit for you. Or if you’re a good fit for me, because it’s not always the case. Right? not always the case. So it doesn’t do you any harm, to say, Yes, I’m interested in coaching, we have three levels of coaching, we have elite, we have the level up where you’re already doing deals, we’re trying to level you up to that next level. And then we have the membership, which is a weekly, once a week call with a group. Right. And so there’s different investments to make, but if you’re interested in any of that. So let us know. Let me know. I’m interested in coaching and we can go from there. So with that said, I want to open this up for some q&a with the folks that actually registered. If you have a question, please either raise your hands throw your question in the chat box. I am happy to answer your question specific about this. I definitely have a lot of comments. I love that What’s up? My school is in the house. Scottsdale Texas.
Youssef What up man? Just starting in domaining. And working on my business online at the same time. I love it. Jason from Cincinnati, Ohio. What up? Matt? challenge is getting the balls to ask people for money. Matt, let’s talk about that. Because you will never ask people for money ever. And I can teach you how to do that right now. So raise your hand. I’ll unmute you. Are Matt allowed to talk? I think this is the right match. How many match do we have on here? Well, Matt, you there brother? Hey, Matt. What’s up, dude? Not much. How you doing? Dude? I’m doing awesome. Thanks for asking. Awesome, though, you and I think this is the right mat challenge is having the balls to ask people for money. Yep, exactly. Cool. So never, ever, ever, ever go ask people for money. And I’ll tell you why. You want to think about how they would receive that question. Right? Like, hey, do you have any money you want to lend me or any of that? The best way to go into any conversation is first of all, think about what’s in it for me. That’s what they’re thinking about. So when you go to them, be ready for them to be thinking that what’s in it for me when I’m talking Am I Why am I talking to them? What’s going to be in it for me? So then, if you think like that, what their first thing is, how can I make money with Matt? Right? That’s what they’re gonna be thinking. So then you just give them an opportunity to make money. And that’s how you position it. You never asked for money. So let’s just say you’re, I don’t care who, let’s just say you’re at a gym, for God’s sakes, right? And you have your gym friend, Fred. Let’s call our gym friend, Fred. He’s not really your close friend. But every time you guys are at the gym, you chop it up a little bit. Hey, dude, what’s up? How are you? Hi, great. How are you? And you say, Hey, dude, things are great, dude, I’m actually looking, I got a couple awesome opportunities. I’m looking to bring on a financial partner with actually to flip some homes. And so that’s really what I’m looking for is I got some of these awesome opportunities. I don’t know if you’re interested. But would you be interested in something like that? Let’s say you’re talking to your grandma. Hey, Grandma, what’s going on? Oh, great, honey, how are you? Ah, you know, I actually have an opportunity when it flipped this home. It’s an incredible opportunity. I’m actually trying to figure out like, Well, let me ask you a grandma, would you be any? Would you have any interest in maybe working with me on that and helping me out financially on that opportunity? Do it together. That’s how you position it. It’s an opportunity. It’s not you never sell like a guaranteed return? You never because that you start to play with the powers that be called the SEC, right? And you never want to be viewed as someone selling a security. But giving someone an opportunity to make money with you is something totally different. And then if grandma or Fred say, Yeah, that sounds pretty cool. Can you tell me more? So yeah, let’s let’s talk. I mean, the property is pretty cool. You know, we could buy it for 100 grand is going to take about 20 grand Viet remodeled, and then we could probably sell it for 200 grand like, it’s pretty awesome. What you know, is something like that lending on something like that, or partnering on something like that. Would that have any interest in? Yeah, you know, I’d love to write. But do you see how I reframe that dude?
Yeah, that makes sense. So like, I would want to be talking to somebody and say, like, um, gosh, would you would you be interested in placing capital in a high performing project?
No, don’t say anything? No. Because, again, you’re coming off salesy. You’re starting to flirt with, like the SEC rules and guidelines, like don’t say anything like that. Like, what you literally want to say is, Hey, would you have any interest in being a part of some of these flips that I have, you know, that I want to work on? Would you be interested in the opportunity to flip some homes with me? That’s that makes sense. That’s it? Would you be interested in the opportunity to flip some homes with me? Yeah, what are you thinking? Well, to be honest, I need money. Right? So I’m looking for either a capital partner or a lender. I’m either one I’m open to but you know, first of all, I don’t I just don’t know if you’d be interested in in doing anything like that. Or in those that type opportunity. You right, perfect. Make sense? Yeah. Awesome. Thanks. Course, brother. Course. Great question, dude.
All right. What else do we got here? Gail, Steven. Stephen, your background has come a long ways. I love it. Dude. Matt, what up? Oh, man, say Matt is LTV the same as LTC. loan to cost. Yeah, I mean, essentially, yeah, loan to cost is really what it is loan to how much they’ll lend versus the price you’re buying at it. So what’s the cost? So yes, you’re thinking about that correctly. Matt. Matt, I’m gonna unmute you again. You have a couple. You have a couple more questions. There. Yeah. Yep. Yeah. So go ahead and ask a couple of the questions that you have here.
Yeah, um, I think the only other one I had was like, so what would an action plan look like to raise private money? Like what type of actions should you contact? Like several people? And then how much money? Or Or do you raise? Do you haven’t like setting aside like a list of 10 people you can go through or? Yeah,
how do you how do you raise questions? Yeah, great questions. Um, you’re definitely thinking further down the road. And so I want you to kind of maybe come back to the starting point. And the reason why I say that is because you’re obviously smart enough to think about like how capital is raised. But when when US Small guys and I say we’re small because think about like Blackstone, right? That’s the big boys. We want to find individuals who want the part of the opportunity. So you don’t need to go around and solicit for money. What you want to do is find opportunities that people could come in and lend on. Does that make sense? So the more opportunities you have, the more opportunities you can present. And the more you can naturally talk about it in your everyday routine, right? Whether it’s on social media, some of you guys follow me on social media, whether it’s on social media, whether it’s on, you know, like I said, a guy at the gym where there’s your grandma, but it’s really about the opportunity that you have, and how they want to be involved in the opportunity. I don’t go around soliciting for money trying to raise money. Because again, this is where you get it’s a very tricky spot, and you start to get in trouble at the SEC. Right? So I have several private money lenders. But I don’t go around soliciting for money, right? I just talked about opportunities I have when people like all bro, and they’ll say, Hey, I don’t know if you’d ever be interested in, in flipping this home with me or being a part of this opportunity. If you are we can talk about it. I’m always looking for good money partners. And then the conversation escalates. For there. Sometimes people say, Oh, I have no money. Sometimes we will say, Well, I only have 10 grand, sometimes you will say I have you know, 300 grand sitting around waiting, what do you got? And it’s about having a consistency in those conversations. But it also is the end of the day, it’s how many? How many homes do you have that are good homes to buy? Right? I think you’re you’re thinking so far down the road, like I would tell you to start at the beginning, like go find the opportunity to go find a good flip, or something that gives you you know, good positioning, meaning like, you know, you could see you being all into this home for 150 grand and selling for 225. If you didn’t see that, then that’s an opportunity. That’s when you’re starting to talk. Now let’s just say you don’t have an opportunity on your desk right now to have those conversations. You can say that exact same thing. You see Fred at the gym, hey, Fred, what’s going on? You know, blah, blah, Dude, what’s going on that? Hey, dude, I’m actually looking for my next investment property. You know, I’m looking for something. Be all in around 150 sell for 225. I’m always, you know, looking for that kind of stuff. Everything’s good. But I’m also looking for some Capital Partners. I don’t know if you’d have any interest in that type opportunity when I find it. Right, so you’re letting them know you don’t have something right now that you’re looking for something and then you’re asking him, what do you be interested in that opportunity once I do find it? Awesome. Thanks. Yeah. Cool, bro. Any other questions? I just don’t want to. I want to answer all your questions.
No, I don’t think so. I think I think that’s pretty good. Right now I only use my own money. And my mentor says to raise money. And I just, I don’t know, like, it’s I’ve just haven’t done it.
Yeah, this is how you do it. I mean, just be yourself, be Matt, be normal, give the opportunity don’t solicit money. You don’t want to give returns and all this. That’s where you get in trouble at the SEC, you just say I either can bring on a capital partner or a capital lender? I’m open to either. Are you open to you know, doing some deals with me?
Perfect. I do have one other question. So I have like, the 401k. and stuff. I have, like 50 grand, but I have no idea how to turn that around to give to somebody? How, like, if someone approached me, how do I? Who do you so you need to? Who do you who’s it with? Um, honestly, I have no idea. I just get a statement.
Also, the and I’m not the like, I should put you in contact with Greg, but you want to turn it into a self directed or Sep? And the reason why is you want to be able to lend it out. Right? And I don’t know what it’s in right now. But like you want to be able to lend it out. And then once you lend it out all that interest or returns or whatever, get to go right back in there tax free. Right. So that’s the intention, the only way to do that, to my knowledge will be in the way I do it is self directed IRA that I can lend out. They can do the deal. They pay me back my money plus whatever they owe me and then it goes right back into the self directed.
So it’s more than just the custodian does that for you to turn it into the self directed? And then my other question would be like if someone said, I want to do a HELOC on my home and loan that money out, you just go to the bank and have them have that conversation pretty much here. Oh,
yeah. 100%. Now, again, I wouldn’t tell the bank like hey, I want to get a HELOC on my home so I can lend it like they don’t really want to hear that. That can be your plan. But they want you to have a HELOC for they don’t necessarily want you just to be arbitraging their loan. Does that make sense? They don’t really care. But like, less is more on those comments. Yeah, right. Make sense? So you definitely want to like, you know, hey, I want to do like a couple remodels on my home and put some money in the kitchen and what I mean just, you know, some of the things I need some cash for just kind of vague. Yeah, right. Okay. Perfect. Thank you, bro. Yeah, of course. Of course. Jason, I’m heading your way, brother. If you’re still here. Jason, you there dude? Yeah, I’m here. What’s up, bro? Did you ask? There’s a couple Jason’s you asked about the pre approval?
I did. I pre approved for hard money lenders.
Yeah. So they don’t they they’re asset based. So they don’t typically ask for a pre approval. I have a friend who has his mortgage banking license. And so he’s kind of a small guy, I would say. So because this is actual money. Now when I say small guy, he’s really wealthy and rich. But he’s not like a big lender for a lot of people. So he actually puts borrowers through more of a rigorous like underwriting. But it’s because he doesn’t just lend to absolutely anybody. Right? And so the majority of hard money lenders are not going to put you through a pre approval process. They just want to see the asset. They underwrite the asset to their own terms, and then you’re good.
Okay, so a quick question about that. So if I’m looking at houses that wholesalers are selling houses, and they’re saying cash only, like, I couldn’t get a hard money loan for that property. Right? Because they’re all
right. Yeah, no, you can. So I can’t in the space of wholesaling. Like, you know, there’s gurus out there that say, just put cash only. You know, how many homes I bought from wholesalers with hard money in how many of my wholesale deals that flippers have bought with hard money, like 99% of them? Okay. Yeah, no, you’re good.
Is it turn time quick on those? Yeah. hard money. Okay. Yeah, I mean, usually, like 72 hours. Okay. That’s great. Okay. Yeah. Right. Oh, no. And then I had another question. Right on that one, it was based on criteria of what they’re looking for, do I need to like bring them a financial statement? Or what are they looking for, like a regular bank is an asset, dude. They’re not an asset. Okay. So they’re just looking for the property, you give the address, and then they do their units themselves? Or
they’ll know, they’ll look at the property and kind of say, Hey, I’m willing to lend this or that. That’s what I’m saying. If you buy it, right, like you get a great discount on it. They might even lend 100% of the acquisition, because they just feel that comfortable about it. Gotcha. Okay.
That’s all I had. I appreciate it. Cool, bro.
Yeah, absolutely. Jumping on. Miss Gail, you there. Gail, you available? Maybe, maybe not. Gotcha. Can’t hear you. Can’t hear Gail. If you play around a little bit more.
If you can unmute yourself somehow, Gail, and I’ll take your question, but I’ll answer you. How important is your FICO score to get her money from hard money lenders? It doesn’t it doesn’t play into it at all. I think you just heard that. Um, what is the probability of a lender considering the borrower’s past experience in real estate investing for the getting loan? If you’re talking about hard money lending, if you are an absolute newbie, then they might only lend you 75% or 80%, even though they maybe lend me 90% or 100%. So they’re just there, you know? And then it also comes down to how much do you buy? Like, what price point are you buying at and what price Did you get it at? Right? Did you get it at a good price or not? So Gail, I’ve unmuted you. As soon as you can find a way to unmute yourself. I’m happy to have you join the call. I’m Justin. Just knee there, dude. Yep, can you hear me? What’s up, bro? Hey, Justin. So yours is about inventory shortage in Phoenix. Have you had a challenge finding inventory is your business up or down? from the same time last year? So you’re obviously in Phoenix? I am right on. So there is an inventory shortage. My business is up from last year and I’ll tell you why. So we are consistently marketing here in Phoenix. But as you mentioned, there’s an inventory shortage on top of all the competition, etc, etc. So we’re pretty consistent here in Phoenix, we do anywhere from 10 to 20 deals a month here in Phoenix. But then we’ve also opened up several other markets. So I’m in Oklahoma City, Milwaukee, and about to be open to Tulsa. And that has bridged my gap, meaning, right, like, if I want to get closer to that 20, every month, I’ll do 10 to 20, from Phoenix, but the difference will come from the other markets, right. And I’m not going into these other markets, trying to be the big dog by any stretch, like quite literally, if I do two to four deals a month, in all of these markets, they’re profitable. And I’m running them through the same team that are already there. So there’s no more overhead or operational costs. So Phoenix is a challenge. But I’ll tell you, you know, there’s no market that is just like, you go into, everyone’s just ready to sell and there’s a bunch of inventory. Does that make sense? Sure. Sure. What, what kind of marketing Are you currently doing?
Oh, I’m in real estate. So I mean, that’s, I’m, I’m just I’m breaking into the investment side, like so you’re on the retail space. I’m in the retail space. So I’m curious about that. Obviously, the way the price points gone up. I mean, we’re up 40% from this time last year.
Yeah, I just put a thing out. It’s nuts. Like the average Cromford report reported last year was like, 350, now it’s at 425, or something like that. It’s higher than that. It’s in one year, like, What is going on?
So I’m curious about so price point, obviously. I’m trying to break into the investment space, and then, you know, something that you could have bought in for 350 last years now cost me 550. And wrecked. And and now you need that. Now, you’re actually having to do a ton of work to it as well. And you’ve got multiple offers on this isn’t the retail space? Yep. And so your, your marketing to to theirs? Okay, so I have a couple questions for you. Obviously, this in the sending market, you know, people are, it’s like basically anything you have is going to sell, right? And and the longer it’s on the market, or the longer it’s taken me to do it, the the higher the appreciations going, that’s not going to be sustainable. And so I’m just Are you getting ready for this moratorium the lift, and putting your putting your, you know, your pieces out? When that happens? So you can start snatching up properties, because that’s just going to be absorbed. I don’t think it’s really going to it’s going to be a pause in the market, but it’s going to still appreciate for based off of the data that I’m seeing.
Yeah, so great questions, I would tell you, I think through I would say through cue to like through q2, I think we’re very safe. q3 I think is probably fine. Towards the end of the year, I get a little like, blurry, kind of like, anything can happen. Right? Like, we’ll see. Am I like, fear of God by the end of the year? No, no, not at all. I think the moratoriums have to get lifted, at some point, we just can’t allow people to live for free anymore, like things will just have to happen. Now. I’m going to remove all the politics out of it. But like, at least that’s what common sense would tell us. It can’t keep going. Doesn’t mean politicians have much common sense. So, um, I would tell you, my money is going into the other markets. I’m actively buying. I just, I’m buying my second rental in Oklahoma City today or tomorrow, the 26th. And we just contracted our third rental. And I think I expect my fourth contract coming back this week. And that’s all within the last 30 days. So my money is actually going into Oklahoma City. Because the rental return here in Phoenix is terrible. Relative By the way, so I’ll relative Sure. So even if the moratorium is lifted, the price points are too high, like maryvale home, like being 200 and something grand like what are you talking about? Stop. I’m not buying that as a rental, which used to be a great rental used to be 120 grand or whatever, right? So I’m not looking at it for that. Um, at some point, if we do roll back and adjust actually correctly, like, I think our market for sure that you know, 25 to 50% appreciation over the last 12 months, insane shouldn’t have happened. We need to have some sort of rollback from that because it’s not reality. But even then, we are already at such a high price point. So just to answer you directly, like my money is gonna stay in flipping and my money is gonna stay in wholesaling here in Phoenix. If I’m looking for buy and hold, then I’ll go elsewhere. Now, I’ll say that but I also am very big on Creative financing like we’ve done a lot of creative finance deals this year here in Phoenix. So if I can get more sellers be more good with me buying on Creative terms, then I’ll do that. I’ll do that here in Phoenix, and that’s mine. Play for Phoenix. Okay. Um
I probably should have a private conversation with you but a lot while I got you on the phone, do you? So I had somebody you know, coming up to me the other day and he’s got some land over on it’s actually a house but he wants to develop it. Are you doing anything like are you doing any multifamily kind of stuff where you’re like scraping and then building or is that I know, that’s probably a little from it. I just being Yeah, I
used to I got I got my hand caught in the cookie jar. I went for a 79 unit development. Three acres, 79 units. I was a little big for my britches. I thought I was cooler better and smarter. And I was right. So that one hurt that stung. I had the scars to prove that. So from that I just said, you know, am I willing to do like a spec home or an infill? Lot? Sure. Am I gonna do like a development? No, you know, I just got sent a piece of land today that I could build three townhomes on I’m looking at it, the close, I probably need a little discount on the number. But even then, like the cost of materials are way way way up what it costs to build now relative to what it did last year, or even the year before that. Crazy high. The safety thing about the townhome is like you kind of have this like it could always just stay in a portfolio. But let’s have a private conversation just so it’s not too much about Phoenix, another sample from here.
I appreciate the questions in the candidness Justin.
Course appreciate you dude. Thank you. Likewise. All right, and Andrew is the last question if he is still on Andrew, what’s up, man? You there? Yo, Justin, what’s going on, man? What’s up partner? You?
Yeah, that question was just in regards of when Matt was asking a question about the hard money. Yes. Yeah, just basically hard money is a sense of ball cash.
Amen. Yep. Use it the same way. Yeah, but anything else dude?
Well, I got ya. The same situation the same as far as with money in my 401k I rolled it over to a custodian and I was able to move it over to fund some deals as well. So
yeah, the nice thing I mean everything from you can lend it you can buy deals with it like for those of you I know a couple of you guys made comment and you’re interested in me coaching you, you can use your IRA to pay for coaching and investment and it’s a total tax free write off right like it once you can roll it over into self directed you can use that money for a lot of great things.
So good shit, exactly. One of the things based on what you’re saying it’s, it’s based off relationships and my background, I do have a lot of people who do have some hidden 401 K’s and I’m in contact with and I’m trying to build my What is it called? My Shelf. So in case anything does pop up that I need some help with? I can just refer to them. Now we’re talking. Yeah, nice. Cool, man. Appreciate you. Fred. Are you there? Yo, Fred, I think I got one more. There, dude. Yeah, can you hear me?
I got you. Okay. So I want to learn from my IRA. where’s the best place to find fixin flippers that want to borrow? I’m not having much luck on Facebook want way too much competition between lenders? Yeah, I mean, being a lender nowadays is as competitive as frickin right, like wholesaling and flipping. It’s crazy. Because everyone’s like, oh, man, there’s a, you know, there’s a gold rush, and lenders make their own money. I mean, I’ll, I’m going to tell you, Fred, what I’m telling everyone on this training, whether you’re on Facebook, or you’re on zoom, always be open to having more conversations with more lenders, always afraid, I will talk to you. I don’t need your money. I have plenty of private money. I have way too much for hard money around me. But like, I’m always open to talking to a lender. So if that means you and I want to have a conversation, awesome, doesn’t mean I’m going to borrow your money or any of that, like, maybe your terms are going to be too rich for what I would use or whatever. But like, everyone on here should essentially be talking to Fred. Fred, I’m happy to talk to you. But the positioning that I’m talking to you right now, Fred, everyone on here should be doing with you and other people, like, always talk to more people. So Fred, where’s your? What market are you in? I’m in Dallas, Fort Worth. Brother. I mean, you have so many flippers out there. I mean, is it just that competitive? Or do you just want to like you’re only willing to lend it at like a 20% interest rate or something crazy?
Oh, no, I think I’m kind of right in the middle. I mean, I’m like And 11% and two points, and I’m really easy. I don’t have you know, I don’t require a bunch of paperwork, underwriting any of that stuff. I’ll even lend 100% if the deals, you know, good deal. Yeah. But you know, I go out there and I look on a lot of Facebook groups and stuff like that for lending. And, you know, the minute somebody says, I need lending, there’s 40 responses, right?
Yeah, jumping jump on these lives, talk about it be about like, what I would tell you in Fred, I’m just giving my own personal advice, like, you’re gonna have a hard time lending to someone like me, because I have too much private money that doesn’t charge points. Your interest rate is about fair. The points are what get you like, I don’t know, if you saw the start of this training. But like, it’s tough these days. Like, I understand why you do it. Like with so much competition in the lending space, it would be tough to lend to someone like me, you might have someone out there. Now, if you’re super flexible, and someone doesn’t have many money relationships, and you’re saying, Hey, I’m going to charge you the two points, but they’re going to be back ended. So you don’t have to cut me a check. You’re closing? I’m you know, do you know, accrued interest, meaning you don’t have monthly payments? So essentially, I’m going to give you this money, and you don’t have to cut a check until the home sells.
Yeah, that would be the way I’m definitely flexible on that. I mean, the points are, you know that that’s what makes the return really nice, totally. Six months, I mean, you know, 10% interest at six months in anything to get too excited about but add a couple points on it makes lending, you know, worthwhile. I’m definitely willing to fold it into the loan, I’m willing to fold everything into the loan, and I’ll even loan him enough money to make the payments to me.
Totally, and that but so perfect. So you’re a great lender, by the way, you have this audience right now on Facebook and on zoom, Fred, like, everyone should talk to Fred now. Is he the right fit for everyone? No, but like, your flexibility is why like private money, period. Like, shoot, if I was in a different position, like if I found you 10 years ago, you would be awesome. And here’s the irony, Fred. Literally the name Fred is the example I use on all my examples. I don’t know if you heard me about the guy in the gym. His name is Fred.
Yeah, I was really late on the call. I was.
Oh, dude, I use Fred all the time for all my examples at all times. So the fact that you’re not Fred. Oh, funny. Fred lands. That’s it. Fred lands in Fred reach out to me. You and I can talk. I’m happy to have a conversation does throw you my number or something? Yeah. Why don’t you send me a direct message? Did you find this through Facebook? Right? Yep. All right. So send me a message. You and I will chat. And we’ll go from there. Okay, sounds good. Thanks. Culebra. Matt, what’s up, brother? Uh, what does coaching look like? Why don’t we do this? What’s the easiest way? And then Matt said, What are you doing weekly draws? Are you doing weekly draw? Now you still there, bro?
Yeah, yeah, I mean, like, so when you get the money? Are you just taking all that money from the lender thrown in that account? And then are you doing like, weekly draws and like paying them weekly? Or how do you push that up?
Yeah. So I actually have the held in escrow. And then my contracting crew was not my crew. But like the contractors I use, they’ll actually go over to the escrow office and collect a check. So I’ll email my gal over at Magnus and say, Hey, we owe a check for 70 $800 on draw number two, and it’s made out to K 10. Construction. And then literally, they write the check and the construction crew goes and grabs it. Gotcha. Pretty simple. Super, super. And then Matt, if you could do me the favor, bro, can you send me a DM? About your interest in coaching?
Yeah, yeah. I don’t know if it’s overstepping too much. Like I have a couple coaches already. But yeah, I was just curious.
And listen, it’s just about having a conversation. See if we’re the right fit or not like, and if I’m not the right fit, or and or you already have too many coaches all good. But it’s worth having conversation. You know what I mean? Perfect. Thank you. Yeah, send me a message on Facebook. Matt, what was your last name? Smith. Okay, so we’ll just I’ll have my team. Look out for Matt Smith. And we’ll make sure we have a combo. Perfect. Thank you. Right on. Thanks, Matt. Appreciate you all. Thank you, Justin. Appreciate you, Matt. All the people to ask questions. Appreciate for everyone who registered. I’m out of here. Peace.