California Hard Money Direct

Hard Money loans are non institutional loans funded by private real estate investors,  companies and funds – using their own money –  most often secured by a first Trust Deed against the subject property.
These types of loans are referred to by many different names, such as, private money, equity-based,  asset based or hard money.
Such equity-driven mortgage loans typically require 40% equity in the property and or collateral in another piece of real estate.
These types of loans also carry a heavier burden and interest rate for the borrower for the simple reason that they also pose higher risk for the lender.  They are most often a temporary solution that opens doors for a more permanent financial solution or exit strategy.

Equity based loans offer an alternative to strict and narrow traditional bank (institutional, conventional) financing, thereby eliminating many of the usual qualifying, credit and income underwriting guidelines and delays of banks, mortgage companies or institutional lenders for traditional mortgage loans. Equity lenders base their decisions on the unencumbered property value, its marketability, the borrower’s exit strategy and his or her ability to repay the loan. On investment properties they do NOT calculate debt ratios and  do NOT refuse clients with low credit scores or poor income. Funding is very fast; sometimes within days of receipt of the application – a true advantage over traditional bank financing.

Buying fixing and flipping properties
Refinancing and taking cash out
Foreign Nationals
Borrowers who are unable to prove income to a conventional bank
Debt consolidation
Purchasing rental properties
Investors taking advantage of current low real estate prices
Corporations and LLC’s
Investors that already own the maximum number of properties allowed by traditional banks
Real estate Partnerships where one partner is buying out the other
Borrowers needing super fast closings
Borrowers with a past BK, foreclosure or short sale

Years ago Hard Money was thought of as a last resort and something only desperate people would utilize.  This no longer describes the typical Hard Money client.  Over 70% of our clientele have FICO scores in excess of 725. Many are aggressive real estate investors who are leveraging themselves by using other people’s money.  They are well aware of the interest rates and have made a calculated decision that even after they factor in the cost of doing business the profits they will make on their transaction itself makes it all worthwhile.

Banks are turning down borrowers in record numbers and this is heavily impacting the earning potential of realtors everywhere.   Not every borrower is capable of putting down 40% but for those who can, Hard Money is saving an incredibly high number of deals that otherwise would have never been funded

Prestige home buyers respond to a different set of motivations than the rest of us. Their decisions are less dependent on jobs, prices and interest rates, and more on how their portfolio is doing. When the financial world was full of uncertainty a couple of years back, and the jumbo loan market dried up, luxury sales plummeted. As the economy started its top down recovery, some wealthy buyers went looking for a bargain….
http://www.dqnews.com/Articles/2011/News/California/HighEndSales/MDCA110211.aspx

The main reason real estate investors choose high interest
hard money loans over other financing options is because they can increase the amount of finance leverage and hence make more money from buying, rehabilitating and flipping pre-owned or foreclosure houses for a profit. If you were to work with only their own money and no external funding, they may miss out on a lot of money making opportunities and can only cope with one or two house rehab projects at a time.
Although these short term loans are expensive, at least they are a legal form of financing to purchase and rehabilitate properties for a profit. Hard money lenders exist because there are substantial money to be made with the real estate investments. So why are they known as hard money loans? This is because the interest rates and closing fees are high, and the loan to value (LTV) ratio is quite strict as well.

Investors paying cash for properties are coming to californiahardmoneydirect.com at the close of escrow and quickly getting 60% of their cash back. With rental properties in high demand, property owners are collecting top dollar for their rentals. Most properties are paying for themselves with the rents received and some are even cash flowing, even with hard money rates .

After the investor takes his or her cash out many start the cycle right over again.  California hard money has no limit on the number of properties we fund per client.

If you are in need of a hard money loan, do yourself a favor and make sure the company representing you has the experience to get the job done. This is truly a case where experience does matter, and you don’t want to make the wrong choice only to find out 60 days down the line when your hard money funding has still not occurred. Check with the DRE to see how long they have been around and if they have a complaint history.

For the record our DRE license was issued 22 years ago and we have Zero complaints.

When you’re looking for a hard money loan for your next project, there are some problems your hard money lender can cause you, often putting your project and loan in jeopardy. Here are four problems to avoid in a hard money lender.

1) Not returning phone calls or emails in a timely manner.
Time is of the essence for a lot of investors and people working in a short time window. If they can’t meet your needs on the small things, can you really trust them to meet them or be timely on the big things? Even how they react to your initial phone calls or emails can be a clue that this hard money lender isn’t someone you want to work with.

2) Someone not willing to put a firm commitment in writing.
Some hard money lenders will verbally offer a specific rate and points, but when it comes to sign the loan papers, they say they can’t give the rate they originally offered. It’s gone up, and you have to pay a couple of points. Since you’re pressed for time, you’re stuck with the offer, or you walk away. Make sure your lender is willing to put their rate and offer in writing before you get to the signing stage.

3) Pre-payment penalties.
Be certain to ask how soon you can pay off your loan without a pre-payment penalty. It is important you know in advance what the penalty will be if you were to pay off the loan early. It is critical to negotiate the terms before the close of escrow. If you know you won’t be keeping the loan for too long then ask for the pre-pay to be waived or to be brought down to a minimum of three months.

4) Avoid upfront fees, especially for online hard money lenders.
There are too many horror stories of investors who pay the upfront fees of a hard money loan, only to find that the lender has now disappeared with their money. And although legitimate lenders do charge upfront fees, there are plenty of hard money lenders who don’t. Save your money for your investment, rather than spending it on unnecessary fees.

There are plenty of hard money lenders who can give you the kinds of loans you need. Rather than settle for a lender who will cause more problems than they solve, work with a hard money lender who can get you what you need when you need it.