I have never had a "swell foop" up front.
----- Original Message -----
Sent: Tuesday, December 06, 2005 10:30
AM
Subject: RE: Fwd: [RealEstate] Still
Looking for Hard Money Lenders(Michigan)
It depends on your
definition of "up front".
To me, up front
means that you have to come up with cash of your own out of pocket. If
cash comes out of proceeds from closing, that's not up
front.
Out of all the
lenders and borrowers I've dealt with, this is the first place I've ever heard
anyone call cash paid out of closing proceeds "up front".
I think what a few
of you need to understand is the concept of the "time value of
money". A lender charges interest to compensate him for the time his
money is in use by a borrower. The interest charged represents the money
he's LOSING because you're holding it and he can't invest it in something
else. Points charged represent the fee for services rendered -
processing your loan and all the work associated with it - think of it as
a salary or money earned. (Example: If you work a 9 to 5 job as
say a poolboy for which you earn a salary, you get paid for doing your pool
duties. If you then lend the money you earned to someone, you get paid
interest on the loan (if you're smart). If you lend money for a
living (ie. that's your job) and you don't charge points, then you can't pay
your bills because nobody is paying you a salary).
This concept of
time value is used on a regular basis by Note buyers. When they buy a
Note, they buy it at a discount to compensate them for the time they have to
wait to get their money back. That discount represents the service
fee (or salary earned) - same as points charged. The interest paid is for
the use of the money.
To help understand
the time value of money, answer this simple question. If I offered you
$1,000 today, or $5,000 in 10 years - which would you take? Most people
would take the $1,000 today. That's time value of money. Of course
if you chose the second one, then simply change the numbers around until you
choose the first option. The value of money is different to different
people depending on their personal circumstances. Someone who is sitting
on a pile of cash would think nothing of spending $1,000 on a TV set.
Someone who is struggling to earn a living would choke at spending $1,000 in
one swell foop.
yes you are
correct but even you concede that points
are charged up front when the loan
closes. royal
financial is a good example of this in Michigan.
they
charge apx17% rate and the up front charges or heavy.
bringing the
true apr to 24. something%
--- John B Corey Jr
<[EMAIL PROTECTED]> wrote:
> Maybe I am just missing
something.
>
> I would say that the 4 people on the cc line
have
> not done there
> homework when it comes to what was
posted as the
> original request and
> what true hard money
is. The person who gets it
> partially correct if
> CrM.
The other three appear to not know that
> traditional hard money
> (no credit check at all, no up front fees and the
> loan
determined by
> the value of the property) is out there and
savvy
> investors are
> making good money landing deals
with such funding.
>
> True hard money is not the right solution
for a lot
> of situations.
> The LTV is lower than many
would like (65% of the
> as-is value for
> some HML when
there is no credit check). The costs
> are what you would
>
expect from hard money (15% and 5 points appears to
> be par these
> days) and the funds are not available for owner
> occupied
properties.
> It definitely is out there for good deals.
>
> Be a bit more gentle to the person who posted the
> request as
they
> appear to know more about hard money than many of
>
the folks who have
> responded so negatively.
>
>
BTW - There was never a statement the loan would not
> be lacking
> collateral or that the fees would not be paid when
> the loan
closes.
>
> The only point that I think will be hard to find
is
> a HM loan for 24
> months if all the other factors
remain as presented
> below. The one
> firm that I know
that will go to 24 months wants to
> see the credit
> file
so they get to understand the borrower better.
> They do not use
> the score they just want to know who they are
> dealing with.
When you
> are at 12 months or less there are multiple
lenders
> out there who
> will offer loans on the terms
below. BTW - Many
> times you can find
> such a lender in
your local investment club
> meetings. I closed a loan
> in
Detroit just a few weeks ago on terms that fit
> everything below
> except it was for 12 months max.
>
> John Corey
>
Manager/Member
> Chelsea Private Equity, LLC
> +1 (503) 906 7840
x1108
> +1 (503) 210 0227 (efax)
>
>
>
>
Begin forwarded message:
>
> > I'm looking for a real hard
money lender.
> >
> > No credit checks
> > No up
front points
> > No income verification
> > No cross
collateralizations
> >
> > With:
> >
> >
Quick closings (2-3 weeks)
> > Loans terms 12 to 24 months
>
> Loans from 20K to 500K
> > Loan secured by the real
estate
> >
> > I don't mind getting the property appraised.
But,
> the loan should be
> > based on the value of the
property.
> >
> > If this is something that you can provide,
please
> drop me a line.
> >
> > Thanks,
>
>
>
>
