Hard Money Loans – Everything You Need To Know About Hard Money

all right what’s going on everybody so I
have my top hard money lender on the video line with me the zoom camera
John Eubank with commercial lending LLC so in this video we are going to talk
about everything you need to know about hard money lending so he’s going to tell
us a little bit about how he got into the business kind of what his services
provide for real estate investors and a bunch of other questions that we have
written down so John yeah why don’t you just kind of tell us a little bit about
yourself how you got into business what you guys
have been up to and and we’ll just go from there
yeah so we started doing real estate here the company has commercially LLC
about 17 years now started you know pretty small as kind of the most you
know small boutique firms would started doing just kind of fixing loans on small
basis with small portfolio to a few investors locally and best 70 years it’s
really grown we’ve been able to you know I think build a pretty good reputation
for ourselves specifically as a local lender being a DC metro area and that’s
helped us kind of grow our foothold on this market and then also our
recommendations helped you know allow us to bring in more capital for the
business and to do some more lending around the area so we especially over
the past the most recent 10 years really where the growths come from and it
allowed us to not only expand again and with a bigger profile a bit more
geographic different locations Wow okay nice and so most of it sounds
like most your growth has probably been through referrals and things like that
yeah you know you don’t need to do too much advertising especially in the real
estate market right a lot of people like yeah talking and see you know a good
lender essentially whoa we’re gonna travel fast yeah yeah definitely
okay so you and so for the hard money lending so you do the obviously the DC
area because we’ve worked together for several years now yeah I
think you helped me by my first rehab and then we have a project going on
right now we have some other projects in the works but you also don’t you do
Virginia Beach I mean you go a little bit further beyond just DC region right
we do well we go you know all the way up through Maryland start out and we go you
know obviously our back yard east metro area building we do a lot of women still
in Richmond we do a lot of Fredericksburg and we have a doing a lot
of business especially weekend past ten years in in the Tidewater region
Virginia Beach and we also recently started doing some Lindy in South
Carolina as well Oh interesting that’s been a new marketing course so I guess
evaluating deals a couple states away is probably I mean the same as if it was in
your own backyard right I mean you actually have to send people down to
look at the properties or how does I mean how does that work you just look at
pictures and look at the comps right so we have a physical presence there in
South Carolina market so that’s kind of where it started they allow us to kind
of get in and make sure that we’re developing the right numbers when it
comes to comps and how to assess you know our loan to do where we need to
being on specific projects so I you know I don’t think they’re for us considering
were we’re very close to all the deals that we do as a private kind of a folio
lender for us we’ve always kind of prided ourselves on knowing everything
about the project and everything about the loans that we do on a really
personal level so you know it was always necessary to have somebody there in
person yeah okay that makes sense so if you’re new if you’re new real estate
investor and you’re looking to get a hard money loan I mean what are some of
the things that you know we need to provide you with so that you can say
okay you know we’re good to land on this property well you know we want to see
the forest first and foremost and just done a lot of good due diligence in
the property and you know you kind of assess and shook out all the risk and
you know we also want to make sure the counter for every single number you know
I’m not looking for construction financing numbers down to the nail but
we want to make sure that you kind of looked over the property and you know
done something a bit more thorough than just kind of thumb when type of analysis
so you know I would say the best thing to do as an investor is to really really
drill down your numbers know your construction cost and know the in and
out of the deal from inception so when you purchase the property all the way to
out sale and all your backers have cost and time that are going to be involved
okay got it yeah that makes sense and then I guess
most of the most of the investors you work with have done deals with you
before they are they new investors is it kind of like a mixture how does that
work with new investors but I would say primarily you know ninety-eight percent
of our business is repeat that’s what we really like we have a lot of great bars
that we deal with or I think you know just absolute experts
at what they do and you know successful bar we’re gonna make sure that you know
all of our bars are are successfully deals and I feel like that’s maybe a
kind of positive feedback loop for us because you know we’re getting a lot of
repeat borrowers and customers because we’re ensuring that their deals are
profitable yeah yeah we’re almost the second set of
eyes and you want to absolutely ensure that not only is we protected and safe
and yield but you know they’re an investment as well as protecting the
satans they’re gonna make a good enough turn right and I think because a lot of
people ask me they’re like why would you use a hard money lender they’re more
expensive than you know say private money or a traditional bank but I always
tell like a lot of people that I’m working with it’s like I mean number one
like you said they’re gonna look at the deal and they’re gonna tell you whether
it’s a good deal or not because if you’re a new investor
sometimes you don’t know what a good deal is or what a good deal isn’t so
yeah part of your role is making sure that investors don’t get into bad deals
great and also I guess a lot of the properties that you guys lend on you
know a traditional bank well it might be a lesser interest rate there they’re
probably not can be able to lend on it just based on the condition of the
property right right and there’s also other factors you know the banks
obviously want to see that you have a certain level of relative experience and
that’s that specific field to two years of certain types tax returns and such so
we’re not going to go that need to know we’re a very project level project level
worrying to know on these deals so you know that project has to make sense and
then it makes sense that and you know we’re gonna lend on it so you know I
think we’re very rational when it comes to you know our loan amount or loan
structure and how the fruit yields yeah and yeah I mean something that’s cared
about what cuz there’s national hard money lenders and there’s also a local
hard money lender so I mean one thing I like about working with you guys is it’s
like yeah I’m talking to you like the pretty much the direct lender and you
guys are pretty flexible and really know the neighborhoods and if there’s a good
deal on the table you’re gonna find a way to make it work whereas maybe a
national lender or national bank you know they might not have the same type
of flexibility that more of like a local hard money expert might have essentially
right right so yeah perfect examples you know if you and I look at a property DC
you know we agree on a certain area certain neighborhood that’s
up-and-coming and trimming do you think you know that there’s you know the
certain values in that neighborhood you know we can both see eye-to-eye on you
might not always get that with you know a bank or a national harmonii or private
lender yeah yeah definitely so as far as the types of deals that you guys do I
mean obviously you do single-family houses townhouses
I’m we actually we did a condo deal I think a little while maybe a couple
years ago you guys do like new development type stuff to do new
construction like larger scale projects and more just like the fix and flip type
stuff sure yeah late that’s five years we’ve
done a lot more ground on the construction involving kind of jobs also
recently you know we always consider condo conversions and and deals like
that DC anything that’s kind of where we’ve seen the real estate market go you
know over the past well maybe five years as well because there’s there’s not as
many painted carpet deals out there much you know a lot of them are now a larger
value added place where you’re gonna have to do additions you’re gonna have
to increase you know square footage and able to get in order to get your your
margin on you got you got you and just out of curiosity because I’m sure you
I’m sure you get a lot of people sending you deals I mean do you have a like
rough percent of what types of deals you would accept like out of all the deals
that people send you I mean obviously it has to you pretty much work off the Mao
the seventy percent formula right I would say say how many come across my
desk that we review and approve I would say roughly about seventy percent okay
Wow okay that’s that’s a good amount higher than I expected because I didn’t
know if I mean some heart I know some money lenders they might get a lot of
tire kickers or people that don’t really evaluate the deal I mean like if you’re
a new real estate investor you’re watching this before you send it to a
hard money lender like John make sure you evaluate the deal and don’t just
send them some random deal that’s on the MLS you spent five minutes evaluating
right I know personally people send me deals all the time that they want me to
look at and evaluate and I can just tell that he really spent too much time
evaluated yeah I mean a good and a good deal for me from a real estate investor
perspective is the seventy percent formula which you’re not if you’re
watching this you’re not sure with a seventy percent formula it’s how you
take the after innovative value times 0.7 and then you subtract for the cost
pairs and that’s pretty much the most you can offer on a property now like
like John was saying like you know there’s lots of deals that can make
sense so if you find a deal of that value it’s probably like one of the best
deals out there right now but that’s that’s what I look for when I’m
evaluating deals yeah you should be expected to make it around you know not
anything less than a 10 percent profit margin but it should be around 15 if
those numbers we can do that yeah so you’re single so yeah I don’t know
exactly what numbers or the amount of e come come through but I think it might
also factor in to the amount of really kind of markers we have and you know
they do break down depending that goes to us so most of them are very strong
gosh you got you so let’s say I have a great deal under contract the seller
needs to sell ASAP how fast can you guys close typically well it’s kind of a back
door maybe on how quickly the borrower can get together and do their due
diligence you know for this example let’s say that it’s all completed we had
the ability to get it in and review it extremely likely we don’t you know
phrasal you know you know we don’t waste time since we’re our own portfolio or
any fun we don’t have to try and source any funds either so we can jump right
into the dealer assuming the numbers all look great we can sometimes that our
review to prove within you know two days and as soon as we recruit ready to close
so you know we have clear title and everything’s lined up yeah turn around
shrinking fast Wow yeah that’s interesting so you can close quickly and
pretty much do any type of you know property that needs any type of work
tear downs properties I just need carpet and paint pretty much any any deal that
makes sense right you’re pretty flexible I’ve always wanted this so as a hard
money lender how do you get the how do you raise the money to lend out for the
hard money I mean I obviously you have private investors
I’m assuming just build up over time is that yeah I go back to kind of talk
about a really good aesthetic it’s have we been doing this for quite a while you
know I feel like we built up a good reputation with our investors and and to
an extent it kind of missed a good word of mouth thing that our borrowers would
have right and works on the other end as well so that money’s just been no source
you have a great reputation on the oxygen yeah and a massive thing I mean
once you uh once you return the investors money they’re pretty happy
obviously about it and they they tell it they tend to tell everybody about it and
ask you to you know once you do one deal with a hard money lender they like you a
lot more and then you know you start to build more of a relationship because
sometimes the first deal with the hard money lender you know they don’t know
you you don’t know them so you know you want to make sure so you bring them a
really good deal for your first deal gets their relationship off to a good
start and then kind of go from there and since we’re private fund we can you
know we’re we’re gonna be with the borrower from when we start the loan all
the way through until it’s paid off and in some cases we’re already working
another deal together at one side really a relationship got you got you okay and
I had some more questions for you let me see okay so I think we briefly touched
on this some I mean you’re more concerned about the deal someone has bad
credit or maybe they don’t have a ton of money to bring to the do you always have
to with hard money lending and really I mean you always have to bring some money
to the table you guys always want to see a little bit of skin in the game right
right okay and usually I mean I guess it’s on the low amount it’s probably
about 10% that you’d have to bring to a deal I mean this if you found like an
amazing deal you always have to bring a little bit which you can raise yourself
maybe you talk to some friends or family you know I found if it’s a good deal
usually you just you get creative enough to bring money to the table however you
need to do that so you guys will provide the overwhelming majority of the
financing but as far as credit you credits not the most important factors
more about the deal great yeah I think it’s gonna focus mainly on the quality
of video it’s what’s gonna drive our finance and ROI
you know I tend to believe that the amount of cash you close it’s really
kind of a a inverse factor of how much profit you’re going to make on the deal
secure way to look at it right those margins kind of slim if you might that
might be do to me bring up more to close but if you’ve got a really great model
of property and that’s worth as we all know that’s where the profits made and
you’re gonna just need to bring less than the closing table so I think it’s
really a factor of how you purchase the problem and I think that’s true you know
you make money on the purchase you always hear that real estate saying but
it’s true once you get into it it’s like some of these deals you can just relist
like three or six months on the road I make a pretty good profit if you know
how to find deals I just had a curiosity maybe you know
this maybe you know how do how do most of your investors that you work with
actually find their properties I mean it’s because with me it’s like a lot of
direct mail right so I do a lot of direct mail I get a certain amount of
response rate I do some online marketing not too much that you know maybe a
little bit of networking but how do most of your investors find their deals so
that’s great question you know I’ve always looked at back
because I’ve been really intrigued that as well their properties and you really
surprised how diverse the answer is yeah yeah there’s a hundred there’s so many
ways to find deals yeah and it seems that most people just have a specialty
but when they find property yeah they kind of just dig in and in rew there and
that’s how it might be almost successful I have people who are you know know
honestly they’ll do three different deals in the same stream yeah because
they that’s how they used or not yeah they’re they’re just integrating into
one neighborhood and that’s really that’s they’re saying
that’s where they like to be and we have other investors who are all over the
state so it really very up you know I don’t know that one’s more successful
the other obviously the best pieces of Isis that kind of finds your path on how
you’re going to source properties yeah just kind of stick to it because because
you’re gonna find efficiencies in that path yeah yeah I think once you start
doing something that you’re kind of interested in your focus on it you start
you just start to see little inefficiencies or efficiencies right and
you start to master that yeah because I talk to investors all the time and
they’re like like oh Direct Mail doesn’t work you have to only do networking and
then other people are like the door-knocking people which I honestly
you can do door knock you know I think that probably is the best strategy
because it’s so direct face-to-face with somebody you can very specifically
target exactly the neighborhoods and everything that you want to find and
then other people that only do online marketing some people do auctions
there’s yet every there’s there’s a niche for everybody really yeah it’s
very versatile so a couple last question for you so so what actually I don’t
think we ever talked about like what what are your race because every hard
money lender it seems has like a different kind of style and way of no
interest and things like that so why don’t you talk a little bit about that
sure so we don’t sell any notice all we don’t we don’t need to you know quiddity
anywhere after we do the transaction so since we’re pulling every know that we
do from beginning to end we’re able to do creative things that a lot of others
you know I don’t see out there the one whatever popular lynnie program is our
fixed cost programs they range from 5% or 10% and go from anywhere from 90 days
all the way out to nine months out to a year as well now the 10% fixed cost and
5% fixed cost options the beauty of them there are no points and there
patience so the amount of a fixed cost amount for the duration that you’re
getting then you know it’s been extremely popular for our investors to
work with these programs but with no points and no monthly payments right
because it’s what it’s really doing it’s it’s freeing up their capital right I
mean it’s allowing them to not pay their lender points right off the bat and not
to pay their lender monthly payments throughout the duration one we looked at
it and said you know what good is it serve us to be collecting all of the
points and monthly payments from a borrower and depleting a working capital
where they could be pushing that into the job is the yield and you turn around
the property faster you know putting it into the working capital budget to get
through the renovation and get it back on the market and we thought you know
that could really speed up the amount of jobs they could do in a year and they’re
gonna because they could they could produce the year and I think we’ve done
that really to be true and for our borrowers to really enjoy those burgers
yeah because most I mean I’d say probably most hard money lenders they’re
more I guess more of the traditional you would say where it’s points upfront and
then a certain interest rate and then you pay a monthly payment for you know
six months nine months for whatever maybe and yeah that you know if you’re
paying a couple thousand per month for six months I mean plus you have to the
cost the rehab you know I can certainly add up so that Bess yeah that’s one
reason why I like working with you guys because it’s more flexible I’m not
paying a monthly payment every single month that’s pretty cool and actually I
meant to ask you this so as far as the price ranges of houses that you guys
work with is it like the full spectrum what is like the lowest and the highest
price range is about since we’d say low end price range that we have is probably
around you know two hundred thousand kind of and then you know we’ll lend on
properties all the way out there you know you home constructions that are
gonna be selling for 3 million you know it can really depend so we’re we’re
obviously open as as always Road the ego that makes that makes and how many
people are on your team or in your in your company right now so we have a
people we also have some inspectors as well around around the area that work
with us but going keep it pretty small you know kind of still petite you want
to be able to certainly be just one one a one-on-one basis without custody
gotcha and do you guys I mean for the for the
future what are you know what is your plan for like the next five years or the
next ten years you have any I mean is it just a is like the go-to local hard
money lender or yeah you know maybe you cross more geographical areas perhaps
but no any ones that are really made gonna make sense for us getting ones
that we can have a personal kind of touch in those markets where maybe have
somebody there physically that can you know work one-on-one directly with
borrowers that are working in that specific neighborhoods so you know we
were okay to expand can then we probably like to but we want to do it where it
will affect you know anything that we do with a one more customer yeah yeah keep
it more personal as opposed to like the corporate bank with the 1-800 number and
like Florida you know we talked like a hundred different people and then yeah I
mean even if you 2x what we are now there’s always the potential that you
lose the ability to be as responsive as one of me to you know be able to turn on
the deal the day right or two days and and if you got too big that that might
not be always the case in a way so it’s you know this in this market and you
know this I’m sure you’re aware and everybody
that’s probably watching the video is aware that these things can happen fast
and so you don’t have somebody that’s available to you at that moment you can
business details yeah yeah and yeah I mean that that’s exactly why I like
working with you guys you guys are responsive huh and you know we you guys
get the deals done so I don’t know if I have any more questions for you I don’t
know if there’s anything else you want to say but I mean if you’re if you’re
watching this video and you’re looking for a great hard money lender that works
quick has flexible programs and light like John was saying just bring him any
type of deal as long as it’s a deal as long as you properly evaluated don’t
just send in junk no they will look at the deal and they’ll try to get it done
so definitely check out commercial lending LLC I’m gonna put a I’m gonna
put your contact info at the bottom of this video in the comment section so if
you’re looking for a hard money lender definitely reach out to John and he’ll
take care of you thanks Jeff all right I’ll talk to you later

2 comments on “Hard Money Loans – Everything You Need To Know About Hard Money”

  1. Jeff Leighton says:

    ►►► Apply For Hard Money Today:

  2. Robert Clark says:

    Great Vlog

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