DFW Investor Lending – Things to know
I have 3 important words of advice when it comes to Hard Money Lending: Keep it local. You could make a hard cash loan to someone in another state in a perfect world, trust that the assessment they had provided you with was valid and feel confident that you would be secured by the equity in the property in the event of default. But this is not a perfect universe, as we all know. There would be no need for Hard Money Lenders if it was. dfwinvestorlending.com has some nice tips on this.
Place yourself a moment in the shoes of a Real Estate Investor. Investing in long-distance real estate is particularly troublesome. It’s not easy to find trustworthy assessors and contractors when you stay locally, let alone from far away. Maintaining long-distance control of a contract is even harder when the investor visits the job site infrequently – if ever. That’s why most good investors remain local. They know that to look out for their best interests, they can only count on themselves. In their city, they learn the property values, the desirable neighborhoods and those from which to stay away. For their businesses, they create support teams: appraisers, property inspectors, lawyers, title companies, accountants, contractors. In this approach, there is wisdom. It only makes sense that the “Stay Local” page from the Real Estate Investor’s Handbook should be taken and plagiarized by Hard Money Lenders.
You should base your business as a Hard Money Lender in a near radius to where you work, not more than an hour’s drive away. Create your own support team of trade professionals. When a customer brings you a potential loan, don’t allow him to order “his guy” for the evaluation. You order the assessment from “your guy” someone you’ve worked with before, someone you trust to give you the right scoop on the value of the land, not a pie in the sky valuation that in the event of default will leave you holding a very empty bag. As if the borrower were dealing with a traditional bank, the borrower still pays for the valuation – yet you retain power. Walk yourself through the house. Bring your contractor along and get a quote for renovation to ensure that the repair cost estimate of the borrower is correct so that you can escrow ample funds for renovations. You’ll get a sense of the different maintenance costs in time. But you will need the support of a specialist initially to ensure that adequate funds are escrowed. “If your contractor isn’t going to bid for the job, let him know it up front and don’t be afraid to pay him for his time preparing the quote (you might bill your borrower with a “underwriting fee”). In the event that a creditor defaults and you have to supervise completion of the renovations yourself, a contractor who will be realistic about his renovation quote could save you thousands of dollars. All this is almost difficult to do from afar.