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Monday, March 20, 2017

How To Spot A Shark Among Hard Money Lenders In California

In a perfect world, every business would have good intentions and want to do nothing but the right thing. Sadly, that is not the case, and some Hard Money Lenders in California are ready to pounce and unsuspecting borrowers like sharks going in for the kill.

It doesn’t happen often, but from time to time there have been shark attacks in the waters off the coast of California. While dangerous, the larger problem for people is not the sharks in the water but the ones on land. No, not Land Sharks like from the old Saturday Night Live sketches or from “shark-nadoes” from the SyFy channel movies.

The sharks people have to worry more about are the unscrupulous Hard Money Lenders in California. They may appear nice. They may act like they are your friend. But if you are not careful and let them get too close, they can make you wish you were swimming with actual sharks rather than doing business with them.

How To Spot A Shark Among Hard Money Lenders In California

In the ocean, it is pretty easy to tell what’s a shark and what isn’t. So when one does get a little too close for comfort you can move away. However, when it comes to Hard Money Lenders in California, it is not as easy. The sharks can be a lot like the good guys. They can say all the right things and appear to be your new best friend while secretly plotting to kill your dream and take you for everything you own.

So—how do you avoid a shark in a sharp suit pretending to be your friend? There are ways to see a shark coming before he/she gets too close to bite:

• Upfront fees or Success fees: If the broker is legitimate, he or she will be compensated by the lender—not you, the borrower. If they want any sort of fee upfront or try to hit you with a “success” fee because they actually did their job right, take your business elsewhere. Something shady is going on.

• Experience: This does not mean an inexperienced lender is a charlatan. But with the barriers to becoming a loan broker being as low as they are, it helps to know about their experience before getting into bed with them. Do they know what they are doing? Have they been successful more often than not? Dig into their history. If any red flags pop up, take your business elsewhere.

• Exclusivity: If your broker works with just one hard money lender in California or only a few, be worried. The better brokers will have relationships developed with numerous lenders and will cultivate more as often as possible to get you a better deal. If they only work with a few, chances are they were created for the sole purpose of funneling clients to those lenders.

• Careful thinking or flooding: a good broker is going to carefully review your application and needs and send your loan package to a select group of hard money lenders that are more apt to approve your loan. A not-so-good broker is going to flood the market with your application in hopes that someone will bite and give you an offer—but not necessarily a good one.

• The Commission: a good broker will take a modest fee from the lender upon the completion of the deal. A bad one will try to take a larger one or charge ridiculous fees. Do your homework, and you can avoid these guys.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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Hard Money Loans in California Just One Way To Get Your Pot Business Started

Federally insured financial establishments are not allowed to work with pot dispensaries but if you want to get into the business, you have to get your money from somewhere. Hard Money Loans in California are one option, but there are others.

It probably still sounds strange to some, but depending on how you do it and which state you live in, it can be legal to sell marijuana. If the media has taught us anything, there is some serious cash to be made in legalized pot. However, since the federal government does not recognize it as legal, federally insured financial institutions are not allowed to approve loans for marijuana dispensaries or even take deposits from them.

So—does this mean you have to be already independently wealthy to open a pot dispensary? Of course not! There are ways to find the money. Hard Money Loans in California are a common method, but they are far from the only option available.

Options Other Than Hard Money Loans in California For The Pot Industry

Hard money loans can be obtained to get the capital you need to get started, but what if the terms are not that friendly and you have already hit up every other hard money lender in the area? Are you screwed? Is this guy dictating such terrible terms because he knows you are screwed?

You aren’t, of course. But it will get a little more challenging to find your funding. The following are a few options:

• Friends and family: It can be embarrassing and hard to ask your friends and family to invest. Doing so certainly comes with an element of risk (how do you tell your brother to quit sticking his nose in the business when he put up $50,000?), but your family and friends are less likely to charge you an insane amount of interest.

• Attend industry events: If you want to find someone who is pro-marijuana and could be interested in investing in a dispensary, attend a trade show, conference, or some other kind of gathering. They wouldn’t be there if they were not interested, and if they don’t have the money to invest, they may know someone who does.

• Private equity funds: This will probably not work if you are trying to get started, but if you are established, have a brand, and want to expand, private equity firms are becoming interested in the market and may be willing to strike a deal.

• Foreign investors: According to some cannabis industry insiders, there have been some Chinese investors making waves in Oregon of late. The talk is just being classified as “rumor” for now, but if you are running out of options, it is something to keep in mind.

There Are Always Options…

If you want to get into the business bad enough, but don’t want to sell your soul to get approved for any Hard Money Loans in California, there are options out there. You just have to look for them and be open to the possibility.

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Things To Consider Before Approaching Private Money Lenders in California

Private Money Lenders in California can you get you the money you need and get it to you quickly, but are you fully aware of what you could be getting into by using one of them?

It’s a sad fact in business, but a fact nonetheless. Sometimes, there are going to be things that come up that you can’t plan for and can’t ignore. You are going to have to deal with them. But if you are a young, up-and-coming business, chances are good you are not going to have a lot of capital just laying around waiting for you to put it to work.

So—you are going to need money and depending on the severity of the issue that arose, you are going to need it quick. Private Money Lenders in California are generally quick to approve loans for cases such as yours, so you decide to hit one up.

However, before doing so, there are things you should keep in mind.

Do You Really Know What You Are Getting Into With Private Money Lenders in California?

Before you get into business with a private money lender, it is good to have an understanding of what you are getting into.

They are not going to give you a 30-year loan. They don’t do long-term loans. Private money lenders are into short-term loans; stuff more in the three to 18-month range. Before you know it, you are going to have payment to make, and since the term of the loan is short, they are going to be bigger. It’s great to be able to get the money in a few days rather than weeks or months (like through other channels). But they are going to want their money back quickly as well.

So, be sure you can handle the payments before entering into any kind of deal. With the high-interest rate that you’ll get charged and the fewer number of payments, your monthly note can be high depending on how much your loan is. Yes, you may need the money and don’t have any other choice, but there is always another way.

No sense in trading one problem for another.

Will it Really Help?

At the time, it may feel like the cash you can get from Private Money Lenders in California is the only viable option. But sometimes you need to figure out how to take a step back and look objectively at your situation to figure out if it will really help.

Will it help you generate revenue? The loan is money you are going to have to pay back so will whatever you need it for help you make more money? Or are you trying to cover expenses because you didn’t make enough? If so, then you may have a larger issue on your hands.

If this loan is not going to help your cash flow, then maybe it is time to come up with an alternative solution—or an alternative form of revenue.

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How to protect yourself from getting scammed by hard money lenders in California

A sucker is born every minute. This is a hard pill to swallow for some people, but it is true and many lenders will use a person’s lack of knowledge to their advantage. Which is why we at Level 4 Funding want to make sure you are covered when dealing with hard money lenders in California.

In the state of California, there are hundreds of hard money lenders that you can go to for your loan needs. Before you ink any deal, you want to make sure that you do all your research. You have to become a detective when searching for a potential lender. Scour thousands of reviews from past clients if need be. Find everything you can about the lender and the firm they represent.

If they have open cases on with the Better Business Bureau make sure you bring it up when you meet with the lender. If the firm is not recognized by the BBB, which is not uncommon for many firms, you can try sites like California Real Estate Fraud are great places to start. If you cannot find enough information on sites like this, try contacting past clients personal via email. Some hard money lenders in California will post fake reviews on their company website to keep up the appearance of a legitimate business.

What if you are already sitting in the lender’s office already?

Simple, keep your composure and listen for certain clues that will tip you off to impropriety. It could be as small as the lender being too eager to give you a loan before hearing what you plan on doing with the property.

One of the biggest things that trip people up are the fees associated with the loan they are applying for. Take bridge loans, for example, most hard money lenders in California will charge you a fee anywhere from $2,500 to $15,000. Yes, it is a lot but you need to make sure you are committed to the project.

That being said, if the lender asks for a fee higher than that you should not go through with the deal. If the loan you are looking to borrow is less than the fee something is most likely off with the lender.

REO fraud is popular with some hard money lenders in California

An REO property, or a real estate owned property, is sold by the lender. Many people fall prey to this scam due to a lack of research. What usually happens is the lender sells the property for a relatively low price to a secondary buyer then sells the property at a ridiculously high price. If you do not look into the past buyers and prices you could fall victim to this.

Many of the frauds are beginning to eliminate the middleman altogether and just selling the property for a high price. Investors can prevent being taken advantage of if they take the proper precautions when looking for lenders. Peace of mind is worth more than a new property.

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Common mistakes made when looking for short sale homes

Rehabilitating distressed homes is a popular way to make money in the real estate business. When you are starting out rehabbing can give you many sleepless nights and stress. Short sales are a great way to begin your real estate career, however, there are some mistakes many new investors make when attempting to complete a short sale.

You have read “short sale” four times now, but what are they? Basically, a short sale is when an owner of property agrees to sell even though the net profits will not cover all the debt associated with the home. As long as all parties that own the property agree to the terms of the sale you are able to buy it. If you know how your contacts you could end up with a great home, however, if you skip a few steps you could have a lemon on your hands.

What should you be on the lookout for when considering a short sale

One of the first things you should look out for when considering a short sale property is fraud. There are many laws and practices that are in place to protect from any fraud that may happen. Perpetrators are usually taken care of by the proper authorities. While there are, many resolved cases, there are many victims that fall for the scheme.

One of the most popular schemes that people are fooled by is “flopping.” Flopping occurs when a buyer or a hard money lender in California is offer a price that does not accurately represent the value of the home. Usually, victims end up paying much more than the actual value of the home.

To make it easier to understand, the owner or lien holder will withhold information from the lender about buying the property for a low price. After they will list the property at a higher value to another buyer. Once the buyer confirms they want to pay the “fake” price. After the deal is concluded the owner pockets the difference.

Use these precautions to help combat fraud

For starters, if you are the one that is buying the home one of the first things you should do is go through the home. Make sure you take time out to go through every nook crawlspace in the home. With short sales, you are able to take a walk through of the home before you commit to purchasing it. Many foreclosed homes will have underlying cosmetic issues that you cannot always see.

Things like foundation repair, mold and mildew or electrical malfunctions can cost you more money in the end. Make sure you have the proper professionals come to clear the home for anything you might feel is wrong.

In regard to the proper authorities, hard money lenders in California also want to make sure the property is appraised by a trusted building inspector. Having an extra pair of eyes will make sure nothing slips through the cracks. When taking on a short sale make sure you cover all your loose ends.

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What you need to start flipping homes in Texas

When you are beginning your career as real estate investor, flipping homes can be an extremely strenuous ordeal. The rehabbing process of a home in Texas could end up costing you a lot of time and money in the end. You can make a lot of money as long as you take the time out to properly prepare yourself for every investment. There are a few trade secrets that you should keep in mind when you begin.

Knowing how to or someone that is handy.

Rehabbing is not all about buying and selling homes. Sometimes a new or not so new home, calls for you to be able to get down and dirty. Being able to install a common toilet system or a being able to run a wire through a wall are great skills to have as an investor. Like we have stated before, depending on how you are buying a home, often you cannot tour the property prior to purchase. Being able to do certain small jobs on a property can take some of that apprehension away.

On the other hand, you also need to humble yourself, no one person can conquer the world. Play to your strengths and recognize your weaknesses. If you know you have no clue on filling holes in drywall, do yourself a favor and find someone that can do it for you. Having a home that looks nice to a potential buyer trumps any expenses you may incur during the rehabbing process.

Make yourself familiar with your work

When taking on the rehab business, you need to make sure you are always on your game. From what sports history tells us the most prepared player wins the most. If you are a hard money lender in Texas, you need to constantly check how the market is changing. If you are an investor, you need to know what you are looking for. Check the area that you are looking to purchase a home in. Make yourself familiar with the types of homes that are in your area, as well.

Surround yourself with a team of experts that know the business

While you should make sure you are familiar with the business, you should also make sure you have a solid team of experts around you. Should you be handy enough to fix certain small jobs in the home, however, you do need an expert that is able to do the bigger jobs. If you are not familiar with plumbing in the home do not take it on by yourself. You may feel as though you save money, in the long run, it could end up costing more if you happen to mess something up.

You might even think you should solely bankroll your investment by yourself. Having a solid hard money lender in Texas that can loan you the money you need. Give yourself a fighting chance when you start your real estate career. You will have a lot of competition, but if you follow these steps you will ensure your success.

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