Hard Money Lending

Welcome Everyone!
Tonight’s Lesson
Hard Money Lending
The Truth
Exposed
www.ChrisGoffInvesting.com
Chris Goff
President of Chris Goff Investing
• Resides in Austin, TX
• Husband and Father of 3
• Business Marketing Expert
• Real Estate Coach & Mentor
From the "Street" to Working for the BIGGEST Name in Real
Estate – Donald J. Trump!
Chris’ reputation for successful students has earned him the privilege of being one of an elite
group of REI educators hand-selected by Donald J Trump to Instruct and Mentor for his
exclusive REI education company, Trump Entrepreneur Initiative!
Chris’s Trump Certifications &
Accomplishments
- Trump Certified Real Estate Instructor
- Trump Certified Real Estate Mentors
- Trump Certified Advanced Retreat Instructor
- Trump Certified Mentoring Instructor
In 2008 I was asked to head up the In-Field training program teaching Trump’s Real Estate
Mentors techniques to ensure each student received the maximum training during their 3-day
live experience.
- Presidents Award 2008
- Award Winning REI Educator
We have Collaborated on and Authored 10 Top Selling Books and programs on the
Subject of Real Estate Investing and have been featured in The Washington Post,
The Houston Chronicle, The LA Times and on National Public Radio.
- Including Trump Entrepreneur Initiative's

- Apprenticeship Program
- Fast Track to Foreclosure Investing
- Quick Start Real Estate
- Real Estate Investor BLUEPRINT
Tonight’s Topics
What are Hard Money Lenders?
Benefits
Pitfalls
What is Hard Money?
Hard money lenders are lending companies offering a
specialized type of real-estate backed loan. Hard money
lenders provide short-term loans (also called a bridge loan) that
provide funding based on the value of real estate that has been
collateralized for the loan. Hard money lenders typically have
much higher interest rates than banks because they fund deals
that do not conform to bank standards.
Hard Money Risk
Hard money loans are more expensive than traditional loans
because they are not based upon traditional credit guidelines which
protect investors and banks from high default rates. As hard money
lenders may not require the income verification that typical lenders
require, they experience higher default rates (and, thus, charge a
higher rate of interest). Individuals and companies may opt to take a
hard money loan when they cannot obtain typical mortgage
financing because they do not have acceptable credit or other
documentation typically required by a conforming loan.
Hard Money Collateral
Hard money collateral is typically the real estate loaned on.
However, it sometimes include other assets of the individual or
business borrowing the hard money. In many cases a hard
money lender will offer a smaller loan size based upon a lower
"Loan To Value Ratio". This means they may opt to loan no more
than 65% of the property value. Therefore it is common for real
estate investors to offer additional real estate as collateral in
order to obtain a larger loan amount. This is known as cross-
collateralization.
Regulation
Several states' usury laws, including Tennessee and New Jersey,
prevent hard money lenders from operating with their usual
practices. Regulation of hard money not only differs by state, it
differs by the status of the borrower in terms of whether or not the
loan is made to a business or to a consumer. Consumers generally
have additional protections in individual states. They also have
more lending oversight and regulation benefits federally when the
loan is issued by a commercial bank, that is federally chartered by
the FDIC. Some of the most aggressive loan terms are issued by
commercial hard money lenders. In addition, the type of property
being lent upon may also be a factor in determining if
state usury laws allow for legal hard money lending.
Loan Programs
Hard Money Loans (Residential)
Property Types: land, SFR, condos, duplex, triplex, quads
Minimum Loan Amount: $100k
Maximum Loan Amount: Case-by-case
Maximum LTV: 70%
Renovation and/or construction funds held in escrow account
Major metro areas preferred
Investment properties or second home (non-homestead properties)
Hard Money Loans (Commercial)
Property Types: Land, Income-producing
Minimum Loan Amount: $100k
Maximum Loan Amount: $5 million
Maximum LTV: 65%
Renovation and/or construction funds held in escrow
Major metro areas only
Benefits
1) Many banks will not fund rehab projects...so even if you are
qualified, a regular bank might not want to give you the money
for your project. Most Hard Money Lenders evaluate the deal,
not your credit.
2) Banks usually want a substantial down

payment...often up to 20%! Some Hard
money lenders will not require a down
payment. This is a huge advantage for you.
Some Hard Money Lenders will require
only 15%.
Benefits
3) Hard money lenders work almost exclusively with real estate
investors like yourself, so they know the industry inside and out.
Traditional banks give any number of commercial and personal
loans and don't have any programs tailored to the real estate
investor. A private lender can create a special program that fits
your needs, with terms and options that work for you.
4) Speed, Speed, Speed!
5) Smaller than Banks which offers the benefit of building

relationships.
Pitfalls
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.
Pitfalls
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.
Pitfalls
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.
Pitfalls
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.
10 Sure Fire Ways to Get
Approved for a Hard
Money Loan
Step One - Find A Property. This step is fairly simple.
You identify the property that you want to get a loan for so that
you can start the process of finding lenders to finance your
investment. Is this property one that is worthy of a loan? In
this market there are some great opportunities for those with
the funds and lending resources to get their deals funded. Will
it sell quickly, or will it sit on the market for a long time?
Properties like churches and golf courses are called special
asset classes and hard to get loans on, simply because they
are hard sells.
Step Two - Call Your Lender. If you already have a
preferred hard money lender, you need to get in touch with them
immediately. You should figure out the financing and the terms
right away, rather than saving it for last. Questions like: Loan
Amount, Equity Required, Term, Loan Reserves Required, and a
solid exit strategy are some of the key questions that need to be
addressed.
Step Three - Find A Lender if You Don’t Have One. If
you’re just getting started, or if you don’t have one specific lender
that you prefer to work with, find one immediately. Idle time means
lost profits, and you need to make sure that you can get financing
so that you can move on the deal. If you waste time and don’t get
to it, someone else will. Make sure that you find a lender who is
actively involved in lending right now in your area and ask them to
tell and/or show you their last few transactions.
Step Four - Verify The Legitimacy Of The Lender. Is
the lender real? Are they actually able to give you a loan?
There are many hard money lenders out there that will tell you
that they are lending and can loan you money, when in reality
they can’t help you at all. Some will be “loan brokers” rather
than “direct lenders,” and you don’t want to work with these
people either. A direct lender is someone who actually
provides the money. This can be a line of credit, a private
group, or even just a wealthy individual who wants to invest in
your success. You MUST know what the difference is and be
sure to avoid working with brokers under the impression that
they are a direct lender.
Step Five - Do Your Due Diligence Ahead Of Time.
Impress your lender with a great borrower loan package. A good
package includes: Budgets, Loan Proposal, Pro forma, Pictures of
Property, Sales Comps, Bio on Borrower, Business Plan, etc....
Step Six - Figure Out Your Exit Strategy From Loan.
Hard money loans are very powerful investing tools. However,
they are generally meant to be short-term investments. How are
you going to pay off your loan? What is your plan for moving
from your short-term hard money financing to a permanent bank
loan? Try to figure this out beforehand. See if a bank will give
you a conditional “letter of intent” or “letter of interest” stating
their interest in funding the loan once certain conditions are met.
Also, if you have a pre-existing relationship with them, ask your
banker to mention this and to refer you. These tools can make a
big difference to a hard money lender in giving a hard money
lender the confidence to move forward with you and possibly
under better terms.
Step Seven - Know Your Costs... Get An Estimate From
Your Potential Lenders. Good Faith Estimates or “GFEs” are
going to provide you with an estimate of what you will expect in
the terms and costs of your loan. It doesn’t have to be exact, and
it rarely will be, but it should give you an accurate range of what
you should expect in your loan when you are working with a hard
money lender. Property taxes, surveys, appraisals,and other
events will increase your estimate, but having the ballpark idea of
what you’re going to pay to close the loan will avoid any
unpleasant last minute surprises. Be prepared. Ask for the terms
up front through a good faith estimate and be prepared in your
transactions.
Step Eight - Watch Your Money. You need to make sure
that any money that you are investing isn’t sitting in escrow for
construction or other fees and being charged to you at the same
time. This is basically a two-way street, but it still helps to
understand what you’re getting into. If you borrow money, it
should be in use. That’s the basic point of this step in the
process. You need to make sure that the money that you are
paying for is actually being put to use. It is actually required in
most cases. There are a few exceptions to this rule, of course,
like many situations in hard money borrowing.
Step Nine - Meet Your Closing Team Ahead Of Time To
Ensure A Smooth Funding Of Your Loan! Pick up the phone to
call and introduce yourself to your title officer and closing team
early on. The closing and title company needs to be on your
contact list before you even confirm the deal that you’re making.
You should keep in touch with these people so that you can
update them on the status of your deals and where the closing
sits to keep it going on time and avoid delay that could blow your
deal.
Step Ten - Establish A Track Record Of Success. You
should have a history of timely payments at all points, even if you
are only one transaction into hard money borrowing. You should
prove that you are a reliable investor who wants to take other
people’s money and make more for them. You will quickly see
how much easier it is to get the funding that you want or need
when you have a reputation. The first loan is like the first date:
difficult, slightly awkward, and neither of you knows where the
other stands. Once the process has been completed once, it can
be repeated many more times and you will both have a better
understanding of how it works and what you need to do. If you do
things properly, they might even chase you down instead of you
chasing down a hard money lender for a change.
The Process
STEP ONE:
APPLICATION
STEP TWO:
DOCUMENTS
STEP THREE:
APPRAISAL AND TITLE
STEP FOUR:
INSURANCE & CLOSING
STEP FIVE:
CONSTRUCTION/REHAB DRAWS
STEP SIX:
SELL OR REFINANCE
BEFORE
PICTURE
Breakdown
ARV: $205K
Purchase Price: $75K – CHEAP!
Down Payment: $11,250
Loan: $63,750
LTV: 31% - Based on After Repaired Value
Points: 3.5% = $2,231
Interest Rate: 13%
Closing Cost: $1,913
Repairs: $65K
3 Month Rehab Project
Monthly Payments: $700.00 X 3 Months = $2,100
Total Investment: $146,244
AFTER
PICTURE
Results
Total Investment: $146,244
Sold for: $197,000
Total Profit:
$50,756
Explosive Marketing
Secrets Revealed Course
Only $497
So far I’ve got more than 40 homeowners and more than 40
buyers, I have not made any offer to them, which is really not
good!
Charles Lee
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Hard Money Lending

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Hard Money Lending

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Welcome Everyone!

- Including Trump Entrepreneur Initiative's

2) Banks usually want a substantial down

4) Speed, Speed, Speed!

5) Smaller than Banks which offers the benefit of building

Total Investment: $146,244

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