Below is an interview with the Chuck Mann of Real Estate Investment Solutions – a National Hard Money Source and his views on the new market.
Q: When did all of the changes begin?
Hard money as well as conventional lending for real estate investment purposes has changed significantly since the mortgage crisis came to a head in 2007 and 2008. Before then, investors could get up to 95% LTV (loan to value) on non-owner occupied 1-4 unit investment properties with mid 600 credit scores. I recall there were a few short periods during this time frame when 100% conventional financing was available for residential investment properties.
Today, most hard money and private lenders are a bit more stringent than they were four years ago in regard to a borrowers credit history, what properties they will lend on as well as how much capital a borrower has. It comes down to supply and demand. Since many banks are not lending for investment purposes, hard money lenders have many borrowers coming to them with excellent credit and a good amount of capital. Taking that into consideration, who do you think they are going to lend to?
Q: If I have bad credit will the Hard Money Lender still deal with me?
Yes. There is still hope for the fledgling investor with limited capital and spotty credit history. With a well conceived investment strategy and a properly presented loan package, many lenders will make exceptions if the property in question makes exceptional sense. This is when working with a seasoned hard money individual is to the investors advantage. Give us a call and we’ll be glad to start an exploratory analysis to determine if hard money lending is suitable for you
Q: What do you think of Hard Money rates?
Due to the supply of quality borrowers in the market and primarily to the melt down of the Sub-Prime lenders rates have come down. Investors in Hard Money Notes and Pools are willing to take less of a return to get a more qualified borrower. There is however, still the Hard Money available for the old (poor credit) Hard Money borrower at higher rates.