Hard Money Facts

How to Choose a Fix-and-Flip Lender During a Recession

Posted by Residential Capital Partners on Aug 26, 2020 4:39:24 PM

Panic is the enemy to your investment strategy. Choosing the right hard money lender might just be the antidote.

As any neuroscientist can tell you, humans make poor decisions when they panic – and property investors are no exception. Panic literally disengages our pre-frontal cortex – the area of our brains that brings logic and flexibility into decision-making. Under duress, our brains instead rely on the amygdala – the part of your brain that responds to instinct, emotion, and the impulse otherwise known as “fight or flight”. You know, the stuff any seasoned real estate investor will tell you to avoid when making an investment.

Any hard money lender worth their salt will tell you to avoid these very same impulses when a crisis hits while offering sage advice such as “your safest bet is to stay the course” or “maintain objectivity”. So why is it so many lenders haven’t taken their own advice, and either stopped giving out new loans or inflated their interest rates in response to Coronavirus?

Perhaps it’s not so easy for lenders to walk the talk without prior experience lending during a turbulent economy.

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Topics: Fix-and-Flip Financing Tips, Fix-and-Flip Lenders, Private Money Lenders

Thrive Through COVID-19 With a Relationship-Oriented Private Lender

Posted by Residential Capital Partners on May 20, 2020 11:47:01 AM

The coronavirus outbreak— and the subsequent turbulence of the stock market—has revealed stark differences between private lenders’ customer service models:

  1. There are hard money lenders that rely on Wall Street to buy loans they have placed on a warehouse line. They treat loans as transactions.
  2. And, there are lenders that have used their own balance sheet to fund loans. They treat loans as relationships.

Did your lender back out of your loan? Are you struggling to get them on the phone? Or get a straight answer to questions when you do? This is a sign your lender uses a transactional business model. This is also a sign that now is the time to find a hard money lender with a relationship business model.

“A lot of our competitors have said they’re relationship partners, and coronavirus was the end of that relationship.”

 

COVID-19 Reveals the Downfall of the Transactional Business Model

Private lenders with a transactional business model will tout both their customer service and the expedience of their capital, which they may deliver when Wall Street will buy up their loans. But what happens to customer service when the expedient capital goes the way of Wall Street’s fear? It evaporates and the very nature of a “relationship” evaporates with it.

In the words of Paul Jackson, Principal of Residential Capital Partners, “A lot of our competitors have said they’re relationship partners, and coronavirus was the end of that relationship. We want to be the lending partner of choice for our customers in good times and uncertain times.”

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Topics: Fix-and-Flip Financing Tips, Fix-and-Flip Lenders, COVID-19, Private Money Lenders

So Your Hard Money Lender Backed Out Because of COVID-19

Posted by Residential Capital Partners on Apr 24, 2020 10:46:47 AM

Coronavirus has spread across the globe in rapid time, disrupting nearly every industry in its wake. House flipping is no exception. Real estate investors are now forced to navigate new challenges to secure funding. Banks are preoccupied and most hard money or private lenders are either sidelined, denying loans or raising interest rates and cash reserve requirements. The clock is ticking—what do you do?

Take a deep breath. You’ve landed in the right place.

Long before COVID-19 came onto the scene, Residential Capital Partners made the decision to run our business with refreshingly straightforward terms: No money down. 100% funding up to 70% ARV. 10% interest. 3 points rolled into the loan. 9-month term.

We’ve always prided ourselves on our transparency and now, more than ever, investors like you need a lender that can deliver on their promises, so you can keep making progress towards your goals.

So, true to our word, here’s a transparent look at what’s happening in the real estate flipping industry, and what you can expect from us:

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Topics: Fix-and-Flip Lenders, House Flipping Market Insights, COVID-19, Private Money Lenders

3 Ways to Spot Trustworthy Fix and Flip Lenders

Posted by Residential Capital Partners on Feb 26, 2020 12:55:12 PM

Finding a trustworthy fix and flip lender can be the start of a beautiful, mutually beneficial business relationship.

But a misleading lender can lose you time and money. Lenders don’t like to turn away business. So, if your deal isn’t a solid, unwavering “yes,” you may hear, “I’ll see what I can do” or “we’re still working on this.” Sometimes, this templated response comes long after the initially promised deadline. Why? Often, the lender is working behind the scenes, trying to make a deal happen for you — even if it’s in the form of an exception.

Bottom line: Don’t leave your investment property loan pending on empty words. Look for a lender who will give you a quick answer and an honest assessment of your deal.

Before you sign — or pay — anything, look for these three qualities in rehab lenders.

#1. They’re Available.

Questions can arise quickly in this business, and you need answers ASAP. Getting in touch with your lender should be easy. A good lender will give you multiple points of contact, and they’ll answer your questions in a timely manner.

#2. The Terms of the Loan Are Clear.

Having clear, easy-to-understand loan terms is simply good business. A trustworthy lender will outline any fees and loan terms before you get to the closing table. Murky fix and flip loan terms can lead to unrealistic expectations of a deal. A reliable lender will willingly help you understand what you’re signing

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Topics: Fix-and-Flip Financing Tips, Private Money Lenders