|Part III- Profiting from your Hard Money Lenders
Having a good hard money lender will help you to become more profitable. You will be able to
take advantage of deals when they come available. You will be able to act quickly if need be. You will
be able to obtain a prequalification letter from your lender to give yourself more credibility when
making offers, and finally, you will be able to act as the bank by connecting your wholesale buyers
with your lenders so they can borrow money to buy properties from you.
If you are pursuing a lot of properties listed with real estate agents you will need a
prequalification letter to submit along with your offers on many distressed properties, particularly
those that are owned by institutions. You can obtain a prequalification letter from a hard money lender
for this purpose, and in fact, your offers will carry more weight when submitted with a prequalification
letter from a lender that is active in your area whom most real estate agents--particularly the ones
that specialize in foreclosures--will recognize.
Hard Money Lenders and Your Buyers - A Match Made in Heaven
It is extremely helpful to have a stable of hard money lenders to call upon to finance the
purchase and rehab of properties that you may want to buy. However, even if you never buy a property
for yourself, the second and most important reason to develop contacts with as many hard money lenders
as possible is that hard money lenders will be your best and most reliable resource in making sure that
your deals are consummated when you sell homes to other investors. You want to become the bank.
Many prospective buyers for your wholesale properties are not all cash buyers, whether they claim
to be or not. In reality, most cannot simply write a check from their bank account, but rather must borrow
their money from other sources. Depending on their source of funds, this may or may not be OK. If an
investor doesn’t have a legitimate source of funds, then it is your job to screen them a little further
to determine if they qualify for you to take them to one of your hard money lenders. Many are capable
of making mortgage payments and completing a rehab and would love to buy your properties if they could
come up with the cash. In this case, it is your job to take control of the deal and lead them to the
money. Become the bank as well as the provider of the property. But be careful. Maintain control of
the transaction and use some discretion in deciding whom you take to your lenders. You don’t want to
burn bridges with your lenders by bringing them deadbeat buyers who default regularly. Your buyer's
credit report should show an intent to repay all of their debts on time, and they should have some source
of regular income which gives them the ability to make mortgage payments to your lender.
Ultimately, you want to be able to take anyone who wants to buy a home from you (assuming they
meet your minimum criteria) to one of your lenders. I have developed a regular following of investors who
buy from me because not only do I find the properties but I also line up the financing, and you can too.
This concludes my series on hard money lenders. I hope you find the information useful.
Since 1998 Steve Cook has flipped many hundreds of houses as an active Baltimore-area real estate investor. Steve’s
unique specialty is the “flipping homes 1-2 punch”, a proven system of real estate investing that powerfully combines
wholesaling and rehabbing houses. Also the founder of www.FlippingHomes.com, Steve is dedicated to helping others
in this thriving online community succeed through understanding and aggressively applying his time-tested,
step-by-step approach to flipping real estate. Get FREE weekly tips from Steve Cook and other house flipping
experts at www.flippinghomes.com
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