"Currently a taxi driver, 532 score, nothing down..."

I just got off the phone with broker Toby. Toby said, "I saw your web site and thought this might fit, because you offer hard money loans with 100% CLTV. I have a deal were the seller is motivated to sell the place and carry back a big 2nd position loan."

I asked Toby to tell me about my potential borrower and the property:
"He is currently a taxi driver and has a 532 mid score. The property is a restaurant but has 2 extra lots. Property value and purchase price is $3.3 million, and the taxi driver doesn't have any down payment. Oh, and the restaurant needs some fix-up and updating done to it. But, the bikers like to eat there..."

Sound like a good deal for your local community bank? NOT!

Want to know what my response was to this hard money loan request?

"Toby, I can offer a loan on this scenario, but I would only be interested in making a 30-40% 1st position loan. The seller can carry a big 2nd. My interest rate and points would be 14.95% and 7 points at closing."

Expensive? YES.

Would you lend your own money on this deal?

Will you really make a loan to a bad borrower?

I am an equity based lender. Would I be comfortable making a loan to a borrower who
never pays anyone back? It all comes down to the property...

What I have to consider as a potential lender on every deal: If the borrower defaults, can I re-sell the property relatively quickly, and for how much can I sell it?

Answering this question is the "bottom line" in considering any potential loan I do.

Question: Will I make a hard money loan to bad borrowers?
Answer: Of course I will.

Question: Will I make a hard money loan on any deal?
Answer: Absolutely NOT.

Why would a bank lend 100% against a frumpy, dumpy house, but not lend 45% against 20 acres of land?

I dunno. It doesn't make sense to me.

Read the post down below under the title of
"Tell me again why banks won't lend on land?"

Hard Money For Land or Commercial Property

Hard Money For Land or Commercial Property

Back to hard money land and commercial loans

Appraisal dilemma!!!

di·lem·ma (dĭ-lĕm'a) n.
A situation that requires a choice between options that are or seem equally unfavorable or mutually exclusive.

Appraisals - the black box of the hard money lender...

Consider the scenario: Two identical 5 acre parcels sitting side by side in Oshkosh, Wisconsin.

Parcel #1 is owned by Jack Handey. The property has been in the family for 30 years and he just loves the natural look and feel of the vegetation: pasture type grass and nice tree cover. Jack loves bird watching on the property and would never want to disturb this little slice of heaven. Even though Jack feels the tax value of $70,000 is way to high, he loves this little paradise.

Parcel #2 is owned by Big Thinkers, LLC. They bought the property last year and intend on building a new "Super Jackpot" Casino and Hotel on the property. Once the magnificent casino and 20 story hotel is completed, it will be worth about $50 million dollars. The cost to construct and complete the "Super Jackpot" will be $40 million dollars.

By using simple math, we can obtain the current land value: $50 mill - $40 mill = $10 million

Question: Two identical parcels - is the value $70,000 or is the value $10 million?

Did you know you could get a local appraiser to give you either value?