Top Hard Money Lender for You

Fort Worth but I couldn’t find them anywhere in Wyoming so anyway I’m excited to talk with Darren today he can kind of tell you some of their terms and how it works but Darren let’s actually start there like kind of how just give us in a recap kind of how hard money works in your world in a couple minutes yeah so Lima one capital is uh you know we were founded by two Marine Corvettes that came back from serving in Iraq and you know they they found a niche in a Marketplace that you know they were doing fix and flips but also saw the financing side needed some cleanup and this is you know 14 years ago and and they saw a need for a hard money lender that was a little bit more consistent more reliable and so they went out and started uh you know seeking Financial backing to be able to support the industry from you know taking their their Marine background and you know we’re going to do what we say and say what we do and provide lending for those that are out there doing flips and Bridge and and really what they’ve gone into was the hard money lending is you know kind of Falls in this in private lending now would we typically be what we’re called is uh and you kind of fall in between you know a local guy that’s got a bunch of money and then a bank you know the banks are they’re less expensive but they’re slow and they’re going to ask for tax returns they’re going to want a lot of documentation the hard money lenders are expensive but they’re quick and so people can react quickly in the market if there’s a a purchase or a transaction that needs to happen you know at a at a Quick Clip now private money is kind of in this in the middle space where we’re not as cheap as the banks we’re not as expensive as uh you know your local lenders but we’re there to provide high volume service one we’re backed by you know most people are backed by financial institutions that are either publicly traded or are tied to Wall Street somehow so you know you’ve got a a lot more Runway than somebody who’s local and then a lot more ability to lend than uh you know a local bank that’s going to constrict based on you know your income or your W2s or something along those lines so The shortterm Fix and Flip loans are U typical terms are you know 12 13 months and and those are going to provide you with a lower uh down payment than you know a typical banking institution uh and then we’re also going to provide the construction budget if there’s if that property’s disted and needs work so you know we kind of find a niche to where we can provide a service to clients like yourself Casey and uh that are out there actively buying uh distressed Properties or even properties that just may fall under Market uh and you’re going you got to go out there and take advantage of those quickly love it yeah so we’ll kind of get into the two different kind of options or several different options but to kind of recap and maybe you can’t get financing from a bank or maybe you just doesn’t you don’t want to wait and jump to the hoops at the small bank or or the mortgage company wants you to do so it’s kind of in between that or and again as Darren said there’s also hard money and hard money is get again more expensive can happen faster but again I don’t advise people to use hard money unless they have to right it’s more expensive more Hoops to jump or not more Hoops but like draw schedules and it just can be more difficult when using hard money especially if you got a big Fix and Flip so this is kind of the happy medium where you can kind of find the balance yeah and I would say you know the hard money lenders are they’re prevalent in most areas uh they’re good for what they’re they’re needed for and that’s being quick the one thing I think people don’t understand a lot of times is that I think You’ really need to know what you’re doing when you get into a hard money loan because you know you’re not being handheld in those institutions because they they know you got to react quickly and then usually if you don’t adhere to their you know set guidelines the penalties are severe so that’s you know whether that’s a financial penalty or just you’ve got to drop and get out of it so that could be difficult for people that are you maybe a little Green in the space or novice however you want to say it they don’t quite know exactly what they’re getting into where on the private many side of things I think we do a really good job especially for those we cater to those that are high volume like you guys but we also do a really good job with those that have you know maybe watched an HGTV and they’ve been diving into YouTube videos and they really want to get into you know doing their first flip we are very cautious with them and walk them through that process to make sure that they’re not making a big mistake and getting themselves into something they can’t handle so Darren such a good point and I speak from experience I remember when he first got into hard money it seems like hey yeah we can you’re watching the shows you’re reading the books you’re like hey I could do this especially somebody who’s like ambitious wants to go do it but you don’t realize kind of walk you through all those if then hypothetical scenarios or or dominoes That Could Fall In where you’d be so that that’s really cool that you guys walk through your clients or people that you’re working with to set them up for Success right yeah I mean at the end of the day we we don’t want to take anything back back I mean we want to have a successful project see you exit with you know making money or if you’re going to hold it for a renter uh you know we obviously love that we love that success we love that continued uh customer coming back to us whether that’s they’re going to do their next Flip or they’re going to go and refinance into a rental loan and you know put somebody in there for a long-term rental yeah I’m glad you brought that up because people and that that’s probably the last thing I’ll cover here is with hard money lenders there are a lot of hard money lenders that are built upon taking properties back and when you default or you don’t perform they’re happy to take your asset back and sometimes that’s how they make even more money right but that’s a good point of more of a private money lender or something like the Lima 1 that’s not their intent their intent is to keep deals coming and you doing more deals right yeah I mean and that’s you know how we’re built is you know everything has to close in an LLC we cannot close in somebody’s individual name and that’s because we’re built to do business purpose loans or commercial based loans that are one not going to report to your personal credit so the more you do with us the better your uh you know your paper is with us and we’re not affecting your ability to run your day-to-day life I mean it’s we have investors that have hundreds of properties that they’ve done transactions with Lima one and then we have some that have done one or two and and they’re you know more of a uh you know just a oneoff type of client okay so now Darren let’s say that I’ve actually just did my Fix and Flip and it’s a birth strategy I want to keep it as a long-term Buy and Hold or maybe just say I find a Buy and Hold from the start that doesn’t need a lot of work but I don’t want to go to a small bank again could be due to credit could be due to the fact that interest rates are high or I want something more flexible like what is a it’s called your guys’ dscr product but I’m tell us more about that yeah so it’s a Debt Service loan so what that means is that you know your debt is the mortgage payment and then the the rent is going to cover the debt so what we’re looking for is to cover that debt by 1.2% or greater so you know if you got a $1,000 rental or mortgage payment we want to see the rent that you’re charging your client at $1,200 or greater and and really what that is is it’s just showing you that there’s cash flow in the property and that the rent renter is going to cover your mortgage note on a monthly basis so those loans will go from anywhere from 80% on a purchase uh to 75% cash out and those are typical they mirror a conventional loan the most right so we offer 30-year fix 101 and 51 arms and then we offer a 51 interest only loan that’s on a 25 year would convert to a 25 year am after the fifth year expires so those loans are are very conventional they mirror exactly what you’ve seen in your personal House of buying a 30-year fixed property before so but yeah those are loans that are highly uh used recently with the popularity of the Burr I think you know you you mentioned uh Brandon Turner before I think he’s probably the you know the Kingpin behind that too with just really making that strategy popular you know to buy renovate and repeat and refinance and repeat and you know you’ve got a ton of investors out there I know you know the two of us are in Collective genius there’s a good amount of people in there that uh kind of have their hats in all sorts of buckets but that’s definitely one of them that’s one that people look to uh you really hold some properties and not only gain on the you know your monthly income off the the rental income but really that gain over time right you mean as long that those properties are going to appreciate in uh in most markets we’ve seen the the housing markets uh increase rapidly recently but you know it’s a win-win over time most most housing markets will increase over time and uh you know those are those are valuable assets for people to own yeah so where these DS loans really help people is when you can’t so maybe you’ve already bought several different rental properties and now the bank is starting to slow you back or maybe you’ve maxed out your mortgages or whatever reason you can’t get qualified through a bank you can actually these loans the beauty of them is they’re based on the asset they’re based on the rent that it brings in so or you might just have again there’s people out there that still want to invest and have bad credit they’ve got a what did whatever in their past right but they still want to invest so is that right Darren basically they could use this dscr product and is the biggest caveat they just have to have a signed lease to be able to do it and it has to appraise is that the big drivers yeah and you actually don’t necessarily have to have a signed lease we can go off of Market rent so I mean basically if you’ve got a vacant property so a lot of times you’re buying a property and it’s not leased out right so you’re you’re going to convert it into um or you did a Fix and Flip and you just finished it you got your co uh it’s not leased out what we can do in those instances is we we ask the appraiser to give us a market analysis on the rent and then we haircut that so you know let’s just say they come back at market analysis on the rent is $1,000 we’ll take 90% of that and say okay we can make the numbers work at $900 a month granted this guy’s probably going to get a th000 to maybe even you know 1,100 in in rent so we’re Cushing it we’re you know giving ourselves a cushion on the on the underwriting side of things uh so you can have vacant properties and get into one of these loans the thing you you can’t do in these is have a distressed property it has to be as is can’t be subject to so it’s got to be a property that uh a renter could immediately move into and and is livable got it and to break that down further so let’s say though you have a lease will you go up to 100 if you have a sign lease for $1,000 a month will you go will you give them credit for that full thousand or do you still take a little haircut off that typically no we will we still look to see what the analysis looks for uh you know really what we want to see is is it in a variance that you know you’re not getting the Unicorn where market analysis is $1,400 in this area and you’ve got somebody in there for 2,000 we’re not going to do that but we’ll you know as long as it’s within range yeah we’ll use that lease got it and to make just sure we can help people doing this calculation again they’re going to take they’ve got their Topline rent number divided by the the debt ratio but the debt ratio is going to include principal interest your payment and then taxes insurance and any other like if HOA any other that stuff HOA yeah yeah yep we don’t take into you know these don’t take into account uh vacancy or anything like that when you’re when when you’ve got an occupied property like a multif family or something like that but these are yeah you just typically to me like if you’re bringing a deal to me and it’s a Debt Service loan I need to know what the address is what the purchase price is or as his value and then taxes insurance if there’s any HOA or flood um you know let us know what that is so we can factor that in but but yeah pretty simplified loan got it so beauty is yeah you again investors should definitely run vacancy and repair percentages in there but that doesn’t have to count against you to get this approved correct yeah it doesn’t factor into The Debt Service got it and 1.2 is solid I know most banks even if you’re talking to so if I’m going to a small Commercial Bank getting good rates like they’re still the same like I’ve you know what I don’t think I’ve heard of any I used to hear some people going 1.15 but even a lot of them are more like 1.25 1.3 now so fact that you guys can go 1.2 in today’s market it we’ll go down we’ll go below a 1.20 not on cash out though so you can do it on you know if it’s going to be rate and term it’s going to you’re going to get cut on Leverage there so 10 is the floor property has to be above 250,000 and we’re not giving cash out awesome so cool well we can kind of wrap on that but kind of I’ll let you get the last word Darren but to recap you got covered for fix a flip you guys have talked about you can do new construction and then obviously these term loans or these DSR loans if you want to hold it as a buying term long-term rental any other stuff you wanted to kind of share no the only other thing i’ i’ mentioned there is that we you know one of our our other really you know popular products and big markets that we deal in is um is the multif family so the fiveo plus uh we are A bridg lender in that space so uh what I primarily focus on is value so usually AC Acquisitions where people are just like a Fix and Flip but it’s um you know it’s a multif family property and we’re we kind of specialize in that BC area where people are buying distressed uh or older Apartments Garden style type apartments and going in and renovating those and doing the same thing you and I would do on a flip so that’s awesome yeah so perfect example guys you seen the big property we did in Casper where we bought it we bought 63 units and made it a lot of work that we were going to fix up and eventually put long-term debt on fortunately we were able to find a small bank that was able to basically accept that risk but a lot of small Banks won’t take on a deal like that right that’s why you would go to somebody like lima they they feel comfortable with hey what’s your the performa and based on the right is that a how you guys underwrite those deals yeah we’re underwriting on the perform on a two-year or threeyear performa and uh and then and what we’re underwriting is that performa based on a agency debt exit so Fanny Freddy exit we want to make sure that we’re setting you up to be able to get right into agency debt and once that’s you know leased out and ready to go yeah that’s highly valuable honestly would have been if we actually I met Darren after we put that deal together but uh that’s a great product guys because again it’s not that if you could find those deals in multif family the thing is they’re home runs it’s like I was having this conversation with my swall bank about like are you kidding me this is a home run but again they’re just not set up to do that that’s why a bridge lender gets you to that like you say that agency debt on the back end and then you can get most times get all your Capital back out and just be doing the birth strategy it’s scale right yeah yeah exactly exactly I mean that’s how those guys got there is uh doing multif Family Properties that’s why they have so many doors now those those branded Turner and those guys so yeah awesome yeah so first off do you guys um I know I asked you said you guys have done some deals in Wyoming so I guess what would it looked like to get you guys to to lend on a deal up in Wyoming what you guys typically need yeah so I mean the things that you know when we always hear like H sorry when we hear Wyoming or you know something out west I mean one of the first things that comes to mind is you know does it fit our credit box and um you know as long as it does we’re good you know the things that we try to will stay steer clear of is rural uh for the most part and when I say R it just means more acreage than anything I mean we we want to see two acres and Below um and we’ll kind of stay to that Niche what you know is does it make sense from a credit standpoint for us to lend on this property but really if those boxes fit we’re full steam ahead I mean as far as whether that’s a Fix and Flip whether that’s just a straight Bridge or ground up new construction you know we’re open to hearing everything as long as it’s uh you know within the credit box got it what’s kind of the process look like so say you’ve identified a property and we’ll just talk about the first deal I’m sure it gets streamlined after the next ones but um as far as like appraisals or you guys call for inspectors what’s that going of look like to get closed from say I’ve got the deal under contract to closing yeah so I mean let’s just take a Fix and Flip to to say we’re going to send two people out uh in most areas right now we’re condensing that in the major msas uh to only one visit but right now so in most markets outside the majors you’re going to have an inspector come out he’s going to go through takes geost stamps pictures sends it back to us just from a does the reason for that is does the budget that you’re submitting match what the inspector sees for you know damage that’s needed on a on a property that’s subject to then we’re going to send in a appraiser route they’re going to do um you know interior exterior appraisal and uh and send that back to us you know as far as you know turn times on that stuff we’re you’re 5 to seven days uh you know with all the resi kind of aaper stuff being slowed down the the turn times on the the appraisals are much quicker right now so from there we’re our teams are trying to close deals in 19 days or less you know they’ve got an objective to get to a 14-day close so we’re not fastest in the industry but we’re also not you know super slow either it’s uh you know we’re not hard money that can close in 3 days uh we’re we still have to do some due diligence uh and the reason for that is you know we want to deal with hiring investors uh for the most part we really want to be you know with those investors that are kind of rinse and repeat and doing high volume and then we also securitize our debt on the secondary market so we want to make sure that the due diligence and uh is taking care of the te’s are crossed and eyes are dotted got it okay so sounds like not really a full appr if I’m understanding it’s like the inspector lining up to make sure your budget and everything looks good and then I’m sure you guys are doing some internal evaluations but you’re not having to S an appraiser out there huh yeah we are so that’s that’s what I say on that in most cases right now it’s a two it’s two people coming to visit the property but in some major markets you know if we were to do one in Dallas we would just send one you know in some of the major markets uh we’re only sending one person out to do that inspection and so there that’s basically considered a hybrid so the inspector goes out Geo stamps the pictures the hybrid appraiser whether that’s ours or somebody else’s is doing a you know a desktop appraisal on that got it okay cool and what is yeah I guess let’s talk rates too like what I know it’s always changing but what’s it look like on your Fix and Flip product for example points and percentage yeah it’ll go anywhere from about a point and a quarter on the fee to somebody who’s never done a flip in their life would be two and a quarter um so and then the Spectrum on the rid side of things you know those that are doing you know high volume flips and and really for us the top two categories are in the last 3 years have you done 12 or more and so as long as you’re in that 12 or more flip category the top two tiers are you are available for you and that’s uh basically 9 and 1 half uh to 10 and a half depending on what the you know what the LTC will end up being and um and really what uh what the loan size is so the loan size there’s a few different loan level pricing adjusters loan size is one of them that’ll increase or decrease the the rate there cool awesome then the other po one that I’ll always talk to when I I’m interested in I know other investors would be too is yeah the loan to values like well how much if it is a Fix and Flip um I guess our goal is always to have less capital in the deal right so we can do more what does that kind of look like yeah so if it’s if it’s deemed not heavy rehab so if you’re not doing anything structural you’re just kind of doing the your typical cosmetic stuff whether that’s Cabinetry flooring paint you know nothing you’re not doing anything structural you’re not blowing roof off will go up to 92.5% now if you are you’re going to hover depending on the you know depending on what the loan size is again you’re at 90 or or 85 got it so and would and you would include the rehab into that or 100% you fund the okay you guys would help fund the rehab as well yeah so we would do uh you know up to we would do the The Leverage on the purchase and then we’ll do we’re funding 100% of the construction budget got it okay and now that’s the other challenge so again people having to use hard money or private or just this type of money before and not used to a bank it’s always the draw schedule right so how is it how difficult is it get to to do draws it and understand the first deal might be different than the second deal but you know as you know there are some hard money lenders that’ll do that and it’s like pulling teeth to get your draw and you’re like well I should have just paid for it by cash Because by the time I got it i’ already sold it yeah no I mean the one thing with Lima that’s really really nice is that everything’s done in house we’re not using any kind of third parties for draws or inp CS everything’s is done inh house so our construction team reviews the draw request now the the inspector does go out there take pictures of it but all they’re doing is you know you submit a draw request on our online portal and it just says you know uh Casey gregerson’s asking for you know drywall there’s five items praiser goes out there the inspector rather goes out there takes the pictures sends it back to us we check the box yes those are completed and then they release the funds so it’s not you were not asking anybody else to touch it other than then the inspector who takes a photo and then the construction analyst who releases the funds so it takes it’s just for example if you put a draw request in on Monday you should have funds by Friday got it okay and obviously as completed work per the scope that and basically estimates you did okay yep nice yeah yeah it’s pretty straightforward the other thing that’s nice is you you have a dedicated analyst so if something you know off-kilter or if the inspector gets out there and you ask for a draw and you by chance didn’t finish it by that time that person comes out you can always just pick up the phone and talk to your analyst you can call me and loop Us in and and we help kind of navigate those things but yeah you you’re not stuck in you know going through voicemail uh mazes trying to figure out who’s who so you have somebody that you can pick up the phone and and talk to somebody we also recently just implemented a u an 800 number so like by chance you called your analyst and they don’t pick up you call the 800 number and it’s it’s just a single it’s just a single tree so it goes to a live human being nice that’s helpful cool so I like it so yeah that’s pretty competitive and I guess that’s the last thing is how hard it is in this current market right like a lot of lenders are maybe it’s the or investors are working with a lender and it’s like twice as hard now to get a deal like this done how hard is have your have yours been yeah I I wouldn’t say it’s hard to get it done I would say the the tougher thing is getting the numbers to line up from are the uh appraisers going to agree with what you’re after repair value is you know we’ve seen the market tighten a little bit to where you for a while there when everybody was kind of cranking the appraisers the values were there they kept searching for the next one and now I think it’s more the opposite to where there’s a little bit of a race to the bottom to where they’re not sticking their necks out as as far as they once had and then it’s just to me when I analyze a deal up front as I say you know hey I’ll call you and say hey Casey it looks like it works at you know the arv you got in here is 375 I’ve got it it works all the way down to 350 if we if we by by chance somehow go below 350 it looks like your down payment’s going to be a little higher are you okay you want to move forward and you know kind of play those games those scenarios out to each other so I think I don’t I haven’t seen anything from you know it’s getting harder but I think those conversations are be becoming a little bit more prevalent to make sure that everybody knows the possibilities that could happen got it and to make sure I understand it too how much room on that same deal so say you’re on that certain tier where you could get 93 93% loan of value or 92 maybe you said but how much how much cushion do you guys want to see in the the actual market value and where you’re at right or you’re saying like if I buy a house that’s worth 100 prices for 100,000 or sorry my purchase price is 100,000 but it’s only worth 100,000 are you guys still going to 92 993 so we we’re going to be capped at loan amount will be capped at at either 70 or 75% depending on the of the AR right so that and that’s but but if you’re finding a good deal you’re awarding people which is which I assume you’re rewarding finding a good deal to where you’re actually lending up to 92 93% y AB which is huge I mean as an investor you’re trying to find banks that I just it drives you crazy when you’re like hey I found a deal like it’s literally appraising I’ve had sometimes where it literally is appraising right now for that and they won’t won’t do it but that’s pretty helpful yeah yeah no I mean it’s good and I think Lima was built on the shortterm Fix and Flip product were really good when it comes to you know heavy rehab in that where a lot of people shy away from that that type of thing where you know if you’re blowing roofs roofs off or you’ve got you know building extensions out on properties or additions we really don’t shy away from those at all you know we’d like that because we’ve got the in-house construction team to to manage that and and again if that’s if you’ve got the experience and you’ve done that we’re good with it you know so you know we don’t shy away from those at all and then new constructions the other side of it too I mean that’s probably the reason why we got into new construction was cuz we got pretty good at doing those heavy rehabs and you know the bigger stuff and we’re basically doing a new construction home here that’s you know the next leap of faith that we can get into from a a lending standpoint and and right now the two the two biggest pipelines and have been for quite some time now and in Lima are new construction and uh Fix and Flip absolutely well Casey thank you for having me man it’s was awesome yeah it’s been a pleasure having you thanks for all the insights where could people find you Darren yeah so I’m you can find me on LinkedIn uh Darren mcgurn I or just uh phone number 678551 3103 or uh hit me up on uh Instagram at darren. murn or Leba I think it is I’ll have to have to figure that one out okay we got C that yeah yeah up there somewhere perfect we’ll put you in the show notes there and uh yeah thanks a lot Darren I appreciate it really helpful yeah Casey awesome anytime as you may have learned by tuning in to this episode of Gregor sense the easiest way way to make real estate investing hard is by going at it alone so as you continue learning and seeking knowledge of the industry I want to encourage you to build relationships with other professionals who are passionate about real estate whether that’s an agent a business owner or a managing investor like myself there are Pros that want to see you succeed and are willing to help you by sharing their experience you can always reach me by visiting Casey greers.com and scheduling a call I look forward to connecting with you and continuing to share my experience with you here on Gregor sense mobile until next time I’m Casey Gregerson thanks for tuning in