EP 30 - How to get the Cheapest Hard Money Loans
May 04, 2022
What’s the best way to fund an off-market deal?
Many of us stick to taking out loans, whether long-term loans or hard money loans, for our funding. What we fail to realize is that, with the constant fluctuations in loan rates, it’s much safer to diversify our options.
In this episode of Collecting Keys Podcast, we talk about the importance of keeping other avenues for funding open when going after off-market deals. We also talk about building trust and rapport with potential lenders, and how this can open up the way to more, even better deals.
Here are some power takeaways from today’s conversation:
- Financial freedom is a luxury; appreciate it if you have it. Not everyone can afford to take the same risks as you.
- Don’t judge potential tenants on their income category alone. Any lack of due diligence during the screening process is on you.
- Given the constant fluctuations in loan rates, it’s important to have backup funding options ready.
- Simple preparation and a pleasant disposition can go a long way when dealing with lenders.
Episode Highlights:
[02:19] Money Does Matter
There seems to be a trend of people reaching a certain level of success and brushing it off, saying they “don't care about the money.” Mike and Dan find offense at this and argue that kind of behavior is arrogant and discredits the struggles of those lesser off.
Not everyone has the luxury of not caring. Without that safety net, many people are forced to pick not failing over taking risks.
[10:43] The Misconceptions of Section 8 Real Estate
Mike and Dan talk about doing their final bouts of due diligence on a 6-unit property. They later learned that it was a Section 8 property, but this didn’t deter them.
The world and our economy are growing at a rapid pace and some people are having a harder time keeping up. Most Section 8 tenants are good people, just in bad, low-income categories.
[19:01] How to Fund Off-Market Deals
Nowadays, long-term loans and hard money loans are worth about the same thing. Mike and Dan speculate that lenders must think that the current spike in rates is only temporary, hence the change. This is why it’s important to have different funding options available.
Tune in to the full episode for Mike and Dan’s discussion on other avenues to funding off-market deals!
[31:29] Getting on a Potential Lender’s Good Side
Whether you’re well-prepared and on top of your work can make or break a deal with lenders. Every interaction is a window into how easy or difficult you are to work with as a business partner — make it count!
Notable quotes from the Episode:
[06:23] “‘Money doesn't create happiness.’ No, but it does make things a lot less stressful, a lot easier for you. That's why a lot of folks in our circles are marching towards financial freedom.”
[15:12] “[Section 8 tenants] aren't keeping up with inflationary rents and all that sort of stuff, but it's not because they're bad people. Things grew around them.”
[23:58] “Your relationships with your lenders are growing their business because one of the first things some of these [lenders] are looking for is like, ‘What's your track record?’”
Resources Mentioned:
