Mortgage Brokers Tip # 17 – Originating Hard Money Loans
Originating Hard Money Loans – Our company has been in the Mortgage business since 1986, and along the way we have celebrated “The Good Time” and endured “The Bad Times” in our more than 30 years in business.
Many of us started in the “A” Paper Business and traveled through the Sub-Prime Market to end up in the Private Equity/Hard Money Loan business. Each “Type” of Lending Product has its own unique marketing strategies, unfortunately some are no longer effective, but some are still effective, in addition to new marketing opportunities available today due to technological advancements.
Since the Mortgage Market changes much like the weather, what’s the marketing “In Thing” to do this year, just may be old news come next year. We all change our clothing when the weather changes, and to stay in the Mortgage Game we MUST change and adjust our marketing efforts when the mortgage market changes. We’ve all heard the age old saying “The only thing that’s certain in life, is death and taxes. We reluctantly offer a 3rd certainty………. the mortgage market changing………………..and it does and will continue long after we’re off to that “Great Mortgage Company in the Sky”.
The following ideas and suggestions are designed to help Mortgage Brokers add originating Private Equity/Hard Money Loans to their list of offered loan programs………….and hopefully submitted the loans to our company for funding and……………………………making more money!!!!
Current Hard Money Borrowers
It’s a sad fact of life that so many Borrowers who are in the position to only obtain a Hard Money Loan seem to remain in the position. Every time a Borrower applies for a Hard Money loan with our company we always counsel them on “Having a Plan” to get out. Sometimes they do, but some many other times they don’t.
Due to the Dodd-Frank Consumer Lending Law, just about all Owner-Occupied properties are out of the question for Hard Money Loans, except for either Business Purpose or Investment purpose loans, but this situation rarely applies when a Hard Money Loan is refinanced.
We always find the great looking Post Card works best, they can’t help seeing your lending proposal, but letters also work well also. These Borrowers are always open to getting a better loan, and since Interest Rates are down for even Hard Money Loans, Borrowers who can only qualify for a Hard Money loan still might be able to get a lower interest Rate then they currently have or get cash out for another purpose.
Your company’s Title Company can provide a list of property owners who are designated as having a Hard Money/Private Equity Loan. While some of the provided leads could be Seller Carrybacks, which are most of the time are at high LTV’s, a quick review of the list should allow for the Seller Carryback leads to be purged.
Small & Unique Commercial Properties
The reason that this is a good target marketing list is that most Big Banks and Institutional Commercial Lenders have minimum lending amounts, be it $250,000.00, 500,000.00 or more. There are many commercial lending opportunities available to where the Borrower only needs a $150,000.00 or some other size loan that the Big Banks just pass on. Also, a lot of special use properties, such as Auto Repair, Muffler Shops, light industrial or very small office buildings are great prospects for originating financing.
Again, this would be a Snail Mail Campaign, and your Title Company can provide you a list of prospects. Originating Hard Money Loans
Since we’re talking about lending to the property owner and not the Business owner, which can be the same in an Owner User situation, the mailing piece needs to be addressed to the address where the property owner received the property tax bill.
Probate Properties & Probate Attorneys
There isn’t a Big Bank or Institutional Lender on the planet that will lend on property that is tied up in a Probate court case. The Borrower is always the Executor or Administrator who signs on behalf of the Probate Estate with authority provided to them in “The Will” or by an order from the court.
There are many great opportunities available here by targeting Probate Attorneys for possible lending opportunities Now or in the future. While not every Probate is handled by a Probate Attorney, typically Probate Estates that include substantial equity in real estate have an attorney involved.
The Marketing Campaign is an E-Mail outreach program. Originating Hard Money Loans
We have found that mailing a post card or letter to Probate Attorneys typically end up in the trash and is not effective in branding a company that offers Probates Loans. There are services that will sell lists of Attorneys that includes their phone number, business location and their E-Mail address. We have found that the available lists have high costs and cover all types of Attorneys. So, purchasing such a list would include Slip & Fall Attorneys etc, and they’re just not good Attorney prospects for real estate financing.
It takes time and can be done on an ongoing basis, but the California State Bars website has E-Mails for most member Attorneys, that can be cut and pasted into a data base. It’s a time-consuming job, but just getting 10 Attorney’s E-Mail addresses a day is 50 a week and later over 200 a month. In a short time by only spending a few minutes a day will build a good size database to market to Probate Attorneys.
Probate Loan are just about exactly the same as a traditional Hard Money Loan as far as Interest Rates, Loan Terms and LTV, but with just a little Probate Court requirement.
That’s about our best Marketing Suggestions for now………………. we know it doesn’t sound like a lot of fun, but rarely do we have the opportunity to get for having fun, but hard work and taking action will lead to more money.
Originating Hard Money Loans
If anyone has any questions or would like to discuss the above Marketing suggestions and how they can help make more money for all us, then please call our office at (888) 797-7970. Originating Hard Money Loans