There are some good things happening out there, but these last (nearly) four years now have been tough. There are plenty of negative signs in the economy as a whole, but I am actually somewhat bullish at this point about real estate markets in general and private money investing in particular. Still, these are tough times and will remain so for some time to come. If we didn’t laugh at these things … well, we’d need antidepressants (strong ones). So here in the name of a good laugh (if not a belly buster, at least a chuckle), I give you a new top ten list.

Drum roll please…

The top ten red flags that you may not want to lend to a particular fix and flip borrower:

10. Starts singing, “If I had me a Hammer,” during meeting at the property.

9. Adamantly certain that the property can be fixed in 2 months and sold in 2 more. Only needs 4 month term.

8. Hasn’t actually looked at the comps, but has a “cozy” feeling about them.

7. Borrower: “Give me $20k and I’ll turn this little 700 square foot shoe box into a friggin’ castle!”

6. Borrower: “It’s a Zen thing. Words and numbers miss the whole point.”

5. Borrower: “Where’s the check already. I thought this was private money.”

4. Calls himself Bevis the Flipping Machine, and refers to himself accordingly in the third person. “Bevis the Flipping Machine will have this place whipped together in the time it takes you to recite the Aztec calendar backward.”

3. Borrower: “Experience? No. But hey, I can handle a screwdriver as well as the next guy.”

2. Borrower: “No I don’t have a cash buffer per say, but I’ve got a stash of old comic books that are worth plenty … and highly liquid I might add.”

1. Borrower: “Yes, I realize there is no profit in this particular project, but I’m going to make it up in volume.”

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Clay is Vice President of Fairfield Financial, a primary source for private money loans since 1964.  Fairfield works with a broad range of private money investors, in a broker capacity, finding, underwriting, presenting, closing, servicing, and when necessary, assisting in the workout of difficult loans.

We haven’t done one of these for awhile.  There is plenty to be serious about with regard to the economy, the real estate markets, and in particular, the market for trust deeds and private money loans.   There is plenty of uncertainty in these markets.  And yet, there are also some good things happening and I am beginning to see the emergence of some logical patterns (which favor those who deal in these markets).  At any rate, there is always room for a good chuckle.  So with that in mind, I give you the top ten loan offerings that you may choose not to review.

Drum roll please…

10. The loan packet is written in what appears to be ancient hieroglyphic on papyrus scrolls.

9. The loan broker informs you that in order to review the packet, you will need to find it in a rather elaborate scavenger hunt, and the first clue is …

8. The loan broker indicates that the entire loan packet has been adapted as a one-man solo performance art piece.  It will be appearing at the Museum of Modern Art in New York this fall.

7. When you ask the loan broker where you may get a copy of the packet, she tells you to place a tin foil hat on your head and wait for the electronic vibes to arrive.  “That could be right away or it could take many days.  You have to be at one with the universe.”

6. Mel Gibson is somehow involved in the broker chain.

5. Time is really of the essence.  You have precisely 1 hour and 19 minutes to review the packet.  Uh … that’s now 1 hour and 18 minutes.

4. You are instructed to go to the phone booth at 19th and Burnside and wait for a call.

3. “What do you want already?  Just frigging write the check …”

2. The borrower’s story is about to be made into a major network TV movie starring Bruce Dern.

1. You want to see a loan packet.  Fine.  There is an app for that.

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Clay is Vice President of Fairfield Financial, a primary source for private money loans since 1964.  Fairfield works with a broad range of private money investors, in a broker capacity, finding, underwriting, presenting, closing, servicing, and when necessary, assisting in the workout of difficult loans.

I remember when I first came into this business 15 years ago, the general attitude toward private money–and private money lenders and brokers–was quite negative.  And to a certain extent, the reputation was not completely unearned.  It was an industry that seemed to harbor a small handful of crooks and a great many more just plain unprofessional “business people.”  And yet, what many people didn’t understand is that there were also honest, professional individuals and entities offering a legitimate, useful, and important product.

As time went by, the rap on private money lenders improved significantly, and it almost got to the point over the years where you might say that private money was a bit “sexy.”  Everyone wanted to have a piece of that market.  Most of the players these days are honest, in my opinion, and many are highly professional, but still I think I’d like to have a go at those still in the market who are either dishonest or unprofessional or both.  Some private money lenders quite simply don’t belong in the business.  If not dishonest, they are paranoid and distrustful of every borrower that comes to them, and as such, they tend to go too far in trying to protect their investment.  This TOP TEN LIST is dedicated to those folks.  (They know who they are.)

Drum roll please…

Top ten clues that you should probably withdraw your loan request from a particular private money lender:

10. One number and two words:  $25,000 non-refundable deposit.

9. The investor insists on moving in with you to “keep an eye on” his investment.

8. The investor insists on language in the loan agreement to the effect that: you will not eat junk food during the term of the loan, you will not engage in bar fights, you will certainly not smoke any sort of substance, and you will not jump out of airplanes or otherwise engage in so-called extreme sports.

7. The lender requires a lien against your pet corgi Noodles as additional collateral to secure the loan.

6. Lender keeps referring to your property as “my property.”

5. Rates are quoted by the day.

4. Lender keeps saying ka-ching at the end of every phone conversation.

3. The product on offer involves a one week term with a one week extension option.

2. The investor wants to become a co-signer on your checking account.

1. The investor requests a perpetual easement to ride his ATV on your property—and your lot is only 4,000 square feet.

– Clay (clay@privatemoneysource.com)

I thought it would be nice to publish something just for fun today.  I rather enjoy doing these TOP TEN lists, but I try to avoid doing them very often for fear that it will look like this blog is purely for my own self-amusement.  And of course to a certain extent this is true—but I wouldn’t want to give you that impression.

Drum roll please…

Top ten clues that you should probably pass on a particular loan offering:

10. The borrower looks uncannily like the young Al Pacino.  (Think Scarface.)

9. The loan packet looks like it has been through a war–beat-up, dog-eared, and coffee stained, and you detect the faint smell of urine.

8. The borrower describes his take-out strategy as, “win lottery.”

7. Worse yet: the borrower describes his take-out strategy as, “bank loan.”

6. The property exists in a different dimension and therefore cannot actually be inspected without passing though a seam in the universe.  (Think of the title problems alone: survey, easements, etc.)

5. The property is located in the near-bankrupt third-world state of California.

4. The property is located on the tropical Island of Cuba, but it is located on US territory.  Uh, yes: there is a spectacular bay view.

3. The use of funds section reads, “…to complete the design and manufacture of an advanced metallic protective hat which will deflect all external thought transitions to my brain and at the same time keep all my thoughts from escaping.”

2.  The borrower is a self-proclaimed Solo Performance Art Specialist who cannot afford to make regular interest payments but commits to make “equivalent value payments” in live regular performances on your front lawn.

1. There is an exception on title which requires that a Chihuahua named Gertrude maintain a perpetual right to fully occupy and utilize the property for the duration of her existence.  (I guess this isn’t an automatic dis-qualifier.  You might want to meet Gertrude before finalizing your position.)

– Clay (clay@privatemoneysource.com)

I thought it would be nice to publish something just for fun today.  I originally wrote and published this TOP TEN list on our web site man years ago.  I think it is still relevant after all this time.

Again, keep in mind, this is done purely for the sake of laughter, so take it in the spirit in which it is intended.  It actually tends to reinforce some stereotypes that I have worked hard for many years to dispel regarding private money and the borrowers of private money so don’t take it too seriously.  Still – just this one time, I couldn’t resist. Drum roll please…

Top ten ways you know it might be time to consider private money:

10. The bank asks you to return the promotional pen which they gave you last month.

9. Your neighbor keeps throwing orange peels and egg shells on your house because they think it is a compost pile.

8. You are continually confusing your FICO score with your bowling score.

7. The Account Rep for your favorite lending institution laughs so hard that he suffers a hernia and is rushed off to the hospital before you can finish telling him about your loan request.

6. When figuring your net worth on a 1003, you include as assets: your karma, your winning smile, your exotic house cat Ms. Buttons, and your $5,000 instructional video course on how to make a million bucks investing in real estate.

5. The bank officer repeatedly refers to your floating home as a “boat”, and insists on using terms and expressions like “port” and “bow,” and “thar she blows.”

4. Meth lab shmeth lab! (A true real estate investor doesn’t let minor obstacles stand in her way.)

3. Your down-payment consists of twelve cases of Budweiser empties, an IBM 386 computer, and a Tim Duncan rookie card.

2. Your timeline is so short that you are working on a scheme which involves flying an escrow team westward to the international dateline and closing the deal at 12,000 feet.

1. The land which you hope to borrow against is so raw that it bleeds when you stick a fork in it.

– Clay (clay@privatemoneysource.com)