Fairfield Financial Services, Inc. - Private Money Loans, Lending & Borrowing

The Private Money Broker

The beauty of private money loans – when they're right, they're right

August 28th, 2013

Clay Sparkman
Historically we have placed loans in the 12-14% range, but in the current market we are finding that this may be a bit high. Especially if a lender is willing to come down to 10-11%, there are little golden nuggets of opportunity presenting themselves.
Here, by way of example, is a loan that we just placed. (The prospectus has been redacted to protect the privacy of the parties involved.)
The borrower had all kinds of problems, but this loan was a gold nugget to us. Why? Just look at the LTV.

Kristopher Gillmore

Fairfield Financial Services, Inc

16055 SW Walker Road, #247, Beaverton OR 97006

Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com

REAL ESTATE LOAN SUMMARY


SECURED LOAN
Rate and Term refinance of property in Superior, Colorado.
Loan Details

  1. Loan Amount: $158,000
  2. Term: 3 years
  3. Interest Rate: 10%
  4. Monthly Payments: $1,316.67 Interest Only
  5. Security:  Deed of Trust in 1st Position security interest in real property located at XXX, Superior Colorado.
  6. Estimated Value, based on purchase price in May, 2011:  $650,000
  7. Estimated LTV based on purchase price in May, 2011:  24%

Loan Overview
This property was purchased on May 31st, 2011 by XXX LLC, with a guarantee by XXX, who is occupying the property part time.  The purchase price was $648,900, and the initial loan was $325,000 with a down payment of approximately $350,000.  After a year of interest only payments, the loan was paid in full.
Shortly after the loan was paid off, the borrower had an investment opportunity and borrowed 150,000 secured by the same property.  The pay history on this loan has been excellent, with one late payment that was promptly submitted after we contacted the borrower (XXX had his payments set up through an auto pay with his bank, but the auto pay expired after one year and he became aware of this after we followed up on the missed payment). The borrower wishes to keep this loan in place, but is looking for a longer term loan at a lower interest rate.  The loan would be made to XXX, LLC, with a personal guarantee by XXX.
Property
The subject property is a 5 bedroom, 5 bath, single family residence with 4,321 square feet of living space, including a finished basement.  The property sits on a 10,013 sf lot, and was built in 1998.  More detailed specs on the property can be viewed at XXX.  Updated interior and exterior photos are pending and will be provided in the full loan packet.
In May of 2011, we performed an inspection of the property and comps that were provided by the borrower.  That report has been provided as a separate attachment.
Personal Financials
XXX has provided a signed 1003 stating a monthly income of $20,000 and a net worth of $796,000
Credit
XXX has a mid credit score of 581, and has provided a detailed explanation (attached) as to the circumstances that brought his credit score to be so low.
—
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , ,
Posted in Private money loan examples | No Comments »

Private money – another perspective

August 22nd, 2013

Clay Sparkman
I thought this was a nice piece on private money and finding sources, by Brian Kline.
How to find Money Partners for Real Estate Investing
As the real estate markets are improving, the opportunities revealing themselves, and the bank rates coming up–it seems like private money is becoming, once again, more relevant ever day that passes.
Let me know if you have general questions about private money or a particular loan that you’d like to get our feedback on.
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

How to Find Money Partners for Real Estate Investing

– See more at: http://realtybiznews.com/how-to-find-money-partners-for-real-estate-investing/98721900/#sthash.QnbrLxfM.dpufHow to

How to Find Money Partners for Real Estate Investing – See more at: http://realtybiznews.com/how-to-find-money-partners-for-real-estate-investing/98721900/#sthash.QnbrLxfM.dpuf
How to Find Money Partners for Real Estate Investing – See more at: http://realtybiznews.com/how-to-find-money-partners-for-real-estate-investing/98721900/#sthash.QnbrLxfM.dpuf

Tags: , , , , , ,
Posted in Analysis, Fundamentals, Resources, Submiting loans | 2 Comments »

Loans we are placing – example

August 5th, 2013

Clay Sparkman
Every now and then I like to present one of the loans that we have placed or are in the process of placing, so that blog readers can see (a) the types of loans that we are placing, and (b) how we believe that loans should be presented. Keep in mind that this is only the initial summary, and that it must be followed up by the relevant supporting documents.

Kristopher Gillmore

Fairfield Financial Services, Inc

16055 SW Walker Road, #247, Beaverton OR 97006

Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com

REAL ESTATE PROSPECTUS

SECURED LOAN
Purchase and renovation of a Single Family Residence in Austin TX.
Loan Details

  1. Loan Amount: $85,000
  2. Term: 12 Months
  3. Interest Rate: 12%
  4. Monthly Payments: $850.00  Interest Only
  5. Security:  Deed of Trust in 1st Position security interest in real property located at yyy, Austin TX 78753
  6. Construction Holdback Account: 20,000
  7. Projected Value by Appraisal:  $126,000
  8. Projected LTV based on Appraisal:  67%


Loan Overview
Xxx is a real estate investor and is requesting funds for the purchase and rehab of this Single Family Residence in Austin, TX.  This is his first fix and flip project, but he does have experience in rehabbing residential property.  Xxx purchased a 4-plex in disrepair, renovated the property, and is currently living there while renting out the other units, allowing him to live there for free with a small positive cash flow.
Xxx will be making a $13,000 down payment, and will exit the loan with the sale of the house.  Note – given the borrower’s debt to income ratio and credit score, it seems like a conventional refi would be an option as well, should he have difficulty in selling the house.
Property
The subject property is a 1,000 home built in 1964.  The lot it 8,411sf, and the house has 3 bedrooms with 1.1 baths.  The property is in disrepair, although reported to be structurally sound (a certified home inspection report is pending).
The borrower will be hiring a licensed contractor to paint the entire house inside and out, redo the flooring, replace the fixtures, roof work, countertops, etc…  The borrower will be doing the landscaping work himself.  It should be noted that the budget as included in the appraisal is more extensive than the work that will actually happen.  That budget includes the removal of walls and reconfiguration the pantry area.  The borrower belies that staying with cosmetic updates will yield the same value and be more appropriate given the style and age of the property.
A revised budget has been provided in the full packet.  Note – although the bid for the repairs is $14,683, the total holdback will be $20,000 to allow for a contingency and funds for landscaping.
Valuation
Two appraisals have been provided by the borrower.  The 1st is a more formal appraisal, with an actual site visit.  The 2nd is a desktop appraisal with computer generated comps and no site visit.  For the purposes of this report, the appraisal with the site visit and lower estimated value has been used for all LTV calculations.
The comps provided in this appraisal seem fairly homogenous, and appear reasonably comparable as far as size, style, condition, location, etc…
The appraiser suggests a projected value of $126,000 after the proposed repairs. – Note – the list of repairs supplied to the appraiser is more extensive that what is actually being done.  The borrower believes that the repairs as provided to the appraiser would not provide the additional value to warrant such repairs, and that more modest updates would yield a similar value and stay more in line with the age and style of the house.
Income
A signed 1003 has been provided in which the borrower states a monthly income of $4,438.  His only real asset is a 4-plex in which he resides, while renting out the remaining units, resulting in a net cash flow of $105/month.  With his outstanding debt (mainly a student loan), he’s showing a negative net worth.  That being said – he does have a fair amount of equity in the 4-plex (Approx. 60K).
Chris reports his total monthly obligations as $1,125, which would increase to 1,975 with this loan.  Based on these numbers, his ability to service the debt from this loan seems reasonable.  If the sale of the property turns out to not be a feasible option, his debt to income ratio would open up the possibility of a conventional refi.
Credit
A recent credit report shows a mid-score of 686.  There are no 30 day late payments reported and all of his accounts are current.
—end of prospspectus—
If you have questions about this prospectus, or if you have similar loan files that you would like to pursue, please contact us via e-mail, phone, or comment.
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Posted in Uncategorized | No Comments »

The language of private money

July 10th, 2013

Clay Sparkman
This post was first published on this blog on 7.20.10. Occasionally I go back and look for high value posts, knowing that either new members were not there when they were originally posted, or that long-time members may have missed them on the first run. This is one of those posts that I feel is worth posting a second time (having made a few changes imposed upon us by time and circumstances).

Most of you are probably familiar with the nomenclature of private money lending, but from time to time, I find myself clarifying the meaning of one or more of the essential words, acronyms or phrases.  And so I shall publish here a brief glossary of such terms for your reading enjoyment.  Consider this to be a bit of continuing education, either in the interest of enlightening you, reminding you, or just plain boring you—however that may be.
Collection account charges
Lenders may do the collection and accounting of their own loans, ask our office to administer their loans, or ask another third-party to perform this service. If our office does the loan collection and accounting (which is generally the case), the collection account charges will be as specified in our page entitled Collection Account Services. The borrower is expected to pay the collection account charges.
Combined Loan-To-Value ratio (CLTV)
This is the total amount of all debt secured by the security as a percentage of the total estimated value of the security. So, for example, if the loan is a first position loan for $60,000, and the seller is carrying back a second position note for $20,000, behind the private-money lender, and the property is deemed to be valued at $100,000, then the LTV is 60% and the CLTV is 80%. The acceptable CLTV will vary based on the lender and the situation, but may in fact, under the right circumstances, exceed 100%.
Instrument of security
Also known as “paper,” this is the legal documentation that provides the framework for the relationship between the borrower, the lender, and the security. The instrument of security may be a note and trust deed, a land sale contract, a mortgage, a lien holder title (with manufactured homes or floating homes, for example), or some other trust deed style instruments utilized only in certain states.
Late charge
This is the additional amount due to a lender when a payment is not paid by the borrower within the agreed upon grace period. Typically the late charge amount will be a percentage of the late payment amount and will become due after the grace period has passed.
Loan costs
These are the costs associated with putting together a loan. They are paid at the time loan funds are disbursed (though commission arrangements may vary) and are generally paid by the borrower, though they are often paid from the proceeds of the loan. They include: the lender, any commission that is paid to the Loan Broker(s), the cost of title insurance (see our article, Why Title Insurance?), the cost of closing a deal through escrow at a title company, and the cost of recording official documents. For our loans, they include a document preparation fee, a property inspection fee, and an account setup fee (for servicing the loan).
Loan-To-Value ratio (LTV)
With regard to a first position loan, this is the total amount of the loan as a percentage of the total estimated value of the security. With regard to a subordinate position loan (a second or third, for example), this is the total amount of the loan added to the total amount of all superior liens as a percentage of the total estimated value of the security. The acceptable LTV will vary based on the lender and the situation, but generally up to 70% is considered acceptable, depending on the loan particulars, the borrower particulars, and the type and quality of the security.
Position
The position defines the order in which claims against the security will be satisfied in the event of a foreclosure. Most lenders prefer to lend only in the first position, but some lenders will go in a “subordinate” position (second, third, etc.) in exchange for a higher rate of return.
Pre-payment penalty
This is the penalty (if any) that a borrower must pay to a lender if a loan is repaid “early.” Most all loans placed through our office do not have a pre-payment penalty of any kind.
Private money lending
Also commonly referred to as “hard money lending,” this terminology describes situations in which private individuals (as opposed to financial institutions) lend money to other individuals (or businesses) in exchange for a fair rate of return on the use of the funds.

Rate
The percentage compensation to be paid by the borrower to the lender at fixed intervals (usually monthly). Rates are quoted as annual charges. Interest rates vary with both the state of the economy and the perceived risk involved with a particular loan. Most first position loans placed by our office during the past few years involved rates ranging between 10% and 14%.
Security
Although almost anything may be used as security, or collateral, to effectively secure a loan, our office generally only places loans that are secured by real estate (with the exceptions being floating homes, manufactured homes, and occasionally stock shares).
Term
This refers to the length of a loan and the amortization. Most loans placed by our office are 1-3 year loans with interest only payments (and thus no amortization; that is, they are interest only). Fairfield is what you would call a bridge lender. That meaning that we provide a way to get from point A to point B, but that you must have a plan for exiting point B and moving on the next stage of your project.
Value
There are different ways to establish the value of a security, and one or more may be used in any given situation. Among these are the following: (1) previous transfer price(s) for the property, (2) tax assessed value, (3) appraised value, as assigned by a paid and impartial licensed appraiser, (4) a Market Value Analysis (MVA) or Broker Price Opinion (BPO) provided by a Realtor, (5) transfer prices for comparable properties, (6) an income analysis, or (7) an evaluation of the cost basis for the property.
That’s about all I’ve got.  If anyone out there has other terms which they wish to offer up, either with a definition or in search of one, please step forward.  Don’t be shy.  I need all the help I can get.

— Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , ,
Posted in Fundamentals | No Comments »

Flexibility and creativity: the beauty of private money loans

June 17th, 2013

Clay Sparkman
This post was originally published on this site on July 6th. 2010. I feel that the information within is so important to a full understanding of private money flexibility and creativity, that I modified the document, bringing it up to date, and am publishing it here now once again.
Our private money lending programs tend to be fairly rigid with regard to LTV requirements but quite forgiving with regard to other issues.   One of the nice things about private money is that it allows for creative problem solving.   I have put many transactions together, that initially didn’t appear to be doable, simply by seeking out a creative way to bridge the gap.
Let me give you an example.   Say that you have a client come to your office and they want to buy a commercial building in Seattle and they need financing.   The borrower is strong and the property is prime but the construction on the building is only 90% completed and there are no tenants yet (and thus no income), and in addition to all that there is no appraisal and the buyer doesn’t have the time to wait for a commercial appraiser as this is a distress sale situation.   So I would say that this guy might have a tough time getting bank financing, right? After some consideration, you decide that this is a good fit for private money.   You check with a private money outfit such as ours and find out that we will loan 65% LTV against the value of this property.   Now let’s say that the buyer has negotiated a purchase price of $800,000 for the property and he has $80,000 (10%) for the down payment.   At 65% it appears that he may need to bring $280,000 (plus costs) to the table to make this loan work, and so you are thinking that you’ve reached a dead end.
Well, that’s where the flexibility angle kicks in.   There are at least four ways that you can meet the equity requirements without the buyer bringing additional cash to the table.   Study these because if you are going to work with private money you should know them by heart.
Solution #1: The borrower may borrow based on the true value of the property.
If he can demonstrate that he is buying well, and that the true value is higher than the purchase price, then some private money lenders will be willing to base their LTV on the true value of the property.  In this case, if there is a strong case to be made that the property is actually worth 1.2MM, then a private money lender may be able to arrange to loan enough to cover much of the purchase of the property (how much, of course, depending on the overall “strength” of the borrower).
Solution #2:  The borrower may borrow based on the projected value of the property.
Say that he needs an additional $100,000 to complete the construction on the building, but that the building will be valued at $1.2M upon completion, then certain private money lenders would be willing to arrange a loan of up to $880,000 to cover both the purchase price and establish a construction fund.  The construction funds would then most likely be held in a trust fund and disbursed as the work is completed on the project.
Solution #3: The borrower may be able to persuade his seller to carry back a portion of the sales price as short-term debt.
Particularly if the seller is in a distress situation, he may be willing to negotiate on this point.  So in our example, let’s say that the buyer is able to convince the seller to carry back $400,000 of the sales price in second position subordinate to a $500,000 loan arranged by say Fairfield.  In this case, we may be willing to move forward with a low down payment loan.  With a strong borrower, we would, for example, be willing to make a loan for $500,000, of which $100,000 would go into a construction account for improvements and something like $30,000 would go toward loan fees and closing-costs, and the buyer would only need to come in with the $30,000 needed to cover loan fees and closing costs.
Solution #4:  It may be the case that the borrower has additional real estate assets that he is willing to pledge as collateral to make up for the shortfall in down payment money.
Private money lenders are almost always willing to consider additional collateral, to make a transaction come together.  Say the borrower has another commercial building, this one in Lincoln City, Oregon, and that it is worth 1.6M with $750,000 owed against it.  The lender would quite possibly be willing to make the loan, with the borrower bringing in $80,000 cash and the Lincoln City building as additional security for the transaction.  And if the borrower is concerned about tying the building up, because he has plans to sell it or refinance it in the future, then it should be possible to negotiate and write into the loan a specific release clause provision stating that we are willing to release the Lincoln City property as security in exchange for a principal reduction, for example in this case, of $200,000.
Keep in mind that these solutions can be brought to bear in combination, so that all four may come into play in order to bridge the gap for any particular loan scenario.  Private money is flexible and creative and for this reason often takes up where the other options leave off.  (In these moments, it tends to tap dance away from the competition.) I have often said that if the banks ever acquire imaginations, I will be out of business, but in fact I’m not worried about it because it isn’t going to happen.  The banks are not interested in creative problem solving because it requires too much special handling.  The banks prefer to batch process the plain vanilla loans–the kinds of loans where the whole story can be fit into a sequence of boxes–and then leave the loans which must be hand-built, one by one, to people like us.  So come join us for some loan building and some creative problem solving.  It is not only lucrative but it is fun.
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , , , , , , , , , , , , ,
Posted in Commercial loans, construction loans, Fundamentals, Multifamily, Private money loan examples, Private money loan uses, Rehab and constuction loans, REO funding, SFR mortgage loans, Short sale funding, Structuring loans | No Comments »

Good advice for real estate fixer and flippers and their associates

June 4th, 2013

Clay Sparkman
As most of you know, my company (Fairfield Financial Services, LLC) does many kinds of private money loans, but our true sweet spot, I would have to say, is fix and flip properties (or fix and rent). We feel that this is a great time to be buying REO, short sale, and under market properties.
We have worked with many fix and flip folks who are new to real estate investing. Some of them have gone on to do very well. This stuff is not rocket science, but three things are absolutely required: (1) The willingness to work hard, (2) A lot of common sense, and (3) A certain amount of specialized knowledge in the areas of (a) buying well, (b) financing, (c) fixing, and (d) selling (or renting) the properties. I rarely see a really good article about fix and flips—one that really lays it out there—but I came across this article today, and I must say, it is very good.
If you are an investment buyer, you should definitely read this, and if you are a Loan Broker working with investment buyers, you should read this, as well. As Loan Brokers and Lenders, we must be able to keep up with our clients. If we are well informed, we will know whether or not the client is moving in a good direction or not—and many times, we will be able to give helpful advice to our clients. So here you go.
Top 10 Remodels for Your House Flip
By Tony Escamilla, Tony is a licensed general contractor and construction inspector. He has inspected over 6,000 properties for investors and remodeled several properties to be “flipped”.
http://www.inspectaproperty.com/Top10Remodels.html
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , , , , , , , , ,
Posted in Rehab and constuction loans, REO funding, Short sale funding | No Comments »

Good news for real estate investors

May 30th, 2013

Clay Sparkman
Well, if this isn’t good news, I don’t know what is:
http://us.news-republic.com/Web/ArticleWeb.aspx?regionid=1&articleid=9562167
It appears that now is the time to be investing in real estate and real estate loans. We finally have a turn-around market that might actually be *real* and might actually be steady.
Let’s hope it keeps going this way. There are so many factors, but there is no reason to believe that this trend won’t hold into the immediate future.
if you have a different take on it, please comment.
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , , , , , , ,
Posted in Real estate market general | No Comments »

Announcing: iPad 4 bonus to brokers closing loans with Fairfield

May 22nd, 2013

Clay Sparkman
We at Fairfield Financial Services (FFS) are pleased to announce our free iPad bonus promotional program.
Starting Wednesday, May 22nd, we are offering a free promotional iPad 4 to any broker or borrower who submits a loan through FFS that we actually close.
The conditions are as follows:
(1)  You must register with FFS by sending an e-mail to clay@privatemoneysource.com with “REGISTER” in the subject line and your name, company name, and phone number in the body of the e-mail.
(2)   This promotion applies to submissions received no sooner than May 22nd, 2013 and no later than June 23rd, 2013.
(3)   A full application (with all items requested by FFS) must be received no earlier than the start date (5.22.13) and no later than the end date (6.23.13).
(4)   Only one borrower/broker may be credited with each loan. That will be the first party that submits the loan directly to FFS.  It is possible that other brokers may get paid for a role in the transaction, but only the party directly submitting will receive a free iPad 4.
(5)   The minimum loan size for this promotion is $100,000.
(6)   You (or your company) must be in full compliance with licensing regulations required for loans of the type submitted for the giveaway in the state in which the property associated with the loan is located.
(7) The prize is a basic iPad 4 with 16GB and WiFi.
Also, if you subscribe to our broker blog, we will add a leather case cover and flip stand to the prize (should you win).You must subscribe to the broker blog using the same e-mail address from which you register for this bonus and on the same day that you register for the bonus.
I recommend that you at least have a look at the broker blog, The Private Money Broker, as there is quite a bit of solid information for those who are brokering hard money loans. You will find the blog and be able to subscribe at the following link:
http://privatemoneysource.com/broker-blog/
Who doesn’t want a free iPad, right? So good luck and get going.
Check out our website for details re our loan criteria, our packaging guidelines, and our process.
www.privatemoneysource.com
I encourage you to sign up and give it a try.
All the best in your endeavors, Clay
– Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , , ,
Posted in Promotional announcement | No Comments »

About hard money loans

May 20th, 2013

Clay Sparkman
There seems to be a lot of mysticism and confusion surrounding exactly what is meant by private money loans (also referred to as “hard money loans”). The boundaries have blurred a little in the past 10-15 years, but the basic idea of private money lending is that private individuals who have money to invest choose to loan that money, generally on real estate secured transactions, with the desire to receive a fair return (commensurate with risk) on their investment. Some private investors go on to form a corporate entity, and utilize lines of credit as a source for the funds that they loan – and this is where the boundaries begin to become a little hazy (as these private investors may begin to look a little like institutions).
Perhaps more important as a defining characteristic of private money is the process and criteria by which the money is allocated to loans. Private money is quite different than institutional money in the following ways:

  • With private money lenders, there is generally greater flexibility with regard to the types of loans and circumstances under which money will be lent.
  • The strength of the collateral is generally more important to hard money lenders than the qualifications of the borrower (though both are always considered).
  • It is generally possible to place hard money loans very quickly. Income verification is rarely required, and appraisals are often not required.
  • Hard money loans tend to be more expensive than institutional loans.
  • The loans tend to be of shorter duration (5 years maximum in most cases).

There is one myth about private money lending that is prevalent but badly mistaken, so it should be put straight here:
The Myth:
Private money borrowers are generally desperate borrowers, in trouble, and without options.
The Fact:
Private money borrowers are, most often, solid individuals or businesses that have circumstances or opportunities that do not fit well into the rigid structures of institutional lending, and require speed or flexibility unavailable through more conventional means.
Other relevant articles

Let me know if you have any questions, or if you think that you’d like to pursue a particular loan proposal.
— Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , ,
Posted in Fundamentals, Private money loan uses | No Comments »

Minding the gap

May 2nd, 2013

Clay Sparkman
It is our opinion and the opinion of many others that banks, though they’ve bounced back in certain areas, have not picked up the slack when it comes to funding rehab, construction, and development loans.
I have been on about this before, so I won’t go into great detail here. I think that the following post makes the case pretty effectively.
2013: Think construction loans
Getting down to brass tacks, we feel that this is a great opportunity for those in the private money business. In particular, we at Fairfield see enormous opportunity, in that (a) this need exists in such a desperate way, and (b) we have been funding and servicing such loans for many years—so it is an easy pickup for our company and for the many brokers that we partner with.
If you aren’t already familiar with our programs in these areas, please consider educating yourself further and seeing if there is not an opportunity for you to offer our products to your current and future clients.
With that in mind, I shall point you toward some prior posts that might help you get a handle on the particulars of our lending in these areas.
Here is our Rehab and construction loan FAQ.
This next article focuses more particularly on quick flips: 2013: The year of the quick flip.
Here is a post regarding our Draw process for rehab and construction loans.
And this post tells you how to go about Calculating LTVs for rehab, development, and construction loans.
I’ve always felt that people learn best by example. So with that in mind, here is an example of an actual loan that we placed.
And here
And here
And here
And here
Let me know if you have any questions, or if you think that you’d like to pursue a particular loan proposal.
— Clay (clay@privatemoneysource.com, 503-476-2909)
Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Tags: , , , , , , , , , , , , , , , ,
Posted in Commercial loans, construction loans, Private money loan examples, Private money loan uses, Real estate market general, Rehab and constuction loans, REO funding | No Comments »

« Older Entries
Newer Entries »
Partner Websites:
Hard Money Lenders