PML - Common ?s in one post....

Financing, Hard Money Lenders, Private Money
1

Hello All,

I wanted to start tapping into some PML sources but have a few questions that I am hoping somebody can answer for me so it’s all in one post! Would appreciate it.

  1. Should I have a specific property that has already been negotiated before contacting PMLs? I assume at least the property has to be recognized as I will need to have specifics in the Exec Summary, etc.

  2. My biggest question is do you guys/gals use PML for the down payments or for the whole property?

  3. Is it common to send the property you are interested in to these PMLs, before you have it in contract? I guess I would be concerned by sending the information over for them to review, when I don’t have it in contract, as they could take it and if it is a great deal, they will give it away to other investors. Maybe paranoid a bit, but curious cause I imagine it would be plausible that this happens.

  4. This is strictly an example, property asking price is $4.5mm, and seller is willing to sell for $4mm. Down payment at 25% would be $1mm. I have $100k to put skin in the game with another $100k reserve funds. I’d need to borrow $900k private money for DP and mortgage the rest via commercial loan or have the PML buy the property outright. Is there a more common way to structure this deal?

I’ve found a few what appears to be quality properties in the $2mm-$4mm asking price range, and a few of my family friends do PML and asked me to put together an executive summary and send it over to them. I do not have a property in contract or anything at this time, so wanted to see if it was common to send an executive summary on a property I think looks good on paper. I’ve done all of the calculations, which is how I determined it could be a solid investment opportunity.

The reason I am looking at the property price range that I am is that the PMLs that I know thru my family, is that they only loan on $2mm and above deals.

Lastly, is there any other recommendations that you can make that will help me be better prepared to speak with these PMLs? I would very much appreciate the advice and guidance!

2

You should stick to a deal where you only need $200K down.

3

Hi,

Hard Money Lender's and Private Money Lenders require there loan to be in 1st position, you can not have a commercial loan and a Private Money Lender together in a deal and either one of these two types of lenders, actually 3 with Hard Money Lenders require you to have 25 to 30 percent down for a loan!

You will also need to show some reserve and closing cost’s for a commercial loan and you should have a personal reserve as things are not selling very quick today and you may have to hold much longer than you expect, and if your looking for portfolio property you need a personal reserve in case of problems or issues outside of your control!

So you really could buy about a $400k property!

                       GR
4

RE Seller and GR - thanks for your posts. I will stick to looking at properties in the $400k range at this time. Or perhaps I can continue to save up more money so that I have a larger down payment.

5

I have a PML (Private Money Lender … for those that may not know) for funds from $250k to $500M. I also have a source for $250k unsecured LOC (Line of Credit) if you have an existing business to tap into.
You would have to have the property under deposit first.