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Originally Posted by Jake
I read an article a few weeks ago about HML'ing. Seemed to good to be true but I have been meaning to do some more research on the subject. Thanks for the reminder! If anyone here has any experience as a hard money lender I'd love to hear about it.
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It's not too good to be true. The problem is a lot of people are not liquid enough to get in. I know of one guy in the Baltimore area, a retired doctor, who now has $18 million in cash floating around the area at any given time. He started with nowhere near that amount.
I'd imagine your best bet -- if they still exist these days -- would be to hit up the more reputable weekly real estate investment clubs in the area.
Before the crash there were a lot of investment property resellers (the guys who fill out the contract to buy with the hopes of assigning it before closing). They've probably mostly dried up, but if you can find a good sized reseller, he'd be a great resource as he needs to get other investors funded in order to unload the properties he was not able to assign and does not want to renovate himself.
The important thing is making sure you understand the market so that you do not do deals where you potentially get fucked on the LTV. You also want to make sure you'd be lending to people that have demonstrated experience renovating and reselling investment properties. You don't want a newb who decides its over his head because then you have a non-performing asset you have to tend to yourself.
After awhile you'll find some people that you're comfortable doing longer term deals on (say section 8 buy and hold for 5 years) where they'll happily give you say 10-12% because the deal allows for it and it doesn't freeze up their own cash or borrowing ability.
Just look into state regulations about lending. You may have to register as a private lender and do what's required of that.