1 private hard money lending “your success is our success.” ~ trent dalrymple director, investor...
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Private Hard Money Lending
“Your success is our success.”~ Trent Dalrymple
Director, Investor Relations – Metro Mortgage Investments
Metro-Mi.com
26711 Woodward Ave.Suite 301Huntington Woods, MI 48070
www.Metro-Mi.com(248) 547-3006
What is Hard Money?
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• A hard money loan is loan where a borrower receives funds secured by real estate. Hard money loans are typically issued at much higher interest rates than conventional loans.
• Many hard money mortgages are made by private investors, generally in their local areas.
Source: http://en.wikipedia.org/wiki/Hard_money_loan
Is it Regulated?• Mortgage Brokers, Lenders, and Servicers Licensing Act – MCL 445.1651• Mortgage Loan Originator Licensing Act – MCL 493.131• Secondary Mortgage Loan Act – MCL 493.51• Consumer Financial Services Act – MCL 487.2051• Consumer Mortgage Protection Act – MCL 445.1631• Mortgage Lending Practices Act – MCL 445.1601• Regulation X – RESPA• Regulation Z – TILA• Regulation B – ECOA• Fair Credit Reporting Act• Various FTC Rules
– Safeguard Rule– Red Flags Rule (ID Theft Prevention)– Risk-Based Pricing Rule
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"Mortgage loan" means a loan secured by a first mortgage on real property located in this state and used, or improved for use, as a dwelling and designed for occupancy by 4 or fewer families or a land contract covering real property located in this state used, or improved for use, as a dwelling and designed for occupancy by 4 or fewer families.
Why Hard Money?
• Faster Process• Flexible• Lend using ARV• Leverage Equity• Higher Debt Ratio• Distressed Property
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Leveraged Investing
Purchase Price of Property 30,000$ Cost to Repair / Rehab 15,000$ Appraised Value 90,000$ Max Loan Amount 45,000$
Loan Principle Balance 45,000$ Closing Costs & Fee 6,750$ Property Tax Impound 2,500$ Monthly Payment 675$ Total Cost of Loan* 59,650$ *assumes 8 months of Interest
Sale Price 90,000$ Principle + Costs (59,650)$ Profit 30,350$
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Your out of pocket costs:
$6,750 – Closing Costs$2,500 – Property Tax Impound$5,400 – Monthly Interest
$14,650
Return on Investment (ROI)
Purchase-Rehab Loans• Borrow against the
projected After Repair Value [ARV]
• Purchase Price + Repair Costs
• Setup Fund Control • Release as Repairs
Completed
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Property Requirements
• Brick• 3 Bedrooms +• Basement• Garage Required• Pride-of-Ownership
Neighborhood
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Appraisals• Specialized Appraisal
– List of Required Repairs by Licensed Contractor
– Predominant Sales• Company Approved
Independent Licensed Appraiser
• Desktop / Full Appraisals
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Borrower Profile• Home Owner• Experience with
Property• Ability to Repay• Credit History
– NO Recent Foreclosures– NO Current Bankruptcy– NO Consistent Negative
Issues
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Be Prepared• Appraisal• Loan Application• Credit Report• Income Documents• Title Commitment• Purchase Agreement
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Be Prepared
• Cash into Project– Minimum 10%
• Realistic Exit Strategy– Extension Available
• Property Taxes– Escrowed / Impounded
• ACH Payments– Automatic Withdrawal
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Michigan Programs & Fees• Real Estate Investor
– Interest Only• Foreclosure Rescue
– Homeowners– Amortized
• Seller Holdback– Lien of Interest
• Application Fee• Appraisal Fee• Interest Rates
– 14% to 18%• Closing Costs
– 6 to 10%– $3,000 (min)
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The Corporate Team David DiMeo, President & Broker • Over 15 years experience in providing privately funded mortgages• Business Development / Service Partner Agreements• Loans Programs / Underwriting Guidelines• NMLS# 171942
Trent Dalrymple, VP Investor Relations• Over 25 years experience as private mortgage professional• Loan Origination / Account Management• Training / Public Affairs• NMLS# 166179
Anne Pancost, Quality & Compliance Officer• Over 20 years experience in banking industry• Senior Internal Auditor / Certified Bank Auditor• Office Manager