Val-Chris Investments

Hard money loans are a form of private money loans, where private lenders lend a borrower money to invest in a property instead of traditional government institutions. Real estate investors utilize hard money financing specifically, as such loans provide short-term funding when they need it most for a good investment deal. Hard money loans are a popular go-to option for the house-flippers who cannot turn to banks for loans. Let’s take a closer look now at the basics of hard money lending,

Despite appearances, entering the hard money lending business isn’t as simple as it seems. In the prior years of the private money lending industry, some shady bad apple lenders spoiled the barrel. Thankfully, today’s market has evolved to become more gracious to both the borrower and loaner.

Private money lending is exactly what the name implies: a loan given to a borrower by a private organization or a wealthy individual. Traditional money lending is an established contract between a borrower and a financial institution, so private money lending is an alternative means of obtaining funds. Private lenders are in the business to make money with their investments. The process to obtain borrowed money generally varies, but it’s entirely up to the lender and the borrower to establish the exact terms of a loan.

A private money lender can be the solution to all your home, investment, business, and real estate ambitions, but the dream doesn’t come easy. Circumstances come and go, and you may need to take action as soon as possible. Never fret—read on for the best approaches to help you find a private money lender for your particular situation and underlying needs. After reading, you’ll know more about how to find a private money lender to back your investment and turn your dreams into a vivid reality.

Earlier this month, our VP Jeff LaMotte was interviewed by Real Estate Bees along with peers on the affect this pandemic has had on the private money market. This survey included information collected from over 2,000 active hard money lenders and Jeff was asked some specific questions as an industry expert. During the COVID-19 crisis, many non-QM and hard money lenders closed up shop due to the future’s uncertainties with this virus, but businesses like Val-Chris Investments remained open, continuing to serve the needs of our private money clients!

Why?

A large part of the Private Money Trust Deed investment market had been gobbled up by the Institutional Non-QM (Qualified Mortgages) Mortgage Companies backed by Wall Street Investment Companies seeking higher yielding investment strategies in the last few years.  Trust Deed Investors were being squeezed out of the market and replaced by large aggregators. This provided fewer opportunities and competition was fierce for these loans.

Conventional mortgage rates are generally determined by a number of factors such as the federal reserve’s rate policy and the secondary market. In the current environment of rising interest rates, while interest rates are generally low, conventional lender’s rates change daily in small amounts. The final rate is dependent on when the rate is “locked in” by the lender putting the loan together.

No financial investment is guaranteed, regardless of the vehicle you choose to put your money into. 

Alternative assets like trust deeds have a lower correlation with the public market, offering greater stability and consistent returns. This makes them a valuable choice for portfolio diversification. 

Trust deeds are secured by real property and include policies for lender risk mitigation. To understand how your interests are protected as a private real estate lender, let’s explore title insurance requirements and why we set the bar at 125 percent.

On September 9th, 2015, the California Legislature passed bill AB 139 and Gov. Jerry Brown has signed this new legislation which has created a new form of deed for the transfer of real property in California effective 1 January 2016. The new deed is call a “Revocable Transfer on Death” deed (which we will call a revocable TOD deed), and this deed allows an owner of real property to deed it to a named beneficiary without the risk of a lengthy and costly probate proceeding or the requirement for formal estate planning documents.

A proposed Constitutional Amendment being considered by the California Senate this 2016 session will potentially affect thousands of taxpayers in our state, either directly or indirectly.