Avatar's Blog
» Hard Money Loans and the Scent of Fish
Posted on 5/6/2005
Avatar Financial Group, like all hard money lenders, don't fund loans
that look 'fishy' in the loan package. The best place for a lender to
find 'fish' in a loan package is in the Executive Summary and on the
Balance Sheet where the price of assets and dates of purchase as well
as current value are listed.
Things that look fishy in a loan application package include, unrealistic appraised value estimates, such as, we purchased the property 1-6 months ago and now it is worth 50% - 400% more without having added any capital improvements. Personal financial statements that over-estimate the value of personal property: "It's all someone else's fault" reasons for seeking this hard money loan, rather than a conventional loan. Or, my favorite, "This property was shuttered and makes no money, but as soon as I buy it, it will make millions right out of the gate. But I have no money for marketing or to put down 20% of my own or a silent partner's cash to make this deal happen.
Be realistic. Be fair about your responsibility for the situation you are in today - if speed is why you need the loan, say so. If it's personal credit scores, tell us. If the property doesn't meet banker's lending criteria, tell us and tell us why. With straightforward answers, we can get you an answer on your loan request in a heartbeat without wasting your time.
Posted in Miscellaneous
Things that look fishy in a loan application package include, unrealistic appraised value estimates, such as, we purchased the property 1-6 months ago and now it is worth 50% - 400% more without having added any capital improvements. Personal financial statements that over-estimate the value of personal property: "It's all someone else's fault" reasons for seeking this hard money loan, rather than a conventional loan. Or, my favorite, "This property was shuttered and makes no money, but as soon as I buy it, it will make millions right out of the gate. But I have no money for marketing or to put down 20% of my own or a silent partner's cash to make this deal happen.
Be realistic. Be fair about your responsibility for the situation you are in today - if speed is why you need the loan, say so. If it's personal credit scores, tell us. If the property doesn't meet banker's lending criteria, tell us and tell us why. With straightforward answers, we can get you an answer on your loan request in a heartbeat without wasting your time.
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