You probably have a lot a reasons right now why you wouldn’t want to lend money out to someone, and the two major reasons that most investors think of first are:
1. People who get hard money loans don’t make their payments on time, and
2. People who get hard money loans have bad credit. You’d be surprised to find out that the opposite is true……
People who get hard money loans don’t make their payments on time
That is absolutely false. Our borrowers have a better “on time” payment record than any bank portfolio’s. Why? Because we are stricter. Our borrowers know that we will foreclose on them in a split second if they are unreasonably late. We have a 5 day grace period, and 95% of all payments are made within that grace period. We are on the phone with them by day 9 if they haven’t made the payment or called us to tell us why. Errors account for almost all of the payments that are late: post office, processing, envelope handling, misapplied payments, etc.
Our borrowers are builders and developers, construction workers and real estate professionals – they are in the real estate game, and they know that their 40% down payment can be wiped out quickly if they are late on their payments.
People who get hard money, have bad credit
People need hard money (or private money) for many reason, including….
1. The banks aren’t lending;
2. Banks don’t lend on properties that are missing plumbing fixtures, or stoves, or air conditioners, (but these types of homes are perfect for rehabbers);
3. Rehabbers don’t usually have all the paperwork a bank needs as they don’t hold a regular job;
4. Borrower is self-employed for less than two years;
5. Borrower changed occupations (but he is still making plenty of money to buy real estate);
6. Even if borrower’s credit score is 1 point below the 640 threshold, he cannot get a conventional loan.
7. The borrower has exceeded the Fannie Mae limit for number of properties owned
So, you can see that most of the people calling for money DO NOT have bad credit, they just don’t fit into the “conventional” box. Our borrowers still have to give us tax returns and bank statements and credit reports. They have to be able to put 40% of the purchase price down on the property and still have enough left over to fix it up, and wait a few months to rent it out.
So, if I had to guess I would say that out of every 10 borrowers, we have 3 that have credit scores over 700; 4 that have credit scores in the 600′s; and 3 that have credit scores below 600. We look at what comprises the score. I’ve seen borrowers with a 700 who just walked out of BK court. And I’ve seen people who have made enough money to always pay cash for everything who had a 540 credit score.
There are many reasons why people don’t want to lend money to other people. The majority of those reasons are the exact same reasons why I set my trust deed investing program up the way I did, and is the reason why we are so successful with our investments. The next page explains how our program is different than others and it just might reassure you that we really have figured out how to make your investment as safe and secure as we know how.
If you want to see what type of trust deeds we have available, register above, and after you click on the link in the email that is sent to you, and sign back in to the site, you will have access to the trust deeds. In order to access the details on a trust deed, you must be an approved and accredited investor with Capella Mortgage. We will automatically send you the paperwork when you register, and when we receive that paperwork back, Corinne Cordon will call you and go over your investment criteria, and if you are approved, you will have access to the details on the trust deeds.