Now that Sub-prime has basically disappeared, the hard money-money lenders are pretty much the only source of capital for many people. 

Once a thought of a last resort strapped borrowers, hard money loans which have different lending standards than traditional mortgages, are attracting a larger, more affluent group of consumers.

Unlike a traditional mortgage, which is largely defined by credit scores and the borrower's ability to repay, hard money loans are based almost entirely on the value of the underlying asset. That means a borrower's income and credit score aren't nearly as important as they otherwise might be.

Borrowers needing a short term loan or a 'bridge' loan are required to have substantial equity in their collateral - either their home, investment property or commercial property - of 30-40%.

Consumers who need quick access to financing to close on a property in as little as 2 weeks or less are good candidates for hard money.

Consumers who do not meet conventional bank financing but have substanital equity in their property are good candidates for hard money.

Be prepared to pay higher interest rates and fees and you will want to refinance as soon as you can into a traditional mortgage.  Once that is accomplished there should be no reason for another hard money loan.

A good broker never tires of finding a good tip to get attention and positive response from a lender. Surprisingly, I find very few good tip lists out there. If anyone knows of some, please share them with me (just shoot me an email). Here's a tip even veteran brokers might find beneficial:

Commercial Broker Tip: How to stand out from the crowd on the phone.
A lot of a broker's time is spent marketing, making connections, talking to prospective borrowers, and making connections with people who might refer business to them. A good broker is a bit of a chameleon: s/he understands how to speak to people in ways that make them comfortable. Often however, when it comes time to communicate with the lender, the broker is either 'all talked out' or ‘stressed out’. The same skills that bring in the clients are lost at that moment. My tip is: find them!

Recognizing your ability to make people comfortable and using that skill when communicating with everyone at the lender's office is going to set you apart from the usual crowd. Chances are, the lender you're calling has already fielded calls from twenty two fast-talking and three grumpy brokers by 11AM. Stand out from the crowd by saying hello, providing your full name and pausing for a moment if the lender wants to write it down along with your phone number and email address. Introductions and pleasantries should take 10 seconds or less; lenders are super-busy people, as you have probably experienced. Remember, you want them to warm to you, not wish you'd hush up and get off the phone.

Pace your presentation and begin with the bare facts. Here's an example that works:

“Avatar Financial Group, this is Allison.”

"Hi, Allison, this is Evan Jones from Mutual Brokers in Texas. Thanks for taking my call. I have a client with a retail strip mall in Dallas that he wants to refi. The property was valued by an appraiser last month for $2.1 million. He needs $1.6 million to pay off a first and get some cash out. Can Avatar fund that loan by the end of the month?"

Slam dunk! You're suddenly my favorite broker of the day! A pleasant tone in your voice, a brief acknowledgement that you are speaking to a human being, and a clear statement of the bare facts in 30 seconds or less means we can both get this ball rolling now.

The easy part? - the pleasant tone in your voice, a moment to repeat the lender’s name and say thanks for taking your call.

The more work-intensive part? - getting all the bare facts before you start calling. Get the following for those precious first 30 second communications:

• property type - be as specific as possible in 4 words or less
• location - city and state
• value, including how and when it was arrived at - critical additional data that sets you apart from the crowd
• loan amount - a ballpark is ok; be clear about the minimum the borrower can take and the amount the borrower would optimally like.

That last one - letting the lender know the minimum and optimal loan amount – can really set you apart in a lender's eyes. It lets them know you are pragmatic and will work with them to get the best deal possible without killing the loan. You and the lender have a common goal – to fund worthwhile loans and make a good living doing it. Here’s just one way to let the lender know you are on the same ‘team’ and ready to help make a deal work.

Even if you don't get to the finish line this time, chances are when your name comes up, you'll be described as an efficient broker who handles solid deals. In other words, someone the lender wants to hear from. Good luck out there!

Hard money commercial lenders tend to fund up to 65% of what is commonly termed, "the fair market value" of income producing commercial real estate property. Brokers would have an easy and profitable career indeed if lenders routinely funded 100% of the cost of purchase or even up to 80 - 90% of the value of properties for refinances. Since that's not the case, here are a few tips for creative loan packaging that will help to meet the needs of clients as well as the funding requirements of lenders.

Blanket Loans are loans utilizing more than one piece of real estate collateral. Here's an example of a commercial real estate blanket loan:

Assume a borrower wishes to purchase a retail strip mall at a cost of $2,000,000. As a hard money lender, Avatar will lend up to $1.3 million (65%) for the purchase. The borrower must come up with the balance. Note that hard money lenders will lend up to 65% of the lesser of the actual price paid for the property or the appraised value. If the borrower is getting a 'fire sale' price and the property is appraised at $5,000,000, the 'fair market value' of the property is still $2,000,000. It is the price for which the current owner is willing or is forced to part with the property on the market today. Therefore, we work with a price of $2 million and a first lien loan of $1.3. Read on...

Assume further that the borrower already owns two other pieces of property: an apartment complex with a recent (6 months or less) appraisal of $1,500,000 and a skating rink valued at $800,000. The skating rink has been in the family for years. It is free and clear. The apartment building has a mortgage on it for $420,000. Both properties operate with some profit. Here's the summary:

The borrower can potentially take out a loan to cover the cost of the purchase and have some extra working capital to make some improvements or market the properties as well. Blanket loans are an excellent way to get additional capital when 65% of the cost is insufficient.

A month later, my husband and I moved apartments and called Chase, among other institutions, to have them change the address on our bill. This process took quite some time: it appears that you cannot change your address online, and my husband went through a number of cyclical telephone systems until he found a disgruntled operator who would change our address. After all, one would not want our television bill to go to the wrong house... what if we somehow missed a payment!

A few more weeks passed and we were expecting another bill. Days went by, and no bill arrived. Logging on to our online account, we figured out why: the operator at Chase had typed in a completely erroneous address. Names have been changed, but the principle remains: say our street name is Eastridge Way North., the address had been entered as Eridge Way. No “North” in sight. No wonder the bill had not arrived.

We paid our month’s bill online and got back on the telephone to correct the error. This time, however, getting hold of a human being was far more difficult than it had been previously. The toll-free number on previous billing statements took us through a cyclical nightmare where computer after computer assumed we wanted to make payments, buy products and complete a myriad of other tasks that had nothing to do with changing our address.

Our next tactic was to try and fool the computers. Every menu we got to, we hit zero in an attempt to reach an operator. The first few people we were routed to said that they couldn’t help us, but would forward our call to someone who could. Three out of four times, we were sent to either a  new useless system or the original automated system that chases its tail in order to have you give it money. No pun intended.

The fourth woman appeared to be in a non-English speaking country, although she said her name was Jessica. She couldn’t change our address and she definitely couldn’t let us speak with a supervisor. Apparently, she didn’t have one. Jessica being pretty much useless, we hung up and called the actual store from which we bought the television. My husband ended up shouting over the top of the sales rep who insisted that he put us through to Chase’s billing department (read: automated lemming). Polite reasoning turned to anger and finally to begging as we literally pled with two different sales people that we be put through to a phone number that didn’t start with 1800, 1877 or the like. We’ll pay for the call! Please let us speak to someone who can fix our address!

Exasperated, a Circuit City manager told us the only thing she could do was send us back to the automated system, but that “if you press three a bunch of times, the computer will think you’re a merchant and it’ll send you to a rep.” With those highly technical, customer-service oriented instructions, we waited for the computer’s friendly tones and began madly hitting “3” on our telephone’s keypad. The success of our venture now depended on dictating our address to another person whose English was limited and who misheard the address twice before getting it right. We made sure not to hurry through the address, and we even spelled it out. Time will tell whether the person actually managed to fix our problem. The amount of time spent on the phone attempting to sort out this seemingly simple problem? Three and a half hours. Three and a half hours of our lives that, television or no television, we'll never get back.

The question is, why is it so hard to change one’s address through Chase Bank? Also, why does the bank wait for five days after you pay a bill online before processing it? My opinion is that this bank makes it particularly hard to do everything in order to have people mess up. They can offer eighteen month interest-free credit lines on purchases as menial as TVs because confused customers can think they’re making payments on time when in fact their payments are being processed after the due date and late fees and interest can be added to their accounts. Making it impossible to change an address also means that bills may arrive late (ours eventually arrived a week late). Another cute trick is to bombard customers with offers when they call and making it seem as though customers have to listen to all the offers before they hang up, for fear of negating everything they accomplished during the call. 

We have made three payments on this television, but we’re thinking about paying the whole thing off next month and working on building credit elsewhere. It’s just too dangerous to deal with an organization whose primary goal is to have you trip up. Although we realize that banks have to make their money somehow, we are not going to be the victims of this type of scheme. The TV was worth every penny we were charged for it; the nightmare of trying to pay for it wouldn’t be worth all the TVs in the world.

In recent years, everybody from middle school children to their grandparents has learned at least something about who to trust, and who to avoid, on the internet. While a great number of people are still fooled by spammers and fraudsters, the general population is becoming increasingly informed - and thus skeptical - of internet advertising and content.
Many reputable organizations undoubtedly sabotage their own success by producing awful content online. When you're on the production end of an internet advertising campaign, you should remember what you consider to be "red flags" and avoid committing these offenses yourself. As obvious as this sounds, it is incredible how many people still employ tactics that scream of illegitimacy. Although everyone has different tastes and levels of tolerance, here are a few things that, when displayed on computer screens, say little more to a user than "Get out of this page now."

One:

WRITING IN ALL CAPS is a very good way of saying "I have nothing important to say, so I'm going to shout, in hopes of someone hearing me. Multiple words that are entirely capital letters also tend to sound toneless and monotonous to the person reading them: Think of a person bellowing at you without any intonation in their speech. Annoying, isn't it? If you want your writing to pack a punch and be remembered, write something worth remembering. It's best to avoid using all caps completely, and if you think a passage need emphsis, using italics is less intrusive.

Two:

Incorrectly spelled words. None of us are walking dictionaries, and I am an atrocious speller; however, would you really post a billboard on a street corner in a busy city without spell checking it first? Also, despite the fact that everyone misspells words, publishing these mistakes makes an author look unintelligent and careless.
Glaring grammatical and stylistic errors. Not many people in your audience will be scholars of linguistics and grammar, or will know the intricate rules of semi-colons, but most people can spot the more obvious errors, such as randomly placed apostrophes, excess use of "..." and the omission of full stops. Also, simply running your text through a spell checker is rarely good enough, as the computer will not notice that you've written "there" when "their" or "they're" should have been used. Think that no one in a marketing niche would make this error? I have seen it numerous times and it always eats away at a writer's credibility.

Three:

Hideous social networking pages. I came across one commercial loan company's MySpace entry that played the song "Take The Money And Run" when a user opened the page. Another loan company had a poppy Top 40 song to play to visitors. Although the first page was probably trying to be funny and the second was trying to be hip, using music on any webpage, including MySpace, is a bad idea. Additionally, taking advantage of some social networking sites' HTML allowances in order to splash pretty pictures all over a page is a bad idea. It looks tacky and unprofessional.

Four:

Too much large/bold/underlined font. There is a saying in the newspaper industry about having information "above the fold." This refers to the content that people can see on the front page when the paper is folded in half. The same term now applies to web pages. Although different computers and different browsers show varying amounts of a page, what can be seen without scrolling is known as being above the fold. Having a dozen large, bold and underlined headings above the fold is as good as having no text at all. Users do not read the text, they just try and find something to look at that doesn't resemble spam. If this spammy text is all that's avaiable, the "Back" button will be looking like most clickable option.

Five:

Excessive color. Even though your color options appear to be infinite, you should not attempt to incorporate every color from fuchsia to lime green into your site. It is also amazing how many people know that green, gray and yellow don't look good together, but who still slap them next to each other on a webpage.

Six 

Big and/or numerous advertisements. If you need to run ads in order to sustain a business, try to avoid having the ads take over your page. Also, too many Google-provided ads will make your site look like a dime-a-dozen directory.

Often, financial companies and cut-price law firms are the major offenders in the realm of bad websites, so if you're in either field and can produce a nice page, you're already ahead.

Of course, everyone can add more to this list, such as annoying flash introduction sequences, but do make sure to stay away from the heavy-weight mistakes listed here. Your online reputation depends on it!