Interview With David Goldberg: What You Need to Know About Colorado Hard Money

David Goldberg, President

In this interview with David Goldberg, founder of The Investor's Source LLC, we will explore some of the facts about hard money loans that anybody looking for a hard money loan in Colorado needs to know. 

 

  1. When it comes to Colorado hard money loans, are there any upfront costs to be expected?
  • We do a lot that other lenders may not do before we collect any kind of fees.  Then we run an analysis and do a property valuation before the borrower has put down any money on how a deal looks and let them know if we think they can make any money on it.  Then and only then, we eventually do have an upfront origination deposit of $350. This isn’t really a fee; it’s just a down payment on our services.  Other than that there are no fees prior to closing.

 

  1. How many deals have you done before? 
  • We have done over 50. 
  • We lend some of our own funds AND we find other lenders for some deals.  People don’t need to be afraid that there will not be enough funds. 
  • It’s nice to have somebody with experience.  They should be licensed in the state of Colorado for Colorado hard money loans.  The lenders should be screened by the company to make sure that they are qualified to lend. 

 

  1. What should a borrower look for in a lender?
  • When you come to a lender, a lot of people try to find a private lender.  Quite often, a private lender may have no funds available.  Many times, with Colorado hard money loans, deals need to be completed very quickly or the property will no longer be on the market.  You want to make sure that your lender will have sufficient funds and can move quickly.  At The Investor’s Source, you don’t need to worry about this because not only do we lend our own money, but we also have many screened and trusted lenders that we can work through.  You may pay a little bit more, but when you come to me you get the peace of mind knowing that funds are available so that we can move quickly.  I can tell you that we have never had a deal delayed at closing because of our efforts.  Delays in the mortgage industry are notorious, but finding a lender that can close on time is a huge advantage because that is not always a norm in the business.  And you want a lender that will be flexible with you.  We work with many different lenders, and each of them has their own idiosyncrasies with how much down payment each borrower needs to put in and how much skin in the game each borrower needs to have, and where the property is located.  Every deal is so unique that if you try to just use one lender, you will have deals fall through.

 

  1. How long are most hard money loans for the loan term?
  • There are different lengths for each deal because each one is different.  Most loans we make are for rehab purposes so, its people fixing and flipping a property.  I would say the norm is between 6 and 9 months for a loan term.  Colorado construction loans go a little longer, 9 – 12 months, before it is built and sold or refinanced.  Rental property loans can take up to two years before they need to refinance or sell the property.

 

  1. What is a pre-payment penalty and do all hard money lenders have them?
  • A lot of lenders don’t have prepayment penalties because usually on a short term loan you are paying enough on upfront points and interest rates that we try to stay away from charging a prepayment penalty.
  • Now on a two year loan we give a little break on the interest rate they are paying because they are holding the loan longer and the lender gets a more steady flow of cash.  In that case we charge a prepayment penalty in the first year.  As long as you keep the loan with us for at least a year, there is no prepayment penalty. 
  • There are origination points at the start of the loan.  What are origination points?  Origination points are what it costs to put the loan together.  It is everything involved with finding a lender and doing the paperwork and the servicing.  This is called the origination points.  It ends up being a percentage of the loan amount. 

 

  1. What’s a direct lender?
  • A direct lender lends their own funds.  A broker is someone who puts together a deal between you, the borrower, and a lender.  Ideally, you go to somebody who lends both their own funds and works with other lenders. 
  • Sometimes people knock brokers who put deals together, and I think it’s an unfair knock.  They don’t have their own money to lend so have the deals that they try to lend, never end up getting funded.  I would say that 100 percent of the time when our deals get approved, we actually end up funding the deal and funding it on time as well.

 

  1. If you were to sum it up, why should borrowers use the Investor’s Source for Colorado hard money loans?
  • In general they are investors looking for money.  For a primary residence, you are better off going to a bank for that.  Investor’s come to us because they find us easy to work with and we have flexible terms.  We are common sense underwriters.  If your credit score isn’t great and you don’t have a lot of money in the bank, if your story makes sense and the property you are buying looks like a strong property and you have shown some financial responsibility, we can usually get you funded.  We aren’t cheap but we can get the money and get it on time.  A lot of lenders only lend on the Front Range.  We are one of the only lenders I know of that will fund projects all over the state of Colorado for Colorado hard money loans.  If the deal makes sense, we will visit it and consider funding it.  We do have a two year loan when most Colorado hard money lenders usually only go 6 to 9 months.

 

  1. Why do you like what you do?
  • I have good experience being an investor.  I started investing myself in rental properties back in 2007 and that gave me a good deal of experience.  We are a company that will look at special situations because every deal is unique.   

 

For more information, give The Investor's Source LLC a call today at 970-635-2397 or click the button below for our application form.