Grant Smith - Hard Money
@GrantPaulSmith
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Chasing $10 Million in Annual Hard Money Loan Production by 2025 | Acquiring Assets Along the Way | Let's Invest x Learn x Grow Together
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Hard Money Loan Production:
2020: $250K
2021: $1 MM
2022: $2.6 MM
2023: $6 MM
Chasing $12 MM in loan production in 2024
Could be our first 7-figure Revenue Year
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@Codie_Sanchez
Hard Money Lending
Overhead:
- Google Suite
- Real Estate Meetups
- Lunches
Product:
Take your cash from your 401K or IRA and put it into a self-directed account.
Lend it out to fix and flip rehabbers at 3 points and 13% for 6 months.
Earn 19% on your money after-tax.
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@Codie_Sanchez
Hard money lending.
As long as you have enough money for the first loan and a list of note investors, you can originate and sell notes until your pockets are green.
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165
My mind damn near exploded when I discovered that a cash-out refinances wasn't a taxable event.
What money lessons expanded your reality?
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@sweatystartup
@PlanningShit
I like balconies for my tenants. They seem to like it because they are able to throw all of their items over th balcony which saves them time when vacating my property.
Win. Win.
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@creation247
Atomic Habits
Combine these principles & systems with what you value and you'll make meaningful traction in that area.
Because of it, I:
- Learned to play guitar
- Found my partner
- Went from $100,000 per year in sales (at my job) to $100,000 per month in sales.
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@girdley
“A healthy man wants a thousand things, a sick man only wants one”
A little bit of Confucious for breakfast!
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@TheDrugMoney
If you can't manage your most precious asset, you can't expect them to manage much else.
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@creation247
Covid
👇
Increased Demand x Printing LOTs of Money x Low Interest Rates x Wartime
👇
Increased Raw Material Costs
👇
Increased Supply Chain Constraints ($5K - $30K)
👇
Increased Container Costs
👇
Inflation
There are other lines to be drawn, but this is one.
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@wealth_director
After 7 years of relationships (3 different partners) I concluded this:
How To Find the Right Partner (Mental Model):
1. Physical Attraction
2. Shared Values
3. Similar Long-Term Goals
4. Lifestyle Compatibility
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@HeroDividend
Here’s how you do it.
Invest $2.5 million through a regional bank.
Have them give you a loan against your portfolio at -2% WSJ Prime which would equal 6.25%.
Get 50% LTV for a loan amount of $1.25 million.
Write hard money loans at 3 points and 12% interest for 12 months.…
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@shawngorham
The best painter I ever saw had an ankle bracelet. He'd been on probation for a while.
Like you said, this guy was a tradesman.
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@benrealestate21
@RealLifeRentals
Wholesalers are notorious for offering ridiculous prices to get under contract for $500 in refundable escrow money.
Then they grab the ARV from the highest 5 comps in a five mile radius and market it to an inexperienced rehabber who wants to be the next Chip and Joanna Gaines.
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@SMB_Attorney
I keep repeating this everywhere, but Hard Money Lending is the most profitable business model I've ever seen.
My company issued $3 million in hard money loans this past year ($150,000 in net revenue). Our overhead is $7,200 per year. I work a full-time W-2.
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@KingJosiah54
Not sure why, but this post got me pumped.
Not a Lions fan, but I have to root for someone to win the Super Bowl.
Let it be the city of Detroit!
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"Real estate is basically a bond with equity upside."
Do you agree? 👇
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@Codie_Sanchez
25% in Hard Money Loans earning 12 - 16% APR
25% Self Storage - 20% CoC
10% Other Real Estate (Raw Land, Cell Tower, Auto Shop)
30% U.S. Equities - Index Funds Only
10% Cash / Treasuries
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@realEstateTrent
I’m an introvert in sales.
I don’t mind it more than my extroverted coworkers.
The only difference is that they socialize to recharge and I prefer to read, write, or do a solo sport.
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@sweatystartup
@cpaik
The fact that this dialogue exists is just mind-boggling.
This metaverse real estate thing sounds like an overhyped and overpriced version of Sims.
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I left my job in medical device sales two weeks ago.
Yesterday, I closed $2 million in new capital investor commitments for the hard money lending business.
We need to raise at least $5 million in 2024 (likely $6 million) to meet anticipated demand loan demand ($12.5 million).…
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@sweatystartup
Mailchimp
Stay top of mind with 10,000+ potential custom customers.
Total game changer.
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We just wrote a $106,500 loan on this property in Middletown, Ohio.
The borrower didn't have to put down 20% of the purchase price like we usually ask.
Instead, they pledged another property they owned free and clear worth $110K as cross collateral.
The investor is going to…
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@realestatemaxi
I use my 401K to roll into my self-directed IRA and then invest into RE Notes. Earning 3 points and 13% on capital. All tax-free. Used wisely, 401Ks can be a great medium to fund tax-free compounding.
I don't disagree with owning rentals in the slightest though!
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@HeroDividend
I’m using a line of credit against my roughly $4 million stock portfolio to write hard money loans at 15% - 18% APR.
My borrowing rate is 6.25%.
My spread is 8.75% at a minimum on a $2 million line of credit.
$175K per year without touching the principal of $4 million.
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@wealth_director
I ended up asking out a long-time friend who checked all the boxes. Going on 10 months now. Best 10 months of my life.
Hope this helps someone else!
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@SaveYourSons
My mental I used to find my partner:
In this order:
1. Physical Attraction
2. Common Values
3. Common Long-Term Goals
4. Lifestyle
Ended up asking out a long time friend (13 years). Best decision I ever made.
At the gym right now. Football game later. Chess before bed.
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@jmventurelog
People say the same thing when I'm charging 3 Points and 12% for a 12-month hard money loan.
Just crossed $2 million in outstanding loans.
Clients are making a dump truck of money on the deals I'm funding and 50% keep coming back for more capital.
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@dealsandcoins
Experienced the same thing with a family member/mentor. Was panic selling his storage facilities so I bought. Raised rents 30% last night. Should improve asset value by $3 million.
I’ve seen that people get more pessimistic and irrational as they contemplate their own mortality.
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How we manage a multimillion-dollar Hard Money Loan portfolio with 2 people.
A Thread🧵
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@Striver___
Atomic Habits
Changed the way I do everything and then, everything in my life began to change as a result.
$10 AUM
Started one company
Acquired another
VP at another
We are what we repeatedly do. Life’s too short to not be who desire to be. Read the book. Change your life.
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@FluentInFinance
I built a hard money lending company to deploy my surplus cash and that of my family and friends.
It work like this. I originate loans to real estate investors on fix and flip properties in local markets to me that I understand.
We are originate loans at 3 points and 12% APR…
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@indexnforgetit
Quoted a borrower for a DSCR loan just the other day.
Purchase Price: $140,000
Loan Amount (75%): $105,000
Monthly Payment: $788.83
Term: 30 Year
Rate: 8.25%
Property Type: Duplex
Gross Rents: $1900
Separate water and electric.
Dated but functioning mechanicals.
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@b3hymer
@Codie_Sanchez
I only do loans in non-judicial states like Ohio. I keep my loan to value low (65% or lower).
I have a clause that states deed in lieu of foreclosure so if I can show that the loan is in default, then I can assume the deed.
I screen well upfront so I rarely have to do that.
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@AdultingIsEasy
The single greatest benefit of having money is to not have to worry about it.
Your attention can flow to higher level activities.
You start thinking in decades.
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@heIpfullandlord
I think one of the biggest cons to RE is also a huge benefit, which is illiquidity.
It takes much more effort to sell your real estate investment than it does your shares in an index fund.
That illiquidity forces a longer holding period, which increases the odds of appreciation
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@heIpfullandlord
I think it has the best definition of an asset versus a liability.
“Assets put money in your pocket while liabilities take money out of your pocket.”
I think it demystifies and challenges a lot of traditional thinking.
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We just crossed $6 million in loan origination in 2023, with a balance sheet of $4.8 million going into 2024.
No defaults, but plenty of deals that didn’t go according to plan. Earning 15% on average on our own capital and 5% on OPM.
Utilizing $3.8 million of our own capital…
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This is a PSA for all hard money/private lenders to make sure you are an insured party.
I lent on this deal as a fix and flip almost two years ago. It sold well and I got paid out back in 2022.
It hit the market just this week for $65,000 after getting struck by lightning and…
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@Codie_Sanchez
The pressure to make the business "go" is something that can only be felt to be understood.
The pressure to satisfy customers.
The pressure to make payroll.
The pressure to grow.
It's a walk of faith and it takes a different gear to execute.
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@Codie_Fisher
In addition, any spouse that works a W-2 (regardless of pay) so health insurance is realistic.
Total game changer for the funtreprenuers out there.
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@indexnforgetit
$1 million in a brokerage with my bank.
Get a line of credit at 6.25% interest for $500K (50% LTV).
Use the line to BRRRR properties👍
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@TripleNetInvest
Customer service and quality of product time and time again.
I've never had a bad experience at Chick Fil A and I've had a bad experience at every other place listed there above (messed up order, hair in food, etc.).
It's incredible what Chick Fil A is doing.
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@realEstateTrent
I watched what 2008 - 2010 did to my dad. He has about 300 employees and had to make the decision to let about 100 of them go.
I’ve never seen a person age faster than he did in those two years.
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Back Story:
My business partner and I were able to carve out some time to go through our loan origination process and came up with this flow chart.
Not perfect, but a good start.
Hard Money Loan Origination Flow Chart:
*This flow is for 1 - 4 units residential properties.
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@realEstateTrent
I’ve said it before and I’ll say it again:
99% of customer service is picking up the phone when the client calls.
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@WealthInc247
My framework has always been:
1. Physical Attraction
2. Shared Values
3. Similar Long-Term Goals
4. Lifestyle Compatibility
Ended up asking out a long-time friend who checked all the boxes. Going on 10 months now. Best 10 months of my life.
Hope this helps someone else!
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Here is What We Make on a Hard Money Loan
Location: Cincinnati, OH
Loan Amount: $112,000
Origination Fee: $3,360
Interest Rate: 12%
Monthly PMT: $1,120
Cost of Capital: 10%
Investor PMT: $933.33
Loan Servicing Income: $186.67
Avg. Loan Duration: 9 Months
Total Loan Servicing…
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@UncommonYield
I think something that often goes unnoticed in any investor's lifecycle is that it's not always about optimizing for return on equity.
For many, once you reach a certain point it's about peace of mind and large sums of cash flow.
Different eras.
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By the end of 2023, my email database for my Lending Company will grow from 946 to over 25,000.
It will cost me $350 per month to capture emails and send emails to that list.
If I close one client, I'll make on average $10,000.
This business works because the marketing does.
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@wealth_director
Doing everything backward.
Market your business first, then build the product.
It will suck in the beginning, but you won't waste your time on building products that never sell.
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@Blind__Luck
I see this all the time.
Work output or responsibility doesn’t change.
Employee comes in asking for raise 10x historical inflation.
What changed? Nothing pertinent to the job.
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The 7-Step Legacy Plan for Real Estate Moguls:
1. Buy Real Estate w/ affordable debt
2. Pay down debt as the property appreciates
3. Refinance debt and pull out money (no taxes)
4. Buy more real estate
5. Repeat (in their lifetime)
6. Pass to Heirs
7. Repeat (over generations)
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Warren Buffet:
Someone is sitting in the shade today because someone planted a tree a long time ago.
Second Generation Wealth:
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Listening to my friends from college brag about how they barely work and get overpaid...
Trying to figure out when it became cool not to give a shit?
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Unpopular Opinion:
What you work on determines the bulk of your success. Not how hard your work.
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My Investment Journey from Stocks to Self-Storage & Hard Money Loans 🧵
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@N8RealEstate
Did a Podcast with a buddy out of Columbus who details his off-market deal sourcing process.
Might be helpful to you!
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Hard Money Shops are raising private capital at 8 - 10%.
1 Year Treasuries have been below 0.5% from 2008 - 2022.
Risk premium: 7.5% - 9.5%.
Today, 1-year treasury bills are paying 5%.
Risk premium: 3% - 5%.
How much more risk premium compression will note investors take?
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@BusinessFamous
My Top Favorites:
The Richest Man in Babylon
A Random Walk Down Wall Street
Set For Life
The Millionaire Next Door
Atomic Habits
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200+ New Followers in 2 Weeks...
Here's a little bit about me:
- 27 years old
- 22 ACT in high school
-
#1
in Finance at College Graduation
- Received $2.2 million from family biz exit (2018)
- Turned it into $5.5 million (2023)
- Hard Money Lending to $10 million NW
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Getting ready to launch "The Capitalize Podcast".
A crowd-sourced real estate investment show that helps RE Investors go from 0 to 1 property. Then, 1 to financially independent.
Focusing on tacit knowledge rather than inspiration
Who should be our first guest? 👇
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@IlanNass
@sebusinesss
@Codie_Sanchez
Here is how I would start:
1. Go to your local real estate investors association.
2. Find a good real estate attorney to create legal document templates and formed LLC.
3. Network with rehabbers, note investors, and even other lenders to get a sense of where the market is at.
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Seems like everyone is expecting real estate prices to fall...
But has anyone considered what it would be like if real estate prices simply didn't appreciate over the next 4 - 5 years?
What's your take?👇
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@Chek_da_ryme
@SMB_Attorney
Here is the nitty gritty. I have originated $3 million dollars worth of 6-month loans.
I can borrow money from a line of credit at 5% APR or sell fractionalized shares of the note at 10% APR (trust deeds).
I've been mostly arbitrating my line of credit for this reason.
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"A good credit score and a W-2 job are your two greatest assets when you are getting started in real estate."
What do you think?
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Industry's that don't expire:
1. Real Estate
2. Finance
3. Technology
4. Food
5. Transportation
6. Healthcare / Pharma
7. Energy
What else?
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@Budgetdog_
I think the psychological benefits of paying off mortgage debt far outweigh the benefits of paying the minimum and investing the difference.
3 Reasons Why:
1. You’re in a better situation to take more risk.
2. You have an essential need taken care of.
3. You can always Refi
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@sweatystartup
I'm a firm believer that everyone should spend at least an hour in the elements every day.
Can be walking your dog around the neighborhood or sitting in a tree stand, doesn't matter.
Completely resets your mental state and gives you incredible perspective and awareness.
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Tell me your habits and I'll tell you your future.
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How much do hard money lenders make?
~6% - 9% on the outstanding loan portfolio if they are using OPM to fund deals.
Or
16% - 19% on their on own funds.
The optimal Capital balance is 50% owner Capital and 50% OPM for a combined return on assets of 22% - 28% pretax.
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Your Private Lending Team:
1. Local Attorney (focusing on foreclosure and lending)
2. Real Estate Agents (BPOs)
3. Insurance Agent (Review Insurance Policies)
4. Legal Transaction Team (Represents you at closing)
5. CPA
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@Breck_Maynokur
Sounds like the lender is suffering from small pipeline syndrome.
Leads have been drying up, but we've been getting 2x the quality per lead.
If you see a lender taking more risk, it usually means they are having trouble finding deals at the higher criteria terms.
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I learned what opportunities existed in the U.S. when I went to Rabinal, Guatemala in 2016.
Our job was to build the foundation of a small house.
We dug the foundation with shovels and pickaxes in 100-degree heat. The earth was hard as stone.
The concrete was mixed,…
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@realEstateTrent
My Dad sat me down after selling his business for 9-figs and gave me the most profound advice.
He said: "If you boiled down my business life, you could only point out a handful of moments that significantly change my trajectory.
The rest of it is what I did while I waited."
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@heIpfullandlord
It depends.
I have a friend who makes $150,000 per year flipping concert tickets and he's never putting more than $5,000 in cash at risk at a time.
In my case, I could probably spend $150,000 on tickets and I'd be lucky to make $5,000.
Point: Stick to your circle of competency
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I went to Monte Carlo in 2017.
Watched multi-millionaires and billionaires party on yacht decks. I’d yell up to them and ask people how their day was going.
They all had U.S. accents.
Opportunity is dressed in red, white, and blue.
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@BusinessFamous
Atomic Habits by
@JamesClear
Started taking action on the methods in March of 2021 since then:
- My lending business has grown 4x
- In a healthy relationship
- Great mental clarity
- Prioritizing Health
It's a must-read IMO.
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Remember this when raising private capital:
You are not asking a favor. You are providing an opportunity.
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I’ll die on this hill...
90% of customer service is picking up the phone when your clients call.
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@sweatystartup
Gotta show some income.
Nick's income after
@recostseg
gets a hold of his properties.
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In the beginning, your investments pay more in knowledge than they do in profit.
Without reflection, you will miss the bulk of your early-stage returns.
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@theficouple
There are very few hard and fast rules in personal finance.
The only general statement that can be made is "it depends" and unfortunately, social mediums love hard and fast rules, which is how Dave has become so popular IMO.
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