REI Mastermind Network | Real Estate Investing Strategies & Mindset
Hard Money Lending 101 with Kevin Rodman #237
May 27, 2021
Kevin Rodman joined Asset Based Lending as a partner in 2014 and brings 30 years of experience in the mortgage industry to the ABL team. Along with Dan and Paul, Kevin is one of ABL’s three loan underwriters. Kevin is leading ABL’s expansion in New England, with a focus on Connecticut and Massachusetts. Kevin also works on building ABL’s strong capital base, which is one of the largest in the hard money lending industry. REIMastermind.net
Kevin Rodman joined Asset Based Lending as a partner in 2014 and brings 30 years of experience in the mortgage industry to the ABL team. Along with Dan and Paul, Kevin is one of ABL’s three loan underwriters. Kevin is leading ABL’s expansion in New England, with a focus on Connecticut and Massachusetts. Kevin also works on building ABL’s strong capital base, which is one of the largest in the hard money lending industry.

Kevin began his career at Morgan Stanley, where he spent 25 years and served in a variety of roles in the Firm’s securities and mortgage businesses. He was President of Morgan Stanley Home Loans, a retail mortgage business, and CEO of Saxon Mortgage, a Morgan Stanley subsidiary focused on mortgage servicing. Kevin was co-head of Morgan Stanley’s Prime and Alt-A mortgage conduit, which purchased and serviced mortgages from over 600 mortgage banks across the US. After leaving Morgan Stanley in 2008, Kevin held several senior management roles in the mortgage industry. Kevin holds a BA in Government from Clark University and an MS in Energy Management and Policy from the University of Pennsylvania.

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - JD

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Transcript 
00:00:01 JD Hoss 
We have Kevin Rodman here on the line with us today. Kevin, I really appreciate your time and this is a topic that I'm really looking forward to diving a little deeper because we have a lot of newer listeners to real estate investing and we're going to essentially do a hard money lending 101 class here today so people have an idea. 
00:00:21 JD 
Of what hard money lending is? How to make use of it? And some of those questions that they should probably be asking themselves and their in their potential. 
00:00:31 JD 
Vendors. 
00:00:32 JD 
But before we kick things off, we I wanted to make sure everybody has your contact information. First of all, I believe your website isebl1.net is that. 
00:00:45 Kevin Rodman 
That's correct, that's our weather. 
00:00:45 JD 
Is that one? Is that one of the best places to get ahold of you? 
00:00:49 Kevin 
Well, that's our website and there's a lot of information there for new investor, so I suggest you go there and play with it and. 
00:00:56 Kevin 
And look for information, but the way to get in touch with me is my email. UM, it's my initials KR at ebl1.net. 
00:01:01 JD 
Sure. 
00:01:08 JD 
Sure, and don't spam his email now. 
00:01:13 Kevin 
Correct? 
00:01:13 JD 
Well I appreciate. 
00:01:14 JD 
Appreciate your time today and like I said we have a lot of newer to real estate investing listeners. So let's start things off by. 
00:01:25 JD 
Helping them understand what hard money lending is and how they can incorporate that into their real estate investing goal. 
00:01:32 
Yes. 
00:01:33 Kevin 
Hard money lending uhm it. It covers a pretty somewhat broad spectrum of the type of lender, but it's an alternative to a bank. A bank. Take time. 
00:01:46 Kevin 
A load of clothes. 
00:01:49 Kevin 
UMH does a lot of due diligence digs a lot, wants you to prove your income when you have construction draws, they could take a week to review it and ask questions and fund it. A hard line lender is somewhat more based off of the asset. 
00:02:07 Kevin 
We don't underwrite the borrower as deeply as we underwrite the underlying real estate and the other hallmark of what we do is we close fast. 
00:02:21 Kevin 
At EYBL, our average time to close in two weeks last week, I closed the deal in two days. 
00:02:29 Kevin 
Uh, in order for that to happen, the borrower came with. 
00:02:33 Kevin 
Clean title. 
00:02:34 Kevin 
Insurance and all of his documentation ready to go because he got frustrated with another lender. 
00:02:42 Kevin 
Bell 
00:02:44 Kevin 
It's, uh, it's it's a bit of a. It's usually a high touch business. Uh, my speak directly to borrowers even though we we've done almost over 700 million in loans in the last about five years. 
00:02:57 Kevin 
UMH UMH we. 
00:03:00 Kevin 
Even though uh after its asset based lending and it hands, it relies more on the value of the real estate. 
00:03:08 Kevin 
I don't want people to think we don't look at the borrowers we do. We move by coast. We look at two years of income taxes. 
00:03:16 Kevin 
And we pull a background report and we have a in depth conversation with the borrower. Mostly the determined. Does the borrower know what they're talking about? 
00:03:29 Kevin 
So what's the proposed project? 
00:03:32 Kevin 
And before we get on the phone with the borrower, we'll research that House in that market and we'll have a good idea of of weather and the borrower would have had to submit a draw schedule or scope of work for the renovation. 
00:03:44 Kevin 
So we'll have a good idea, but we still want to get comfortable with the borrower after we've gotten comfortable with the real. 
00:03:51 Kevin 
State. 
00:03:52 JD 
Sure, can you talk a little bit about like what? What are those things that you're looking at regarding that that real estate, that House that a person would need? 
00:04:00 JD 
To to be aware of. 
00:04:03 Kevin 
Well, the most important thing for the borrower and eibl is that you buy the house right. That means you buy it at the right price. 
00:04:09 
Hmm. 
00:04:13 JD 
Right? 
00:04:13 Kevin 
And uhm. 
00:04:15 Kevin 
Generally. 
00:04:17 Kevin 
Especially, you know if you have new new people to real estate on the phone. 
00:04:22 Kevin 
Uh, on I'm sorry on the program, UM? 
00:04:26 Kevin 
Buying on MLS. 
00:04:28 Kevin 
It's generally full price. You're not gonna find some diamond in the rough. 
00:04:30 
Umm? 
00:04:35 Kevin 
On MLA, so over, but we have over 500 borrowers in our book right now. In our portfolio. We're direct lender. 
00:04:43 Kevin 
We have 100 million in capital and 60% of our borrowers are repeat and those borrowers are professionals and they know how to find houses. They've got real estate agents. 
00:04:56 Kevin 
Who might find them a property before it's listed they go to court? How they go to courthouses for auctions? 
00:05:04 Kevin 
They have connections with banks for sports sales. UM and Dario. 
00:05:10 Kevin 
UMD and UM. 
00:05:13 Kevin 
You know one that's rare, but we find often is a hoarder house. Most people, when you see a real hoarder house, it's shocking. You know you could get three dumpsters to clean out a 2000 square foot house. 
00:05:28 
Umm? 
00:05:28 Kevin 
Stuff piled up to the ceiling and you just can't. Some people can't envision what it could be, but a professional investor does so. So the most important thing is. 
00:05:40 Kevin 
This. 
00:05:41 Kevin 
Uhm, to answer your question is by the house right? So then, once you buy the house the investor with that you know without our help have to figure out what's the house going to be worth if I fix it and and what does. 
00:05:59 Kevin 
To be repaired. 
00:06:01 Kevin 
And so there's small renovations that are umfer typical homes of say, you know 1800 to 2400 square feet. More renovations are redo the kitchen, redo the bathrooms, maybe refinish the floors and some paint. 
00:06:20 Kevin 
That you know that might be $25 a square foot. 
00:06:24 Kevin 
Then you get into slightly bigger renovations, which would include biting roof and Windows. Now you're in for a maybe. 
00:06:37 Kevin 
$50 square foot. 
00:06:40 Kevin 
Maybe 4. 
00:06:40 Kevin 
30 
00:06:41 Kevin 
And then there's bigger renovations where you're replacing the heater, adding HVAC, doing a bunch of electrical work. If you're putting in HVAC, you might be putting in duct work. Now you're getting into, you know, $70.00 a foot, though we the, the investor. 
00:07:03 Kevin 
I have to figure out how do I make the most money. 
00:07:07 Kevin 
Do I do the $30,000 job, the $50,000 job, or the $70,000 job and in order to figure that out, you have to know the local real estate market. 
00:07:19 Kevin 
So there are some markets where you just have to have central air conditioning to get the right price. 
00:07:27 Kevin 
Often you you know you need a 2 1/2 bath. 
00:07:34 Kevin 
Not too bad. 
00:07:36 Kevin 
And you almost always need a new kitchen. 
00:07:40 Kevin 
If you're buying a house that got updated or beat up kitchen, Bella home and honestly bathrooms. Bella home. 
00:07:48 Kevin 
Then it's pretty easy to refinish the floor so so the investor has to decide which way they're going to go, how big a renovation. 
00:07:56 Kevin 
If I do the 80,000 renovation, do I get paid back all of that and maybe it sells the house quicker than $30,000 renovate? 
00:08:06 Kevin 
And, and so there's their decisions to make. Then you get a scope of work. 
00:08:11 Kevin 
Should you should have a contractor or interview two or three, get a scope of work, what it's gonna cost. 
00:08:17 Kevin 
Then you come to ABL. Now during this period you'll be working with one of ABL sales people and they know. 
00:08:25 Kevin 
The the regions that they know, just like myself and my partner. 
00:08:30 Kevin 
You know, every town that we lend in and what the markets are like in those towns and our sales. 
00:08:36 Kevin 
People have more time to talk with a potential borrower and talk about what we think might spell in that market. 
00:08:45 Kevin 
But really, what they need is a real estate agent, the investor. They need a real estate agent to guide them. 
00:08:50 Kevin 
And tell them, yeah, you. 
00:08:53 Kevin 
You gotta put in central air from you. You know you need a second bathroom, sometimes in lower middle income neighborhoods we might see a 70 year old Cape home where there's three bedrooms upstairs with one. 
00:09:11 Kevin 
With one bathroom but no bathroom downstairs and you know? Or what does that mean for resale and what? What would it mean if I put in a half bath? 
00:09:22 Kevin 
So, so those are the types of things you have to figure out before you present a real loan opportunity to EBL and you want. 
00:09:31 Kevin 
Maybe I'll lend you money. 
00:09:33 JD 
Sure. 
00:09:34 Kevin 
Hope that answers your question, yeah. 
00:09:35 Kevin 
Yeah. 
00:09:36 JD 
Yeah no, yeah it does it and what is interesting is that you you're pretty much painting a situation where you could really use your hard money lender as one of those team members to validate a few things. 
00:09:45 
Yeah. 
00:09:51 Kevin 
Well, we are a local lender. We land in 10 states. Most of our lending is in a state that touches the Atlas. 
00:09:59 Kevin 
Nekocon, and that's because we've been around for 10 years and we started our based in Jersey Stadium in New Jersey and we started just blending in New Jersey and New York. And then we added Connecticut. And then we added Pennsylvania and then we added Delaware. 
00:10:20 Kevin 
Delaware Maryland, Virginia. Uh, we recently added Rhode Island, Massachusetts, New Hampshire, and along the way we added Florida, which has become one of our biggest markets. 
00:10:31 Kevin 
Dumb and dumb are. 
00:10:34 Kevin 
Ohrum 
00:10:37 Kevin 
Our value or our mantra is blend in areas that we know I don't know how to land in Kansas. 
00:10:45 Kevin 
I I don't know the market lending markets that we know and we know those markets and so we're a high service. 
00:10:54 Kevin 
Uhm, somewhat lower volume shop then if you go online and you see national lenders that lend everywhere, they're not going to give you the service, they're not going to hold your hand like we will. 
00:11:06 JD 
Sure. 
00:11:08 JD 
So just as a reminder, everybody head over to ebl1.net For more information. And as Kevin mentioned, there's quite a bit of information out there. 
00:11:17 JD 
For for you there and it's great to see a lot of those resources just available for people freely on on your website. 
00:11:26 JD 
Uhm, when you're doing your due diligence on a property, then what? What are you looking for like it? Apparently there's going to be comparable and what can the neighborhood and the market support? But what are some of those due diligence items that? 
00:11:39 Kevin 
Yeah. 
00:11:43 JD 
Uh. 
00:11:44 JD 
That you will be asking for. 
00:11:46 Kevin 
Great question Jack. So the way the process works is my sales person worked with a potential borrower to put a submission together for the loan, and that's going to include a signed purchase contract, a scope of work and a borrower experience working. So what else has the borrower? 
00:12:06 Kevin 
John in real estate investor. 
00:12:08 Kevin 
Uhm, and then they submit the package, uh, for underwriting. So then I pick up the file to take a look and I spend. 
00:12:16 Kevin 
And by the way, there might be more information in there that borrower has submitted like tax returns, maybe or. 
00:12:27 Kevin 
Uh, survey? Other things related to the property. 
00:12:32 Kevin 
So the first thing I do is I take a look at the property address. 
00:12:37 Kevin 
And I go on Google and I pull it up. 
00:12:39 Kevin 
And there's a remarkable amount of information on Google, so I look at the House. 
00:12:45 Kevin 
Uhm, sometimes it's, uh, there's photographs of the house online inside. I then look at the Street View. 
00:12:55 Kevin 
Uhm, how does this house compare to the other houses on the screen? 
00:13:00 Kevin 
Then I zoom out and take a look at the town. Uhm, where is the town in relation to other towns that we know? 
00:13:08 Kevin 
Where is it in relation to New York City or one of the cities in Florida or Boston, wherever whatever state we're looking in? 
00:13:20 Kevin 
Then I take a look at the scope of work. 
00:13:23 Kevin 
I already know from looking at the house what I think it's worth. 
00:13:27 Kevin 
Uh, because we just know the markets and we know, you know, we know what sells. And then I look at the scope of work and based on what I'm seeing online, does the scope of work makes sense? 
00:13:40 Kevin 
And we've underwritten thousands of loans. But then when we get into the scope of work. 
00:13:46 Kevin 
If it's a house that's going to sell for 350,000. 
00:13:50 Kevin 
It doesn't need a $20,000 kitchen. 
00:13:54 Kevin 
But there is a now. It needs $10,000 kitten. 
00:13:58 Kevin 
So if somebody put a $20,000 kitchen in line at him there I would know there's a serious problem. 
00:14:04 Kevin 
Either the borrower doesn't understand what they're doing, or they've got a contractor who's trying to steal money from them, or. 
00:14:12 Kevin 
Tell me one or the other. 
00:14:14 Kevin 
Same with bathrooms. A $300,000 house the bathrooms could be around 5000. 
00:14:21 Kevin 
Master could be 7. 
00:14:24 Kevin 
Uhm, and and so uh and same thing we go down I go down I do a quick scan fighting for that house could be 6000 the route 37,000 in the in those ranges and so if it all looks good. 
00:14:40 Kevin 
And, uh, we also have a profit calculator, but uhm, we take a look at assuming an average hold time, which pre pandemic was ten months. 
00:14:51 Kevin 
22 
00:14:53 Kevin 
Get a project completed and sold and come and that timeline actually had been lengthening over the last few years. There was eight months. 
00:15:04 Kevin 
Three years ago, and there's a lot of reasons why things were getting a little bit longer, but a post pandemic six months everything is moving. 
00:15:15 Kevin 
Uh, in in in the suburbs inner city, inner City, Brooklyn and Bronx. Different story. If you're in an inner city market, those markets are not selling as well right now as suburbs 'cause people are getting out of this. 
00:15:29 Kevin 
Pretty. 
00:15:30 Kevin 
Uhm, so uhm, we run the calculator just be how much profit the borrower has built in. We have our own policy which is the borrower has to make a minimum of $25,000 profit after all expenses or the lesser of that and 10% of. 
00:15:50 Kevin 
How much they're spending? So if they're buying it for 250 and putting in 50 so it's 300 deal costs, then they have to have $30,000 profit. 
00:15:59 Kevin 
Based off of probably will put in a seven-month whole time. 
00:16:03 Kevin 
So, so that's what I look for, and then I get on the phone with the borrower. 
00:16:09 Kevin 
And introduce myself. 
00:16:12 Kevin 
And uhm, start asking questions. I asked the borrower to tell me about himself. 
00:16:18 Kevin 
Uhm, what do they do for a living? 
00:16:20 Kevin 
Uhm, uhm, do they have any partners in the transaction? What the flight goes before? How much money do they have in the bank? What? How much money do they make? Have they set up an LLC for the property? 
00:16:33 Kevin 
Uhm, uhm, how do they know the contractor and describe the Prof? 
00:16:38 Kevin 
Yeah, and the borrower has to sound like they really understand the project. 
00:16:46 Kevin 
That to give me confidence in my partners confidence that they're going to execute because we're in this together and it's not adversarial really. We're partners. You know, we want to just make our money back from the loan. 
00:17:04 Kevin 
Uhm, make our interest. 
00:17:07 Kevin 
Have the house pay off so we can put the money out again. 
00:17:11 Kevin 
And we want to help the bar or get it done. Borrower wants to get it done as fast as they can sell the house, make their profit, buy another house, hopefully finance with the ABL so we're all aligned together and EBL out of our. 
00:17:31 Kevin 
3000 loans we've only had problems on about 80 to 100. 
00:17:37 JD 
Sure. 
00:17:39 JD 
So it's it sounds like you know outside of you know you you talked about the statement of work. You need the address. 
00:17:47 JD 
Maybe some tax information? What like your ideal applicant if they came in fully prepared, what would they have in hand for you? 
00:17:58 Kevin 
Purchase contract. 
00:18:01 Kevin 
A well, a well thought out scope of work. 
00:18:05 Kevin 
And an experience worksheet that we would give them a form where a template in Excel where they would put that in and. 
00:18:17 Kevin 
Uh. 
00:18:19 Kevin 
That's really All in all, you know this is part of money. Hard money is bad. 
00:18:24 Kevin 
So, uhm, that's really all we need to. 
00:18:29 Kevin 
Get on the phone with the borrower. 
00:18:32 Kevin 
Talk about the deal and give them a decision on the call. 
00:18:36 Kevin 
It's either OK. 
00:18:38 Kevin 
Uhm, sounds good. Everything you said sounds good, so we're going to move forward. We're going to send you a term sheet and if everything you told me uhm works out, we'll do this loan. 
00:18:52 Kevin 
But there's a. 
00:18:53 Kevin 
Fair number of steps between what I just said of sending a term sheet that you know and closing the. 
00:19:00 Kevin 
No. 
00:19:00 Kevin 
Uhm, and we can go through that if you'd like to that you know, processing from terms too. 
00:19:08 Kevin 
Uhm? 
00:19:10 Kevin 
Those but the most important thing to them, the two of the most important things that happen first is the appraisal. So once we've issued a term sheet, we order an appraisal. 
00:19:21 Kevin 
The appraiser and we have appraisers in every county and the you know, we move fast and our appraisers are hard money appraisers and they know we have to move fast so we send them the order. The appraiser will call the borrower, set up the appointment. 
00:19:41 Kevin 
Usually happens within two days, maybe 3. The appraiser has the scope of work so they know what's being proposed to be renovated in the house and they meet the borrower and the appraiser at the property. 
00:19:55 Kevin 
And the and the borrower then pays the appraiser typically $450 a month for the appraisal when they meet, and the appraiser then takes off with the scope of work as the borrower explained the project. 
00:20:09 Kevin 
So they hear it, and then the appraiser will walk through the house, photograph everything, photograph the entire exterior, photograph the Street View, go back to his office or her office, and within 48 hours send us an appraisal report that the report that says if the borrower. 
00:20:29 Kevin 
Does all these repairs the house was going to be worth X. 
00:20:33 Kevin 
And that's the biggie. 
00:20:36 Kevin 
That's the biggie. So if the borrower came to us instead, I'm certain this House is gonna sell for 3:50. 
00:20:42 Kevin 
I have a real estate agent. I have comps, you know parables that you know other sales. I know the neighborhood I've done this before in this neighborhood. That's great. It comes back at 3:50 and we had. 
00:20:56 Kevin 
Price the deal for the appropriate profit margin and you know, say the borrower is borrowing on that deal maybe 275, so they've got 75,000 baked in. 
00:21:07 Kevin 
Uhm? 
00:21:08 Kevin 
I'm sorry, but they're probably boring, more like 250 because they're spending more than or lending UM, then, uh, that's 85% of the deal right there. All that's remaining is some paperwork. Pretty standard like the LLC Formation documents, then operating agreement. 
00:21:29 Kevin 
Like there's more than one person and the title report and credit so credits the next really serious one borrower. But I'm always gonna ask the bar or what's your FICA? 
00:21:43 Kevin 
Well, it says my flight goes 700. 
00:21:47 Kevin 
We get borrower gives us authorization to pull credit. We pull credit, it comes back at 700. That's great. 
00:21:54 Kevin 
Comes back at 600. That's the big discussion. 
00:21:58 Kevin 
You know comes back at 6:50. Usually it's because of high credit card balances. Not a big deal. We'll probably proceed. I was back at 600. That's a. 
00:22:08 Kevin 
Talent. 
00:22:09 Kevin 
Uhm, so there's a. There's a phico discussion to be had, and then there's the bank accounts. The borrower might need $40,000 for this deal. They build $40,000 with down payment. 
00:22:25 Kevin 
All right? 
00:22:26 Kevin 
For the first draw up, pay for closing costs so they have to spell U.S. bank statements that go the that they have the cash. 
00:22:38 Kevin 
Close the deal. 
00:22:40 Kevin 
Uhm, and then the title report is the final thing. It's always the final thing. UM, the borrower has to pay to have a lender's title report means there's a title company that's been storing that. When we make our mortgage. 
00:22:56 Kevin 
We're going to have our first lien and no other. 
00:23:01 Kevin 
Entity like the county or the date looking for taxes or an another mortgage lender has a lien in front of ours that the title insurance. The purpose of it is to guarantee the lender that we have a perfected first. 
00:23:21 Kevin 
Priority lien in the in the in the property. 
00:23:24 
Sure. 
00:23:24 JD 
Here. 
00:23:26 JD 
So you know then I I probably are going to say that it it likely depends on the property, but how do the what would you typically see for terms and how does the how is the money utilized? Like if if I buy a property? 
00:23:45 JD 
Uh, I know that the IT comps out if I get it all repaired, it's going to be worth 250,000, but I'm buying it for. 
00:23:52 JD 
Half that 100 and a quarter. 
00:23:56 JD 
What would somebody typically see like regarding the purchase price? And then how does the funding work for the rehab? 
00:23:57 Kevin 
Uhm? 
00:24:05 Kevin 
Another great question Jack. So uhm every lender. It has somewhat different rates points and proceeds that they lend and it also varies depending on the experience of the borrower. Though as borrowers get more experienced they get. 
00:24:25 Kevin 
Lower rates. 
00:24:26 Kevin 
And more proceeds higher level. 
00:24:30 Kevin 
So our rates range from 9% to 11%. 
00:24:37 
Huh? 
00:24:37 Kevin 
And our points range from one point to two points. 
00:24:41 Kevin 
There are borrowers that are doing. 
00:24:43 Kevin 
In deal deer are getting 9% and one point. 
00:24:48 
Umm? 
00:24:48 Kevin 
Meaning if the loan is $200,000, that's $2000. They pay us in upfront points. 
00:24:56 Kevin 
Uhm, and while I've never done a deal before, it's getting 11%. 
00:25:01 Kevin 
And two points. 
00:25:03 Kevin 
OK, that's the range. It's a pretty tight range. It's actually much lighter than it was years ago. 
00:25:11 Kevin 
Where new borrowers might have had to pay. 
00:25:14 Kevin 
13 percent 14% the market you know gotten tighter. 
00:25:19 Kevin 
Uhm, and then you're posting. 
00:25:21 Kevin 
No, for somebody that's never done a deal before, we, we, we, we have our loan at 85% of their deal cost. So if their purchase in your example is 100 and 25,000. 
00:25:38 Kevin 
And their rehab is 50,000. I'm making numbers up, not diploma calculator for this Jack, that's 175. 
00:25:42 Kevin 
Huh? 
00:25:47 Kevin 
So our maximum proceeds would be. 
00:25:50 Kevin 
100 and 4800 and $48,000 so. But from that we cracked the 50 for the construction escrow, which means we would come with roughly $98,000 to close and the borrower would have to come with roughly $27,000 down. 
00:26:10 JD 
Sure. 
00:26:11 Kevin 
And dumb. 
00:26:12 Kevin 
So. 
00:26:14 Kevin 
Uhm? 
00:26:15 Kevin 
That's an important concept of most hard money lenders. It's very core to our culture, which is what we call in in the game. 
00:26:27 Kevin 
How much? 
00:26:28 Kevin 
Pak does the borrower have to put in this deal? 
00:26:32 Kevin 
So. 
00:26:33 Kevin 
It's enough to incentivize them to get the deal done. 
00:26:38 Kevin 
Right? 
00:26:38 Kevin 
'cause obviously if we went 100%. 
00:26:42 Kevin 
They just walk away. 
00:26:44 Kevin 
But they've got no skin in the game. 
00:26:47 Kevin 
So like the big lesson learned from the UM, the Great Recession of 2007 and what went wrong with the mortgage market is borrowers were getting 95 and 100% loans and then they all just walked away. 
00:27:04 Kevin 
So, uhm, we all we've learned our lesson and now we require our table with some cash. 
00:27:12 Kevin 
Sure. 
00:27:14 JD 
You know, we talked about what your due diligence would be on a property, but what let's? Let's spend in the last few minutes we have talking about the due diligence a borrower should have, like what kind of questions and what should they be asking for from a potential borrower or lender. 
00:27:32 Kevin 
Well one of the oh what's the asking from lender? Oh OK. 
00:27:37 JD 
Yeah, just to make sure that it's a good fit for them. You know, you know there's a lot of. 
00:27:41 Kevin 
Yeah, sure. 
00:27:44 Kevin 
Sure, so number one is. Are you a direct lender or a broker? 
00:27:49 Kevin 
A direct lender like us. 
00:27:52 Kevin 
Generally keep the loans in our portfolio. 
00:27:56 Kevin 
And that means we have a lot of flexibility. 
00:28:00 Kevin 
Because nobody else is telling us what to do. 
00:28:03 Kevin 
A broker. 
00:28:05 Kevin 
Is going to send the loan to some other prompt. 
00:28:09 Kevin 
And. 
00:28:10 Kevin 
You might be getting into a situation with a lot of unknowns. Uhm, there's a lot of good brokers out there who brokered in good firms. 
00:28:14 JD 
Right? 
00:28:19 Kevin 
And then there's other quickly. 
00:28:23 Kevin 
UMH so direct lender, that's number 1 #2 how fast can you close? 
00:28:29 Kevin 
It's gonna take Me 2 months or two weeks because my seller told me I have closed in two weeks. 
00:28:37 Kevin 
But like you know, yes or no. Can you close and then take a look at their reviews on the web? Eibl has hundreds of reviews and 98% of them are. 
00:28:50 Kevin 
Great, and so are the reviews online, consistent with what the person you're talking to is saying. Are you certainty of close? That's the number one thing our borrowers are looking for. 
00:29:02 Kevin 
And you both. 
00:29:04 Kevin 
OK, so are you in or out broker with direct lender? Can you close tell me about the closing process? 
00:29:13 Kevin 
Is this going to be somewhat easy or is it gonna be really painful and what? How are you gonna make this easy for me? 
00:29:22 Kevin 
Uhm, and uh, what's it gonna cost me to close? 
00:29:27 Kevin 
What are all my cost ABL discloses it in our terms, every cost we have is there. Are there any other costs that you're not telling me about? 
00:29:38 Kevin 
Uhm OK then uhm. 
00:29:43 Kevin 
Then, uh, when am I gonna get punky? 
00:29:47 Kevin 
When am I gonna know exactly what you're offering me and uhm? And is the term sheet. 
00:29:53 Kevin 
Uhm? 
00:29:55 Kevin 
Gonna change. 
00:29:56 Kevin 
Are you gonna? Are you going to change the deal at the last minute when you know I have to close? 
00:30:03 Kevin 
Are you going to raise my rates or you know you know what? What are you obligated to do? 
00:30:08 Kevin 
And you know the truth is any lender can change anything at any time. But check out their reviews online. 
00:30:16 Kevin 
Because Blender can do that. 
00:30:19 Kevin 
Well, it couldn't honestly if. 
00:30:22 Kevin 
It's up to you know, are we going to have a trusting partnership or not? 
00:30:29 Kevin 
So those are those are the big. 
00:30:32 Kevin 
Questions that come. 
00:30:34 Kevin 
And some other questions borrowers ask is that I hire an attorney. 
00:30:40 Kevin 
And the answer is yes. 
00:30:43 Kevin 
No, we think you should hire an attorney and we're never going to advise you otherwise, because if we advise you not to, and everything gets screwed up. 
00:30:54 Kevin 
Or I was going to say, but you told me not to hire an attorney. 
00:30:57 
Miller 
00:30:59 Kevin 
But in addition, ABL has a closing attorney. 
00:31:02 Kevin 
But those they're not part of our company, they're external. We have attorneys in every state, and so our borrowers have to pay the attorneys cost. 
00:31:10 Kevin 
It's one of the biggest parts of the closing cost in Florida. It's $500, but up here in the Northeast it ranges from 1000 to 1500, so it's a significant part of the closing. 
00:31:23 Kevin 
Awesome. 
00:31:24 Kevin 
Uhm, and another question borrowers asked is that I order the title report or will you and our answer to that is whatever you want. 
00:31:35 Kevin 
We have a title agency that we work with. We don't have an ownership interest in that title agency and we don't think lenders good. 
00:31:45 Kevin 
Have ownership interest in title agencies, uh, because it could be somewhat of a conflict of interest and and but some do and it works OK. 
00:31:56 Kevin 
And typically we tell borrowers to go out and order your own title. 
00:32:00 Kevin 
Because. 
00:32:01 Kevin 
We are. 
00:32:04 Kevin 
We think it's the right thing for a borrower to have freedom to do. 
00:32:10 JD 
Sure. 
00:32:12 JD 
Well, the last question I have for you then is there. Is there a question you wished I would have asked you here today? 
00:32:20 Kevin 
Uhm, you've really covered it well, Jack, uhm I don't. I can't think of anything right now. And you know, do your lender to the people listening. 
00:32:28 Kevin 
OK. 
00:32:28 Kevin 
 
00:32:29 Kevin 
OK. 
00:32:29 Kevin 
 
00:32:34 Kevin 
Do your lender due diligence do? Do you know there's a lot of lenders you can find on the web on the website? 
00:32:40 Kevin 
Out there, you know, a lot of lenders paying. 
00:32:44 Kevin 
Or paid apps. And then there's the organic EBL. We're proud we've been around so long we're near the top of the organic search in every state. 
00:32:54 Kevin 
So what does that mean? How do you get there? Well, you get there by having a lot of people land on your web page and use your website. 
00:33:04 Kevin 
And we're proud of that. But do you want to work with a lender who's only been in business for two years? 
00:33:11 Kevin 
Or one year, so check out your lenders, uhm, check out their reputations. Talked to a few of them, interview them and. 
00:33:24 Kevin 
That's my suggestion and see if they're helpful. See if they can tell you about the market that you want to be in. 
00:33:32 JD 
No, that's a great advice. You know, as much as anything, I keep seeing everything. And as just adding a number, another team member and you know you need to make sure it's a good fit. 
00:33:43 Kevin 
That's right, you really do. 
00:33:46 JD 
Well, again, if you want to hear more from Kevin, Head over to ebl.net For more information. I really appreciate your time. 
00:33:56 JD 
This has been a great session, especially the long overdue hard money lending 101 and I really appreciate the insight and help. 
00:34:05 Kevin 
Thank you, Jack. Thank you to everyone who's listening.