The Checklist to Follow before Getting a Hard Money Loan


Hard money loans are a type of loan that buyers receive from private investors or companies that are looking to invest in sure things. That makes hard money loans a little tricky to get, but they are an excellent way to ensure a fast closing.

If you are interested in attempting to gain a hard money loan for your next property purchase, make sure you have these four things checked off before you contact an investor like Loan Source LLC for a commercial real estate investment loan in Houston, TX.

Property Analysis

Private investors and companies that are looking to lend hard money loans want to make sure that their investment is going to pay off. That means that you should do a property analysis and write a report for your lender. Make sure the investment property is located in a good neighborhood or an up-and-coming neighborhood. Print out articles about the neighborhood to show proof that it is a good investment. Remember, your lender wants to put in a safe investment, and you have to make sure you show them that the property is worth the risk. In addition to location, you should include photos of the property and any public records about the area, including water sourcing and recent transaction histories.

Repayment Plan

Remember that hard money loans are based on the quality of the investment, and your lender is investing in you. Therefore, before you step in the door, be sure you’ll be able to answer the question: “How are you going to pay us back?” This will show the lender that you’re prepared for the question and that you are confident in your payment methods. Having a solid repayment plan is a solid step toward loan approval for a hard money loan.

Income Documentation

As a part of your repayment plan, you may have to provide proof of funds or a business plan if you are thinking about using the property as an investment for yourself as well. This will show the lender that you’re prepared to pay back the loan in full based on the amount of income you make in a month. You may also find that it’s important to include references in this situation. This is especially true if you have been with a company for less than six months or a year. These references will show your lender how secure your employment situation is and give them proof that this is a secure investment.


Business Plan, If Necessary

Remember, if you are planning to use this property to help you start your business—i.e. if it is a management or investment property for you—you should include a business plan to show your lender your plan to pay them back. This is a great way to ensure you have a solid investment for your lender, and that it is safe.

If you are interested in getting a hard money loan, contact Loan Source LLC. They are an investment company that specializes in commercial real estate investor loans in Houston, TX. Visit today to get started.

Tom Berry’s Tips for 2019 Part3

Tom Berry’s Tips for 2019 - Part3

Tip #4

What Dictates your Business?

If you let the market dictate your business model for that year, you’re going to have a better chance at success! Why? When you choose a strategy, and create a business model around something the marketplace doesn’t need – you are setting yourself up for failure.  You must choose a strategy that is conducive with the marketplace. Unfortunately, in real estate investing MANY people make the mistake of creating their business model around a strategy not needed in the marketplace. Here’s an example: Everyone wants to be a house flipper, and why is that? Because they saw it on TV. Maybe they thought it was sexy, or it looked fun, or “it gives me an opportunity to use my creative side”. Listen to me and listen carefully – those are poor poor poor ways of creating a business model. A business model should be determined by what the market is asking for never because it looks fun. When you look at a business model for yourself you’ve got to ask, “Where is the market?”, and “What does the market need?” That is using this rule of letting the market dictate your business model and it will save you time and money.

Tip #3

One Size Does NOT Fit All

Often, I hear “I am a wholesaler, that is all I do” or “I am a flipper, that is all I do”. Then a deal comes along with the potential for profit, but it doesn’t fit their desired strategy. Using only one investment strategy prevents them from making the deal work for them. They are now working for the deal. You can’t let your strategy get in the way of investing and call yourself an investor. The question is “Can we make money with this lead the way we like to make money?” In other words, does our desired investment strategy fit this deal? If it does, great. But if it doesn’t then you need to go to the next strategy that does work. This is making the deal work for you. When you are new to real estate investing you may only have one strategy available, and that’s okay. Start planning ahead even in the beginning, it is crucial to your success to be looking into the next strategy. After mastering your desired strategy, add another, and another and keep adding to your tool belt until you never have to walk away from a deal. Your ultimate goal is to get to the point where you can make money with any deal using any strategy. Get out of the mindset that “One size fits all” because that is just not the case in real estate.

Tip #2

Start with the End in Mind

No spoiler alerts here – it’s important to keep the end in mind. Know what your company should look like ultimately. Keep your end goal in mind when you start and while you’re building towards it. I often ask fellow investors, “What is your end goal?” I am always surprised by how many cannot answer such a simple question. Some of these folks have been in business for 5 or 10 years but they are still just doing transactions with the goal is to just make money now. That is a pathetic goal – it really is. It’s a lazy goal and a cop-out answer of what you want to do. This is your life, you should strive for making more than money. It’s important to start thinking about the ultimate lifestyle, your dream. “What is my ultimate lifestyle? What do I want my company to represent? Will it make me happy?” Then you need to start working toward what your company needs to look like to achieve these goals. To do this you’ll have to take a couple of things into account: The first one is (obviously) money and the second one is Freedom. Freedom of time is just as important as money. Once you have those two things figured out then – and only then – can you begin to visualize what your company needs to look like. Take my word for it, 12 years ago I created my business on a dream board and now live the lifestyle I choose. My wife and I also have and make the time needed to enjoy it. If I had just strived for a bigger paycheck each year, you wouldn’t really be interested in my advice. So, keep the end in mind whether you’re starting or growing your business.

Tip #1

Don’t be Afraid to take Action.

So many people are hesitant to do this because ‘they have to think about it’ or ‘they have to analyze it’, they think they have to know every variable before they can proceed in getting a contract. There should be no fear of taking the first step. The person who controls the contract controls the world. Start with at least getting the contract. Once this is done if you can’t close on it or if you decide that you are just too fearful to rehab it or keep it as a rental, you can always sell the contract! Wholesale it to someone else and take that extra money that you’ve made and put it into more marketing to get more contracts. The bottom line is, you must take action. You’re not going to know everything, you’re never going to know everything. After 12 years of real estate investing, I’m still learning. You will find out what you need to learn and study after you start. You can’t move forward without taking the first step.

Tom Berry’s Tips for 2019 Part2

Tom Berry’s Tips for 2019 - Part2

Tip #7

Build Multiple Income Streams

Some of your income may come from real estate and some may not. If you start out like my wife and I did, full time, then all of your income will come from one place. For my wife and I, that income stream was Wholesaling. It was sufficient but I quickly knew I wanted to have multiple income streams for security. We began to hold a few of these properties as rentals and every once in a while we would fix and flip a property. This allowed us to start building multiple income streams. This gave us more stability and consistency which allowed us to do more projects. Today we have other businesses’ outside of real estate providing us additional income streams but it all starts with just the first one. Once you’ve mastered that first skill you can add another and in turn add another stream of income. Once a year my wife, Melissa, and I take a look at all of our income streams and eliminate the bottom one or two based on that year’s performance. We always eliminate the bottom tier of our income streams because I know the next year I’m going to expand and be faced with more opportunities. You will have to start eliminating areas that are not growing to move forward on the next project or the better performing income stream.

Tip #6

Delegate, Delegate, Delegate

Delegate and track everything in your company… except branding!

What I mean by that is we want to eliminate all the tasks that we, the owner, have to do in the company excluding the task of branding. I want to unload everything I can so I only need to focus and tackle the big tasks. Initially, you will say, “Well I am my company – I don’t have anyone else”. That’s fine for now but start thinking about the things you would eliminate if you had an employee, a virtual assistant, or someone else on your team. Start thinking about how much more productive you could be if you started delegating those tasks – particularly low paying tasks. Give yourself an hourly rate and say I’m going to eliminate everything I’m doing in my business that does not pay over “X” then fill in the blank. You may say “I can hire someone for less than $15 an hour to do this then I shouldn’t be doing it.” Eliminate or delegate the smaller more time-consuming tasks. Once you do delegate these tasks you want to track it. Make sure the work is still being done and most importantly, being done the way you want it to be done. Eliminate all the work that you can, if you can, because that will free you up to tackle bigger tasks and allow you to grow. Remember, there is no one man army.

Tip #5

Study Market Cycles

This tip is one of the LEAST talked about areas in real estate investing and probably one of the most important. All markets move up and down. You’ve probably seen this in stocks, gold, and silver pricing. Those same metrics exist for real estate in submarkets and of a particular asset class. Real estate can be defined by those two things, submarkets and assets classes. Let’s say you’re investing in a particular market and in a particular asset class, such as Houston and the submarket of Galveston, with your asset class being single family homes. You want to be a student of that market, you want to study the cycle of that market. One of the biggest misconceptions in real estate is that values only go UP and that is absolutely NOT true. Real estate goes up, down, and sideways for periods of time. A market cycle typically will last anywhere from 8 to 10 years. This can be from peak to peak, or valley to valley, depending on where you’re starting in the cycle. Understanding what the cycle is doing and expecting what’s coming next gives you a huge advantage over your competition. In the marketplace, most commodities are not predictable because they have what we call high volatility. It is very difficult to predict the direction of a stock, currency, or precious metal but it is NOT that hard to predict real estate. If you understand real estate, you understand that it moves very slowly. It’s not as volatile, it still moves up, down, and sideways, but it does it in a much slower fashion. Start studying the cycles of what you’re investing in and where you’re investing so that you know what’s coming and what to do next. Start online! You can find everything online now. Example: You’re investing in an apartment complex? Check your local MLS – look at the historical data then study the historical data through Costar, LoopNet, or Commercial Gateway. The internet is full of amazing resources to gauge the market cycle in the submarket and asset class of your choice. Start studying now!

Tom Berry’s Tips for 2019 Part1

Tip #10

Your Network will = Your Net Worth

“Your Network Will Equal your Net Worth.” This is a catchy saying we hear often at a lot of different real estate meetings. But so many don’t understand what it really means. People are the most important part of your business, not your marketing, not the contacts you have, not the money you have – it’s about the people in your network. If you build a strong enough network over time you will find tons of private money, new deals, partners, trades, realtors, pretty much everything that you need – even the people and resources you didn’t know you needed. Like crucial professionals such as your attorney or your accountant. In this business, it is really all about the people in your network. The sad and unfortunate truth is many of us miss that. So, believe me when I say, “Your Network Will Equal your Net Worth.” Growing a strong reliable network of people TODAY will provide you with more resources and growth opportunities TOMORROW. Start building your network today.

Tip #9

Stay Focused on ONE strategy until Mastered Before Moving to the Next

Stay focused on one strategy until you master it. Once you have mastered your desired strategy then consider learning and adding new strategies to your business plan. I often see many people get into real estate and start bouncing around from one strategy to another… and another… and another. They get into real estate with the idea that they’re going to wholesale. The next week they’re rehabbers and the week after that, they’re taking a class on how to buy non-performing notes. What they’re really doing is chasing the easiest way to make money… or trying to. The fact is, there is no easy way to make money. All successful real estate strategies work at one point or another depending on the market cycle. The real professionals in R.E. investing know what they want to do and what they are capable of. They immerse themselves in the education necessary to become a master at it. Bouncing from one shiny penny to another or one strategy to the next, just because you think it’s going to be easy, will keep you from mastering anything.

Tip #8

Systemize Everything

To systemize means to repeatedly do a task in the same way so that you can do it in the most efficient manner possible. When you systemize tasks for efficiency it allows you to accomplish more faster. It’s important to organize and create these systems so that you can easily train another to do the same. Setting up standard practices and repeating these tasks eliminates room for error and allows for more growth in your business. As your business grows, your employee numbers will too. Having in place practices and systems will allow for a smooth transition. If you don’t work towards systemization you will never own a business you’ll just own a job.