In my recent post What is Hard Money,  I promised to post a list of Hard money lenders.  So here it is.  Much of this list comes from an e-mail by Baltimore real estate investor John Parker; thanks John.

Local Baltimore Hard Money Lenders

Cavalier Realty Company, Inc.

Hard Money Bankers
Jeffrey Shiller from Hard Money Bankers is a practicing real estate attorney. He is active in several of the local investing clubs.

HML Capital Group
Beth Marsie-Hazen helps run the Mariea investing club. You can find her and her partner Michael Gabriel at their meeting regularly.

Neil Roseman, Imagine capital
Neil is a lead inspector as well as a hard money lender.  I have never used him for hard money but I have used him as a lead inspector.  I wouldn’t hesitate to use Neil if I was looking for a loan.  The best way to reach  him is by cell phone  410-591-4597

Rex Frost, Blue Island Inc.
Dr. Frost can be reached from 9am -12:00 noon at 410-592-2967

Hard Money Lenders From Around the Country

Brookview Financial
Equity Development Corp.
Hard Money Funding Network
Cohen Financial group
Blue Water Funding
Private Financial Club
Fusion Cash and Capital
HML Funding LLC
Synergy Equity Management
Dial Financial
Kennedy Funding

Other Funding Sources

The following are not true hard  money lenders but they may help with your quest to find investing money.

Go Big Network
Prosper
Lender Lab

If you are new to real estate investing you may have heard the term “Hard Money”.  Just what exactly is hard money?  It is a short term loan with high interest designed for investors who renovate properties. These loans do not come from banks or traditional lenders. They are offered by private lenders in the business of making loans to real estate investors.

You can remember the term by thinking it’s hard to pay back because of the high interest.  However I was at a foreclosure auction of a well know Baltimore hard money lender and he said it’s call hard money because  “It is hard to collect.”

What Are the Terms for Hard Money Loans

While traditional financing is made primarily based on credit scores and the borrowers ability to pay, hard money is usually based on the value of the property.  Hard money lenders will loan for both acquisition and repairs up to approximately 60- 65% of the after repair value of the property.  A typical hard money loan would pay for the property at closing and pay for the repairs on a draw schedule.  In other words repair money would be reimbursed as the repairs are completed.

Hard money lenders typically charge 12-15% interest and 3 to 5 points.  A point is  1% of the loan.  So for example if you were borrowing $100,000 and were charged 3 points,  you would have to pay $3,000 up front.

Why Should I pay Loan Shark Rates?

You might ask “Why would I pay that much in interest when rates are so low now?”

1. Loans are hard to get now.  You may not even be able to get a loan from traditional lenders like banks.
2. Even in a strong lending market it is harder to find construction loans.  Most mortgage lenders only want to lend on livable properties in good condition.  We usually need loans on properties needing work as well as the money to fund the renovations.
3. Traditional lenders take a long time to approve loans and can be unpredictable.  Hard money loans are often approved in a few days.  Sometimes the ability to act fast will get you better deals.
4. If you have poor credit, that may not be as important to a hard money lender.  It will kill you in the eyes of a traditional lender.
5. It is often cheaper than a “partner”.  A common scenario is to find a money partner and split 50/50. You are giving away 50% of  your profits!  A  hard money loan would cost you a lot less.

New investors often think hard money is too expensive.  It is not the cost of the money that matters, it is how much money it will make you that counts.

New  Rules for Hard Money

The tightening of credit markets has affected hard money loans too. Today a hard money lender is likely to look at your credit. They may also  expect you to have some experience in renovating properties, and have some “skin in the game.”  In other words they won’t fund the entire deal.  You will have to come to the closing table with some money to put down.

In the next couple of days I will post a list of hard money lenders.  So check back soon.

Happy investing,

Ned

Baltimore is a city of neighborhoods. Many of these neighborhoods have colorful names that hint at the history of the neighborhood, Greektown,  Butchers Hill, Brewers Hill etc.

But do you really know the true borders of those neighborhoods?  There are official names for every part of the city.  Often investors say a property is in a particular neighborhood that it doesn’t really belong to.  A common example would be properties that often advertised as being in Belair Edison when they are really part of Four by Four.  Four by Four is close but with distinctly lower property values.

Full Color Baltimore Neighborhood Map

The city produces some wonderful maps that are helpful to Baltimore real estate investors.  The city map office is at 417 E Fayette St. (The same building where construction permits are issued.)  They offer many different maps  and I have three posted in my office. The one pictured above with the city neighborhoods is available in black and white or full color.   As I recall the color version $54 several years ago.  The black and white versions was substantially less.

Baltimore Zip Code Map and Color Street map

I have the zip code map right behind my desk.  When a deal comes through and I want a quick check where it is located,  I just turn around and check the zip code.  The other map in the corner is a color street map which at the time was only $5.  A serious investor should have these maps but if you are new  you can go to Baltimore City’s Neighborhood page.

Happy investing,

Ned

What Is a 1099?

A 1099 is an informational return required by the IRS.  Employees receive a W-2 to let them know how much income was rep0rted to the IRS.  You may also get a 1099 INT from your bank telling you how much interest you received in the prior year.  In a similar way businesses are required to report how much they pay other business and independent contractors.

Some small businesses are not even aware they are required to supply 1099s.  A typical real estate investor may need to send them to their attorney, contractors, assistants, and Bird dogs they have paid.  I am sure many investors never considered this requirement and were unaware they were risking IRS fines and penalties.

Who Gets a 1099?

You are required to give a 1099 to any Payee to whom you pay at least $600 or more in the year.  This quote is directly from the 1099-MISC instructions

“At least $600 in rents, services (including parts and materials), prizes and awards, other income payments,   .   .   .   or Gross proceeds to an attorney.”

The key words there are “other income payments”.  If the income is taxable to the payee, you should send them a 1099.

There are some exceptions to the requirement.

• Trade or business reporting only.  Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. This does not mean you can skip this just because you didn’t make any money, or do business in your own name. If you intend to make a profit, you need to send them out.
• Generally payments made to a Corporation are not reportable. Keep in mind the IRS instructions specifically say a Corporation, not an LLC or other business entity. Also you must report amounts paid to an attorney even if they are incorporated – I guess the IRS doesn’t trust attorneys either!
• Payments for merchandise, telegrams, telephone, freight,  storage, and similar items are not reportable.  So if you buy plumbing supplies from the local hardware store you do not need to report that.

Extended Due Date for 1099 Forms

The due date for 1099 forms is Jan. 31st 2010, however since Jan 31, is a Sunday you have an extra day this year.  Form 1099s are due to the recipient by Feb. 1, 2010.  Reporting to the IRS is due by Feb. 28, 2010.  However the due date for reporting to attorneys (box 14 10099-misc)  or “Proceeds from real estate transactions” form 1099-s is Feb 16.

How do I file a 1099?

You must send a copy to both the IRS and the Payee.  You can get the instructions on the IRS website, www.irs.gov.  I am unable to find the 2010 instructions but  Here is the link to the 2009 instructions.

You will need their taxpayer identification number.  You get that by giving them a form W-9 Request for Taxpayer Identification Number and Certification. The W-9 instructions are available here.

Have Your Accountant File

Of course I just give the information to my accountant and he takes care of  it.   See this post, why I love my accountant Goodwich, Stoller and Associates. You can go to their site directly at Goodwich Stoller and Associates.

Happy investing,

Ned

This was originally posted in 2009 and has been updated with 2010 information.

Last night Baltimore’s Mayor Dixon hosted a town hall style meeting about vacant and abandoned house problem.  Mayor Dixon, Housing Commissioner Paul Graziano,  Deputy Commissioner Code Enforcement Michael Braverman and panel of city officials spoke about how the city is handling the vacant properties they own.

Three ways to acquire Baltimore city owned property

Listening to the panel I was impressed that the city has taken steps to correct some of the problems with acquiring city owned properties. Yet it seems they still don’t understand some of the problems. They spoke of three programs.

• Rolling Bid Program – where small investors and developers can purchase properties from a list of properties available.
• Request For Proposals (RFPs) – where bundles of properties are offered to developers that can handle larger projects.
• Scope – Selling City Owned Properties Efficiently. These properties are listed with real estate agents.

The rolling bid program is a little known program which you can find along with Scope properties and  RFPs  on the Baltimore Housing website. The last thing you could call the SCOPE program is efficient. Few investors bother because of the hoops you must jump through.

I am sorry I didn’t catch one of the panelist’s name but he said he has been very good at getting deals approved by the Board of Estimates. The city’s goal is to get these properties in the hands of someone who can get the job done. That is more important to them than getting top dollar.  If you put in a proposal make sure you emphasis how qualified you are, particularly financially.

Baltimore Land Bank Authority

In addition to these existing programs they spoke about the Land Bank Authority they want to create. This has been approved on the state level and is now waiting for City Council approval. This will give the city more flexibility in acquiring & disposing of properties.

MAREIA represents the small investor

After the official presentation many attendees got up to make comments or ask questions. The small investor was well represented, as approximately 25 members of the Mid Atlantic Real Estate Investors Association (MAREIA) showed up. Government affairs Committee Chairman Babara Klaput, President Alan Chantker, and myself all gave our feedback to the panel.

The City has done a good  job of acquiring vacant properties. They own approximately 10,000 of the estimated 17,000 vacant properties in the city. However they have done a very poor job of getting them in the hands of capable renovators.    This meeting makes me believe that will change, but that change will be slow in coming.

Happy rehabbing,

Ned

Baltimore County Tax Sale

The Baltimore County tax sale will be held Wednesday June 3, 2009, at the County Council Chambers, 400 Washington Ave,  Room 205, Towson, Maryland at 9 a.m.  You must pre-register for the sale by May 29 at 4:30 p.m.  Registration is free. More information and the property list are available a the Baltimore County website. There are about 3400 properties listed to go into the sale.

Howard County Tax Sale

The Howard County tax sale will be held Wednesday May 13, 2009 at the Ten Oaks Ballroom, 5000 Signal Bell Lane, Clarksville, MD 21029. The sale will start at 10:00 am and the doors will open at 9 am. You can get a list of properties and more information at the Howard County website. There are currently about 1,000 properties listed for the sale.

In order to bid you must pre-register before May 8th. You can register at 8930 Stanford Blvd., Columbia, MD 21045. You must provide a $1,000 deposit in cash or certified funds to register.

Good luck and don’t bid to high.

Ned

More articles on tax liens here

Do you have a mastermind group?

I am fortunate to be a member of a high level mastermind group. I am continually impressed with the ideas, knowledge, and success level  the members of my mastermind group generate.  Two members of my group are putting on an exciting event later this month, The Exponential Wealth Conference. The conference will be Two days Friday April 24,  &  Sunday  26, 2009 with multiple  speakers,  and jam packed with info. Click here to see the complete schedule

The man who negotiated with Warren Buffett

I am not just telling you about this because it is put on by my friends but also because I know this will be a great event. I know my friend Pete Gauthier is both an excellent negotiator and great teacher of negotiating because I have heard him speak first hand.  Pete Gauthier sat across from Warren Buffett at the negotiating table  during his stint as as a lead negotiator for the Pilots Union.

All the other speakers; Dan Sprietzer – Business coach extraordinaire, Edwin Kelly – Investing in real estate with your IRA, Tom Zeeb – Automating your business are top notch. I have never heard the featured speaker Richard Flint, but my friend Dan assures me I will be impressed.

Business Foundations, Where Every GREAT Business Starts

I am a big fan of education. There is no better place to invest your money than in yourself. When Dan told me about this event I really wasn’t excited about spending another $2-3,000 for a multi-day event. I love these things and they have really helped me succeed to a high level but hey right now it’s just not in the budget. Then he tells me “It’s only $199.00!” Whoa, Big Change, it’s now only $49 ! ! !

Sign up here

Some of the Topics Covered Will be

• Setting up systems
• Business automation
• Internet marketing
• Negotiating
• Tax free investing
• Much Much More

Sign up here

The Exponential Wealth Conference: How to Make it, How to Grow it, How to Keep it!

Did you see what I said above. It’s now only $49.00!

Do you have an Apple iPod? How do you use it? I try to take a walk every day. It is modest exercise and it relaxes me. I also get some of my best ideas while walking. To help generate those ideas I listen to my iPod.  I listen to motivation, sales, real estate and marketing recordings.

Many of us have a shelf full of programs from all kinds of real estate Gurus. Why not load them onto your iPod and actually listen instead of leaving them on your shelf.  I have also recorded my goals so that I can listen to them daily. You can take this a step further and record a list of your strengths and successes. Motivational speakers regularly talk of our “Self Talk” and how it can help or hinder us depending on whether it is positive or negative. Record a positive self talk tape  and listen daily. This guarantees you a daily dose of positive messages.

What is Nike +

I Use a Nike+ for my iPod.  This is a really cool tool.  It has a little transmitter that goes in your shoe and it sends a signal to a receiver attached to your iPod.  It keeps track of how far and how fast you run.  When you sync your iPod it uploads your info to a Nike website which tracks your mileage.  You can set goals and track by day, week, or month.

While I am out walking, the Nike+ is keeping track of how far, while the iPod give me something positive and motivating  to listen to.

Kudos to Nike for Good Service

Well I had to replace my sensor as the battery had run out. I hooked it all up and it wouldn’t sync properly with the website. I checked the online FAQ – useless.  So I sent a message to customer service.  Most big companies like Nike have bad customer service. They want to rely on their horrible online instructions and FAQs.  Much to my surprise I quickly I got a reply back with an answer that actually worked.  It was a personalized message from someone who actually understood the question! I was very impressed and I think Nike deserves Kudos for providing such good service.

Try it Yourself

If you want to get an iPod or the Nike plus I’ve made it easy for you. Just click the links below. The Nike+ does not work with all iPods. So if you already have an iPod make sure you have the right one before you spend the money for the Nike+ kit. You need to get a Nano (1G, 2G, 3G or 4G) or an iPod Touch 1 G or 2G. To make it easy for you these links will send you to the right page.

Apple iPod nano 8 GB (4th Generation)
Apple iPod touch 8 GB (2nd Generation)
Apple Nike + iPod Sport Kit for iPod

This book by Dave Lindahl is about repositioning Apartment buildings. This is truly one of the better books on real estate investing that I have read. While its primary focus in multi-family buildings, it has tremendous value for single family home investors also. Dave Lindahl got his start renovating single family properties and doing small 3 unit multi-family properties.

What is Repositioning

For those unfamiliar with the commercial property business a repositioning would be the equivalent of rehabbing a single family home. Rehabbing a single family home is usually done on a vacant property.  When the property is complete it is sold to a homeowner or landlord. Repositioning is generally a more complex process. It can often be done with tenants in place. Usually some renovation is required but it is more than just renovation It is often also about upgrading the tenants, management and the Position of the property in the marketplace. (By the way one of the best books on Marketing is called Positioning: The Battle for Your Mind Repositioning apartment buildings is in part applying it’s concepts)

Multi-Family Millions is Full of Tips

This book is full of tips. My copy is full of yellow highlighted pages. Many of these tips apply to rental properties of any size. One example would be his suggestion to offer tenants to paint an accent wall for an extra $20 a month. Or how about this tip

Replace faucets. Do not be cheap here! Inexpensive faucets are a maintenance headache, and end up costing you more overall. Get ones that are distinctive and elegant. Here’s my rule: If the tenant has to touch it regularly, make it special.

The book has advice on finding deals, working with contractors, smart renovation tips, financing your deals, negotiating and much more.

Who is Dave Lindahl

Dave invests in apartment buildings around the country. He started small. His first rental was a  3 unit building in a depressed  area. He now has over 5,000 units, so he know what he is talking about.

Who Should Buy this Book

Anyone who wants to invest in apartment buildings would find this to be a wonderful book. Yet there is value to single family home landlords, and rehabbers. As I said above this is one of the better books I have read on real estate investing. In addition to really solid information it is well written, easy to read and easy to understand. Just as importantly it is not full of irrelevant fluff like so many investing books. I recommend this book highly. You can buy it from Amazon at a great price here. Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits

Happy reading,

Ned

How do I invest in this volatile market?

Are you wondering how to invest in this changing market? Have you seen your savings and investments decline? Are you paralyzed and unsure what to do with your investments even as you see them wither away to nothing? Crab Properties, LLC has arranged a free online webinar to answer these concerns.

Arkad Group, LLC will present why Commercial real estate, specifically apartment buildings, is the best investment for this market.

I know what you are thinking “I don’t have the kind of money it takes to buy an apartment building.” This is why the second part of the online webinar is about using your IRA. This little know technique allows you to use your IRA to invest in high return investments like commercial real estate.

Invest in real estate with your IRA!

Did you know you can invest in real estate with your IRA?  After their home, retirement accounts represent the largest investment for most Americans. This is an untapped source of funds to invest in real estate that most never even realized was possible.

Satchie Carvounis, a representative for Security Trust Company, will give a presentation on how to super charge your retirement accounts by investing in creative strategies like real estate.

Don’t settle for stock market losses or measly 2% returns bank CDs or treasury bills. Sign up now.

Sign up for our list to get announcements of future events

Commercial property and IRA webinar

Details
When – Wednesday March 25
Time – 8:00-9:00 pm eastern savings time
Where – Online, watch and listen in from home
Price – Zero, nada, nothing, just sign up.
Click Here to sign up