Since “lies” is too strong of a word, I used fibs. Who among us doesn’t tell a tiny fib every now and then?
I do hard money loans for Los Angeles and hard money loans for San Diego and I would venture to guess that these fibs are pretty much not exclusive to Southern California.
Here they are:
1. “My partner has the down payment”
Sometimes this is actually the case so don’t always assume it’s a lie. Much of the time, however, they just paid $2000 for a nothing down seminar and were told they don’t need down payments.
2. “I am NOT going to live in the property.”
At least with California hard money, I would venture to guess that 95% of all California hard money lenders don’t loan on owner occupied homes. I make sure the rent pencils out with the payment and if doesn’t, I find out how the new buyer plans on making the payment if the place will have negative cash flow.
3. “I was quoted a great rate of” (fill in the blank)
Maybe she was quoted that but we usually know what the market is for a certain dollar amount with the borrower’s credit history and amount of Loan to value.
If she was quoted that great rate, why isn’t she jumping all over that? In the San Diego hard money market, I know my rates are very competitive so when a rate seems ridiculous, I am usually suspect.
4. “The house I want to refi is worth X amount of dollars.”
Almost always, subtract at least 5-10%. They remember what their neighbor got in 2005 for their house and “their house is not as nice as mine.”
The only time I got an underestimate of the house is when a guy wanted to buy out his brother and he would benefit if the appraisal came in lower. It doesn’t matter what they estimate it is because we will find out approximately what it’s worth.
5. “I have flipped 60 houses this year.”
Sometime this is actually true with the big movers and shakers but much of the time, they have flipped 60 in their entire life. Even flipping 60 houses in a lifetime is quite a feat so I don’t think they need to stretch the truth on this one.
Since to some extent, we all exaggerate some, let’s make a conscious effort to catch ourselves and tell each other the truth.
California Hard money loans and trust deed investments