Page 187 - Trump University Commercial Real Estate 101

Use a Money Multiplier

One subset of private money is angel investors . These are high - net -
worth individuals who lend between $100,000 and $10 million. We
discuss angel investors later in the chapter.

Hard Money

When I first used hard - money lenders, I thought they were perhaps
connected with the mob. Maybe it had to do with my fi rst hard -
money lender, who insisted on meeting me at the local donut shop. He
wore an old, round - brimmed hat and was dressed like a gangster.
Maybe it had to do with the rates I was being charged — between 17

and 20 percent, plus another five points! (One point is one percent of
the loan amount, paid up front.) Can you blame me for drawing that
conclusion?
I then discovered that hard - money lenders are often simply
wealthy, honest individuals who ’ ve carved out a specialized niche for
themselves.
I ’ ve just told you the worst aspect of working with these lenders —
they cost an arm and a leg. Here ’ s the great aspect: They don ’ t care
about you.
In other words, you could be from Mars. If the deal you bring
them is good, then your lack of experience, lousy credit rating, or other
problems simply don ’ t matter. They ’ ll lend you money on the deal,
collateralized by that deal. If you can ’ t pay, they get the deal.

I financed a lot of commercial properties with hard money at the
beginning of my career. I discovered that if my deal was good enough,

these lenders would give me 100 percent financing, and they would act
quickly.
I got into a few properties that generated excellent cash fl ow. That
allowed me to refinance them for much lower rates and pay off the

hard - money lenders. Now I had even better cash fl ow.
I laugh when I hear people slam hard - money lenders, saying that
they would never consider paying someone so much interest. By set-

ting arbitrary limits on themselves, they will not benefit from a whole
class of deals. These are the deals that don ’ t work with conventional

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