The Hard Money Lender Business Plan and Financial Model provides you with seamless, real-time control over your profit and loss statement, balance sheet, and cash flow analysis. Please see the video below!
1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $15 million for the development of a hard money lender based in Dover, Delaware. Hard Money Lender, LLC (“the Company”) intends to provide short-term loans specific for construction projects and rapid acquisition of properties. The business will typically lend on a 70% loan-to-value basis. The Company’s CEO and Founder is Kyle Reeves.
1.1 The Services
The business, using the capital sought in this document, will provide comprehensive and creative financing solutions for real estate firms that are seeking to quickly acquire parcels of land with the intent to engage in real estate development. The business will generally receive interest rates ranging from 9% to 15% per annum depending on the current interest rate climate and the risk that the business is taking.
In addition to the interest, the Company will charge closing fees of 4% on each transaction. This will help defray some of the risks associated with this type of lending.
The third section of this document will further discuss the operations of Hard Money Lender, LLC.
1.2 Financing
At this time, the Company is seeking $15 million to commence hard money lending operations. The terms of this investment can be found in the Company’s private placement memorandum. Outside of using the funding for the business’ portfolio, a small portion will be used for the following:
• Location development
• General furniture, fixtures, and equipment
• General working capital
• Initial marketing
Moving forward, Hard Money Lender, LLC could easily secure a warehouse line of credit that would allow the business to leverage its equity capital. This document assumes that this event would not occur within the next three years.
1.3 Mission Statement
The Company’s mission is to provide cost effective financial solutions for real estate firms and entrepreneurs seeking capital.
1.4 Management Team
Kyle Reeves is a highly experienced real estate financial professional that has more than nine years of experience in this field. He will be able to properly provide financial solutions for clients.
1.5 Sales Forecasts
1.6 Expansion Plan
Over the next three years, the Company will make continued reinvestment into its portfolio in order to provide a greater number of hard money loans. The business may also solicit additional rounds of capital to further expand operations. As discussed above, there is also the potential to acquire a warehouse line of credit.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Hard Money Lender, LLC. The business is registered as a limited liability company in the State of Delaware.
2.2 Required Funds
The $15 million sought in this document will be used as follows:
2.3 Investor and Management Equity
Please reference the Company’s private placement memorandum.
2.4 Exit Strategy
The Company could easily be sold to a third-party financial institution for an immense profit given the highly recurring nature of the interest income generated from the portfolio. In this event, a qualified investment bank would be hired to manage the sale. This is not expected to occur for at least seven years.
3.0 Lending Operations
As discussed the executive summary, Hard Money Lender, LLC will provide a wide range of creative financing solutions for real estate firms and entrepreneurs. Generally, these funds will be used for quick acquisition of land and to carry out property rehabilitation and renovations. The terms of these loans will generally be twelve to thirty-six months.
In some cases, the Company may divest the loan to a third-party financial institution for a significant premium. The business will maintain ongoing relationships with banks, real estate financing companies, and hedge funds that are seeking above market rate returns on mortgages. The business will typically receive a premium of 4% to 6% of the face value of the loan.
The business, at all closings, will generally receive a fee equal to 4%. These fees will allow the business to operate with a greater degree of financial stability as they will cover a substantial portion of Hard Money Lender’s operating costs.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
Although the interest rate climate has been volatile, there is an immense demand for residential real estate. The Federal Reserve and global central banks have implemented comprehensive monetary policies that have caused inflation to abate while concurrently lowering interest rates.
It should be noted that any issues with the economy will not impact the Company’s ability to generate profits and remain profitable. The unique financing solutions offered by Hard Money Lender, LLC will find an immense audience among real estate firms that are seeking quick access to capital on a short-term basis.
4.2 Hard Money Lender Industry Analysis
Currently, there are 28,000 companies that provide hard money loans and related types of real estate based financing. Each year, these entities aggregately generate $300 billion of revenue while providing jobs for 225,000 people.
The growth of this industry will remain strong in the coming years as the demand for real estate continues to expand in lockstep with the growth of the population. Given the ubiquity of internet usage, the Company will be able to effectively market its financing solutions to real estate enterprises nationally. The Company will continue to work with its retained legal counsel in order to ensure that the business can provide hard money loans to any firm in the country.
4.3 Customer Profile
Any real estate entity that is seeking quick access to capital to complete acquisitions, renovations, or development is a potential client of Hard Money Lender, LLC. Generally, most of these clients will be engaging in projects that have a budget of less than $2 million. As there are over 100,000 companies actively involved with this industry, the Company will have an immense number of potential clients that will use the business for their short-term real estate funding needs.
4.4 Competition
As stated above, there are numerous lenders that provide short-term real estate financing and hard money loans. The primary way in which the business will differentiate itself from competitors is by streamlining its underwriting operations. This will allow for faster credit decisions than competitors. Additionally, the business will maintain highly controllable operating costs that will allow the Company to be competitively priced as it relates to its interest rates.
5.0 Marketing Plan
Hard Money Lender, LLC will use a number of marketing strategies to ensure that the business is able to cost effectively reach real estate firms and real estate entrepreneurs that have funding needs. A majority of the Company’s marketing operations will be online driven as the business will provide financing throughout the entirety of the country.
5.1 Marketing Objectives
• Develop a SEO and mobile device friendly website.
• Maintain ongoing referral relationships with real estate agents and brokerages.
• Engage in print advertisements among publications that focus on real estate development and renovation.
5.2 Marketing Strategies
Hard Money Lender, LLC will use a number of marketing strategies that will ensure that the business is able to effectively reach potential clients that will use the Company’s lending services. Most importantly, the Company will use online strategies including search engine optimization and targeted social media marketing. The Company will maintain continued investments into these operations throughout the life of the business.
As it relates to the Company’s website, this state-of-the-art platform will feature functionality that allows individuals to apply for hard money loans. This will feature a secure upload portal where relevant information can be provided to the Company. This platform will undergo general search engine optimization so that it can be quickly found when relevant queries for hard money are conducted.
For social media, the Company will use targeted advertisements on LinkedIn among individuals that list their profession as a property rehabilitation specialist or real estate developer. The business will also maintain a page on Facebook in order to further increase brand name visibility.
The Company will also develop ongoing relationships with real estate agents and brokerages that will provide referrals when their clients need access to creative financing solutions for their acquisitions. Over the next three years, these referrals will be an invaluable source of business. The business will distribute mailed advertisements to real estate firms that can act in a referral capacity.
5.3 Revenue Overview
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Hard Money Lender, LLC will acquire $15 million to launch operations (as equity).
• The business will reinvest 50% of its after-tax profits into the expansion of its lending portfolio.
7.2 Sensitivity Analysis
The Company’s revenues are only moderately sensitive to negative changes in the economy. There are always massive opportunities for real estate entrepreneurs to engage in profitable projects. These entities always require ongoing access to capital in order to conduct these operations. Hard Money Lender, LLC will maintain controllable operating costs which will ensure that the business achieves a substantial ROI on its portfolio.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.6 Breakeven Analysis
7.7 Business Ratios
