Private Money411 Magazine - The Source for Real Estate Finance Spring 2014 | Page 8

No Fluff!
The Godfather of Hard
Money on Private Money
Lending in Today’s Market

L

By Robb Magley

“Hard money”
lending gets its
Leonard Rosen
name from the
practice of basing
loans strictly on the hard equity and hard
asset – “no fluff,” said Rosen, no long
stories about a borrower’s 20-year plan for
a particular property.
“The only questions are, one, what is
the property’s value, and two, how much
equity does the borrower have in it?” said
Rosen. “The loan is based on the amount
of equity they have in the real property –
that’s it.”
These loans have been a part of the
marketplace for half a century, according
to Rosen, but since 2008 and the real
estate “implosion,” private money lending
has grown to fill the gap left by traditional
lenders.
“(The banks) have extremely tight
lending criteria now, from a creditworthiness standpoint and a regulatory
standpoint,” said Rosen. “They are not
taking the normal business risks they were
over the past 10 years; unless you have
stellar credit, and a piece of real estate that
you have significant equity in, the chances
of getting any kind of real estate financing
from them is very slim.”
Enter the “hard money” investors. The
loans are primarily used in commercial
real estate, investor fix-and-flips, or any
short-term project where borrowing
is used to solve a problem or bridge a
situation until the implementation of an
exit plan – for example, to refinance or
sell a property within a year or so.
“Sometimes investors will buy property
on the courthouse steps, or REOs from the
bank, and they’ll get them at wholesale
prices,” said Rosen. “Imagine a property’s
worth $100,000, and an investor has
$35,000 into it. In comes the hard money

eonard Rosen is known
alternately as “the Godfather
of hard money” (he’s been in
the business for 35 years) and
“the Pitbull.” Unsurprisingly,
the second nickname has a good story
behind it.
“Back in 1982 was my debut as
a six o’clock anchor on the national
cable network, Financial News
Network,” said Rosen. “My very first
night going on I was nervous. We had
put all of what I was going to say on
a teleprompter – 13 minutes of me
speaking. As I was getting ready, and
the director was counting me down,
he said ‘6 ... 5 ... 4 ... 3 ... Leonard,
I’m sorry, we lost everything on the
teleprompter ... 2 ... 1 ... you’re live.’”
He laughed. “And I do this,” he said.
“I went 14 minutes, live, first time on
national television. The guy walked
up to me after and said, ‘Only a pitbull
could make that happen.’ And it just
kind of stuck.”
It’s hard to find a more fervent
booster for the industry, whether you
call it “hard money” or just “private
money lending”; Rosen’s “Pitbull
Conference,” which teaches the insand-