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All About Hard Money Lending with Dave Orloff


In this episode, Larry invited Dave Orloff of American Heritage Lending. He's been in the mortgage business for years. American Heritage Lending is a lending organization for the real estate investor community. He is a full-service mortgage broker with extensive knowledge of mortgage lending. He talked about how the mortgage industry works, how to get loans, and many more.


  • Dave's background
  • What his business is focusing on
  • Operating nationwide
  • Different types of loans
  • Underwriting process
  • The importance of experience as a lender
  • Their process from start through closing
  • What happens once the loan is approved
  • Some of the required documentations
  • AVR appraisal
  • Their terms
  • Their qualification
  • Advice to those who are just starting
  • On working with them


  • "The investor can’t do a deal without money."
  • "Don't go take a giant giant leap into the business.”



Larry: Welcome to the Brain-Pick-A-Pro show live from Lake Wylie, South Carolina. Thanks for being on today whether you’re watching on video, audio, or on the website, iTunes, Facebook, YouTube, whatever. Thank you so much for being here we really, really, really appreciate it. I know I don’t say it enough but we appreciate you watching. We appreciate you listening and your feedback, so please please share this and give us some feedback. We love it. I try to bring on this show, I have two shows, BRAG Radio which is a Facebook Live, Be Rich and Generous, Kandas and I do that show; and this one where I interview rockstars in real estate, people who are movers and shakers, people who serve the investment community and that sort of thing. So if you like it, if you’re enjoying it, please please share, comment, and give us some feedback, show us some love. We really, really appreciate that.

So, let me just jump right in. Today’s guest is a guy, Dave Orloff, he has been in the mortgage business for years. He is the CFO of American Heritage Lending, and it’s a lending organization, hard money and some other loan programs just for the real estate investor community. He’s got a lot to share today. You’re going to learn a lot about how the whole mortgage industry works, about what to do and how to get loans and that sort of thing, different types of loans that are available, so please give a good welcome to Dave. What’s up, buddy?

Dave: How are you, Larry? Thank you for having me. I really appreciate it.

Larry: Man, it’s my pleasure. I’m glad to do it. So, why don’t you start out and tell our listeners and viewers a little bit about yourself?

Dave: I’d be glad to. So, coming up. I’ve got 20 years in the business focused in the early days on your traditional mortgage banking, serving homeowners and dealing with big banks and everything in between. Over the last several years, we shifted our focus and we’re dealing exactly as you mentioned with the real estate investors, more of a business to business transactions. We have some unique new products available for them if they’re looking to find a property for quick acquisition all the way through buy and hold cash flow-type products where the underwriter is a lot like a commercial loan.

Larry: That’s good. That’s good. You’re pretty much just about nationwide, right?

Dave: We are so there’s about 10 states we don’t lend in but we cover pretty much the entire nation.

Larry: That’s good. That’s good. So, tell us a little bit about the different types of loans that you have. Are they transactional funding, just hard money, fix and flip loans, landlord loans, or what?

Dave: It’s a great, great question. I kind of think of it in just a couple of buckets. The first one is our fix and flip product which has been very active over the last, I’d call it, two years and that’s exactly what you’re expecting. I don’t have to give any description on that loan product. We have your traditional hard money. You know, when somebody needs to acquire a property quickly that don’t have time to do any type to underwrite. We’d take a look at that collateral, take a look at the borrow, and fund those in as little as five days. And then this unique category where, you know, if folks were looking to buy, you know, single family homes, and rent them out, and make the spread on cash flow, positive cash flow, they had choices like going to a bank or being underwritten traditionally by sending in pay stubs, and bank statements, and tax returns, and all the like.

Larry: Right.

Dave: But similar industries like commercial loans, if you’re buying an apartment building or an office building, they’ll look at the rental income to support the debt service on that loan. We’ve developed a product where we do basically the same thing. So it’s a neat way for real estate investors to whether you need to finance more than properties or whatever caveat the bank kind of pigeon holes them into. This is a really neat and exciting new products for us to go out and help folks kind of use leverage on real estate, increase their returns and don’t have to go through a nightmare underwriting process.

Larry: I hear you. So, you mentioned the underwriting process. Tell us a little bit about that. What is the process. Is it strictly asset-based or are you looking for somebody with a certain credit score or somebody with a certain amount of experience?

Dave: We call it as somewhere between asset-based and an institutional feel for commercial lending, so we are going to look at the credit score but we’re looking at a credit event history, not necessarily a certain cycle or range, just what we land on. We’re definitely taking 90% of the underwrite decision and we’re looking at that from a collateral perspective. So, like I said, it’s primarily the asset, what does it generate, what condition is it in, and then I’d say the remainder is the borrower’s experience. But, you know, nowadays if you’ve done two, you’re an expert.

Larry: I know. How important is experience to you as a lender? I mean, you’re putting money out on the street and you’re not in the real estate business. You’re in the finance business. You don’t want to get the property back, right? How important is experience to a lender like yourself?

Dave: It’s amazing that you bring that up. Everyday we talk to folks and think, we’ll gosh, why wouldn’t you just do a loan on this property. You know, it’s 60% all TV. In the worst case, you get the property back but you’re absolutely right. That’s the last thing we as lenders want to see happen. We have a whole back office team that does feasibility reports. We look if it’s going to work. We make sure you’re making a good decision. We look at surrounding areas. We do a very heavy underwrite on that collateral and the decision to put our money out as basically a partner. You know, we’re going to get along side you and/or your contractor team and then make sure that you’re doing a good deal if that makes sense.

Larry: That’s really good. It’s interesting that you mentioned partner, Dave, because it really is. I mean, the investor can’t do the deal without money and you can’t deploy your money without a borrower that knows what they’re doing and how to see it through to completion.

Dave: I’d say in the traditional mortgage sense, the deal is done when, you know, they’ll refi or that purchase transaction closes, ours is just really beginning and you’re absolutely right. You know, we’re staying involved in the construction process if it’s fix and flip. If it’s just more traditional, we’re making sure whatever need and opportunity presented itself to the real estate investor, we’re staying alongside them during that process to make sure that they capitalize on that opportunity.

Larry: Good, good. So, run through a typical process of somebody from initially reaching out to you on your website or whatever through to closing. How does that process take place?

Dave: So, we’re easy to find. Call comes in, you know, whatever it is comes in, we’re going to do a very very light “underwrite” like we said, you know. At first, we’re going to ask you a little bit about the product you’re looking for and what project scope you have in mind. Is this something you’re going to buy, you’re going fix up, and you’re going to rent out? Or are you going to flip it? What are you going to do? And we’re going to model those numbers real quick, Larry, and I’d say within the first 20 to 30 minutes, we’re going to know if this is a product that fits one of our loan programs. From there, we’ll be able to determine, yes, we’re interested. We’d like to partner with you on this. The application process is simple. It’s a two-page loan app. It’s about four or five supporting documents. We do the work in the back office and we’re able to get back and, you know, make a lending decision quickly.

Larry: Once you get an approval to someone, then what happens from there?

Dave: Once the loan is approved, you know, internally here with our underwriting staff, it’s basically just like you’d expect with an escrow company, making sure the funds are delivered on time, we do all of our funding in-house, so it’s directly wired in. that process is usually only two to three days. The money is deployed. We even do a lot where we’re, you know, financing the rehab cost. If it’s a big construction budget, the only additional saying that I think is process oriented would be, you know, we’ll set up subsequent draws and we’re monitoring the progress such that we’re communicating back and forth with the disbursement folks saying, okay, you know, we’re at this process, debt and milestone. It’s time to release the next set of funding and we’ll manage that for our partners as well.

Larry: Good. so you hold back some of the money in escrow if you’re funding the rehab and then there is like draw request and draw releases, correct?

Dave: That’s exactly right. Exactly right

Larry: So, tell us a little bit about some of the required documentation, like, maybe a rehab estimate, appraisal, tax returns, copies of LLCs.

Dave: So our typical underwriting, this is probably getting pretty far in the weeds, but you’ll have experienced folks on the show. You know, we’re going to take a look at, like I said, first of all, that credit report. We’re going to get a full appraisal done and we’re going to match that to a scope of work. So, if you don’t have that, you know, you’re not used to formal documentation, we’d certainly supply you with that. We can help you complete those. We’re going to run what we call kind of a profit or a model internally here to make sure based upon what comes back on that appraisal with, you know, after repair value, we’re going to look at comps and we’re going to size up, you know, does this need a threshold to profitability with enough margin of error that we like it? Then, you know, we’re going to look at just the basic stuff. You know, homeowners insurance. We’re going to look at your entity documentation. Is it in good standing? Can we see the organization structure whether LLC or corp. We’re going to vet that out. That’s about tit.

Larry: Oh, okay. Good, good, good. Now, you guys are based out of California, right?

Dave: We are in Southern California, right? Kind of near the coast between L.A. and San Diego.

Larry: Oh, cool. That’s awesome. So, in getting an appraisal, how in the world do you find a local appraiser, you know, in 40 different states or do you have a national service you use and then they sub it out to somebody in their network?

Dave: We’re not relying on three different appraisal partners. That’s their management companies, vet and train appraisals for this specific type of lending because you have to kind of no more than go out and measure, take photos, look at comps. You have to understand where the property is today and where it will be in X number of months when completed.

Larry: Right.

Dave: Yes. we rely on three different vendors for that.

Larry: Okay good. You get what’s called an ARV or after repaired value appraisal, right?

Dave: We get an ARV and then for this new loan product, we make sure we have a rental summary and we look at rental comps as well. We go into it knowing hey, if this is a fix to rent, if had a bedroom and a bathroom, whatever you’re going to do to the property, we have a real good idea what that’s going to rent for when you’re finished.

Larry: Okay. Good, good, good. Now, I’m assuming the investor pays for the appraisal. They pay for that upfront, right?

Dave: They pay for it upfront, from time to time, you know, we can charge that through our partners that are repeat customers and things like that, yes.

Larry: Sure. That’s good. That’s good. Your website looks very very easy to navigate. Tell us about your different kind of services. You’ve got an adjustable loan, you’ve got some refinances, some traditional loans too, right?

Dave: The website you’re on is our corporate website. We have another specialty site you should check out. It’s

Larry: Yourbridgelender.

Dave: Your bridge lender and that speaks more to our fix and flips and stuff like that.

Larry: Okay good. That’s good. That’s good. Oh, yes, yes, yes. Awesome.

Dave: A little bit more fun.

Larry: Yes, exactly. Alright cool. So tell us a little bit about your terms?

Dave: So, the fix and flip or anything that’s kind of that acquisition strategy were 12-month term, interest only payment, real simple stuff. If you don’t want any payments, we can escrow it for you. We make that really, really easy. On this new program, everything you sort of expect from a Fannie Mae or Freddie Mac type product, we have those terms. So, you know, 1-3-5-7-10 year adjustable periods. We have a 30 year fixed. We have a 15 year fixed. We have a 20 year fixed. So you can match up payment with your goals, whichever way you want to create your loan.

Larry: Good, good. Fix and flip, buy to rent, refinance, bridge loans, that’s cool. That’s cool. Are you able to tell us like some of the interest rate ranges and stuff like that on the different programs?

Dave: You’re going to make me do that today, Larry?

Larry: No.

Dave: Now, we expect to compete on rates so the back story, we’re supported and semi-partnered, I guess you’d call it with a large Hedge fund out of New York. So, our capital is institutional class so what you should expect with that is a lower rate structure than typical hard money. So we’re in the single digits. Let’s say the high single digit is a starting point.

Larry: That’s great, man. It’s good. I don’t know why you, you know, said that because, man, that’s great. Like, I do hard money in the Carolinas, right?

Dave: Okay.

Larry: I’m 12% and five points, right?

Dave: Can I invest with you?

Larry: Yes, right?

Dave: So, here in California, obviously we have bigger loan amounts and what have you but we haven’t done a deal in the double digits so far. I’d say in the last six months that we are ready to really compress out here.

Larry: Wow, that’s great, man. That’s great. See, I probably should have kept my mouth shut because now we’re going to be refinancing. I’m going to get some payouts from you in the next 30 to 60 days, right?

Dave: You asked the question, buddy.

Larry: I know, right? That’s funny. That’s funny. Tell us a little bit about the buy to rent program, the landlord loans. I mean that sounds pretty good because a lot of people just think of hard money lenders as just fix and flip lenders, right? Rehab loans but you’ve got some longer term money available, right?

Dave: This is sort of my pet passion. You know, I’m a real estate investor myself so I flipped houses and I owned properties that I rent out. It’s just amazing that if you think about what a bank would require, if you’re going to go, buy a rental house, you know, you need to put at least 25% down and you need to send two years tax returns, pay stubs, and they want to look through everything. If you can get that loan, then they put caps on you and you can’t finance more than these number of properties.

Larry: Right.

Dave: They hit you with the debt that you’re accumulating along the way and it just becomes extremely difficult to qualify for those loans. So it just never made sense to me when you have an instrument for an investment that produces a payment, you know, monthly income payment stream, why can’t you use that to qualify the asset and that’s exactly how it’s done in multifamily lending and commercial lending. Well, after months and months of work, we kind of came up with a test product that does it exactly that way. So this program is going to look at, you know, you bought the house for 100,000 dollars, you’re financing 75,000 dollars and the cost is 500 to 600 bucks a month all in.

Larry: Right.

Dave: You’re renting it out for 900 dollars a month. We see that that is a good investment.

Larry: Exactly.

Dave: I over use the term but I think this landlord loan or rental long term hold loan is a real common sense underwriting.

Larry: That’s awesome. It makes sense to me because unlike a hard money loan, the investors making the payments out of their pocket with the landlord loan, you got the investor on the hook and you have the tenant, right?

Dave: I read a great headline on a friend of mine email the other day that said, is you rental house, you know, is your investment paying for itself? You’re absolutely right. That tenant is making that payment. Why shouldn’t you be able to use some leverage to go out and scale your business or pay off some other hard money loans you have.

Larry: Right.

Dave: Those rates drop into the fives and sixes, Larry, for a long term money. Right? So it’s very competitive. It mirrors more of a bank product.

Larry: The reason I’m imagining that it does resemble a bank product is because you are using institutional money and you can get it at a very low rate.

Dave: Exactly right. Exactly right.

Larry: Good, good, good. That’s awesome. So, are you able to make any loans to people that, you know, maybe they’re getting started or whatever, maybe they’ve been in the construction but they haven’t done their own fix and flip or are you looking for somebody that’s done at least one or two?

Dave: We really understand that you got to get started somewhere, so all we really ask or maybe where we tighten up on our internal guidelines, if you’re brand new would be, you know, don’t go take a project down that needs a ton of work or don’t think if you’re going to tear the walls down and add a bunch of addition, let’s go get started on more of a cosmetic flip.

Larry: Sure.

Dave: You know, repaint, kind of scrape some ceilings. Do something like that. Don’t go take a giant, giant leap into the business because you and I know we’ve invested long enough. It’s never like you think it’s going to be when you start pulling walls down. I think you’ll find problems everywhere. So, we have no problem financing a first timer and you know, again, partnering with you hoping that you come back and hoping that you have a good experience and hoping that you make money, let’s just start with a little bit of easier project.

Larry: You know what, I’m so glad that we’re talking about this because so many people think that they can just go and oh, I found this house. I can pick it up for a hundred thousand. It needs another hundred thousand in work and it will be worth 300 thousand, right? I’m going to make 200 grand on this, but you know, they’ve never. Not to mention that, they live in California and the house is in Texas, right? So, it’s very, very important that people understand that you have got to start somewhere but don’t start with… it’s like most people who own multifamily did not start with multifamily, right?

Dave: That’s right.

Larry: Yes, right?

Dave: I would comment there that I think that is such wise advice. You know, we all love the HGTV shows and it makes it look really really really easy and you can depend on your service providers, but the truth is, it’s a business for a reason and it takes good management and it takes good oversight, it takes, you know some great planning. Even then, right? Even us pros, who have done it a long time, we get stuck and you got to know how to work through those problems.

Larry: I don’t mind saying, I hate rehabs. I hate them. I don’t do them, don’t do them, but that doesn’t mean that you can’t make a ton of money out there. I mean, I know people that love it. Now, I’ve used to love it. I used to love going into a project, smelling the smell of the fresh cut wood. You know, putting up walls and stuff. I used to love that. You know, I would show up at a job suite, bring them snacks and drinks and they love that, you know, check on the project. But, anymore? I don’t. I don’t enjoy it. I don’t want to do it. You can’t make me. You can’t make me, but I used to. I used to love it. There’s a lot of people out there making a ton of money doing rehabs and they need people like you to be able to help partner with them to fund their projects. So, tell us a little bit about this. As far as somebody come into you for a loan or they’re going to need 20% down or 30% down or whatever, how does that work?

Dave: You know, a good rule of thumb is about 25% down. If you’re just looking for us to do a regular hard money loan. On the fix and flip, you’d be surprised but we’ll go up to about 85% loan to cost so we’re going to look at the acquisition price plus what your budget states you’re going to use and need for construction financing and we’re willing to be at about 85% of that dollar amount.

Larry: So, which means they’re going to need to put down about, they’re going to need to have about 15% down plus some reserves, correct?

Dave: That’s correct. That’s absolutely correct.

Larry: Yes. You do use require a reserve. I mean, we do. We require six months worth of reserves.

Dave: We’re easier than that.

Larry: Good.

Dave: I don’t want to take away your business. We’re easier than that and I think we understand that or at least, hopefully it’s not a faulty sense of security but we do quite a bit of due diligence internally like I said it’s kind of that feasibility review and we’re looking at all those factors and hoping that we made a good lending decision. We’re partnering with somebody that knows what they’re doing and they’re going to have a successful project outcome.

Larry: That’s awesome.

Dave: Because I think it’s high leverage. When you think about lending your own money and I think about lending my own money, I wouldn’t want to put out 85% of, you know, the total amount invested. I think that’s pretty risky, but we believe we’ve got some underwriting tools to help us get comfortable with that.

Larry: That’s great. That’s great. See? I have to be a little more conservative because it’s my own money. I don’t have a Hedge fund I’m working with. I don’t have institutional money so I work hard for my money. I want to protect it like a kid.

Dave: As you should.

Larry: Yes, that’s true. That’s true. My wife actually does all of our hard money lending. You know, I heard somebody say a long time ago, have the person managing your money that you’re sleeping with.

Dave: I love that. If you don’t mind, I’m going to, if that’s not copyrighted, I’m going to share that somewhere else today.

Larry: There you go, that’s good. Give me credit for it.

Dave: I will.

Larry: That’s good, man. What other kinds of words of wisdom would you like to share about somebody that’s looking to do some projects whether they want to build a portfolio or they want to do some fix and flips. What kind of words of wisdom would you like to share?

Dave: You know, I’ve just really enjoyed this time and I think you and I have philosophically the same thoughts about real estate and risk and, you know, preparing. What we are all looking for is kind of some independence and wealth and some create ways to solve that income burden, right?

Larry: Right.

Dave: So, when these new programs came available where we can help an investor through that entire life cycle and help them scale whatever segment of the business they were most interested in, I became quite passionate at this opportunity to help people buy and hold real estate and get long term financing. Maybe it’s a cliche but it becomes a little bit like Monopoly, right? We’re going to start small and we’re just going to build one house at a time and my advice is to start slow. Don’t take on too much. TV shows make it look easy.

Larry: That’s it. That’s true, man. So if somebody would want to reach out to you, apply for a loan, you know, get started with you, how would they do that?

Dave: You can reach us through the website, You can always call us toll free, 800-731-9226 and my email is

Larry: Awesome, That’s awesome. Dave, I really really appreciate you being on today. This has been really cool. Thanks a lot for sharing. I hope you don’t take too much of my business.

Dave: I won’t. I promise. Thank you, Larry. It’s been absolutely my pleasure.

Larry: Awesome. Sounds good. Thanks a lot, buddy. Take care.

Dave: You too.

Larry: Alright. thanks.