Lessons from 4,000 Loans: Jason Balin’s Conservative Lending Model

Bryce
Today, we’re with Mr. Jason Balin. Jason, thanks for being here.

Jason
Bryce, I appreciate it. Looking forward to it.

Bryce
Unless you’ve been living under a rock, Jason is the expert when it comes to hard money and private lending. They’ve built an incredibly successful operation, and I’m excited to dive into that today. They also have a fantastic podcast, YouTube channel, and a powerful email marketing system. You guys are a well-oiled machine, and I hope to get there someday. You’ve been a mentor to me, and I’m grateful to have you on the podcast to share some of your wisdom.

Jason
Thank you, Bryce. Those are very kind words. I appreciate it.

Bryce
They’re all true! I promise I’m not just buttering you up. This is going to be fantastic for the audience. Now, for those listeners who have no idea who you are, give us your elevator pitch and some background.

Jason
Absolutely. My name is Jason Balin. Most of my time is spent running Hard Money Bankers, a private lending company focusing on the Mid-Atlantic—DC, Maryland, Virginia, Delaware, Pennsylvania, New Jersey. We started in 2007 with my business partner. At the time, we had no clue what we were doing.

We came from the real estate and mortgage world, just like many people in private lending today. We didn’t like the lack of control and the inconsistencies of flipping houses or owning rental properties. So, we figured it would be easier to be on the lending side. We liked the finance side more.

Back then, the market was very different. Capital was limited, and if you were looking for a private lender, you’d find mostly older attorneys who owned title companies. There weren’t formal hard money lending operations like there are today. Institutional capital didn’t exist in the space, and finding funding was hard. But if you could get your hands on capital, it was much easier to operate with little competition.

Bryce
It’s wild to think about, especially the 15% and 5-point days.

Jason
Yeah, back then, it was great. But when institutional lenders entered the market around 2014-2015, it shook things up. The market had changed, and by then, there was a lot more liquidity. I’ve only been through one major real estate cycle, but we’ve learned a lot along the way. If I had started in 2005 and had a hundred deals under my belt, I might not still be here after the 2007-2008 crash.

Bryce
You might not have made it.

Jason
Exactly. It’s hard to say. But we were fortunate that we started in 2007-2008. Since then, I’ve learned to be very conservative with our investors’ and our own capital, mostly because it wasn’t ours when we started. I was terrified of ever having to make that phone call telling an investor they lost money. Thankfully, that hasn’t happened after nearly 4,000 loans. But that fear has kept us cautious, and that’s been part of our business model.

Bryce
That’s incredible. So, let’s dive into that. You mentioned starting in 2007. Private lending wasn’t nearly as common as it is today. What was the catalyst for you guys to make that shift into hard money?

Jason
Right after college, Chris and I both ended up in the local area, Montgomery County, Maryland, just outside of DC. We were both entrepreneurial and had a passion for business. I became a real estate agent, and Chris worked at SunTrust Bank, now Truist. He was doing loans. After a couple of years, I realized selling real estate wasn’t as easy as I thought. I remember thinking it was a great job until I realized how much work it was.

At the same time, I started working in a mortgage company. It was around the time when subprime lending was big, and refinances were everywhere. One day, I brought a deal to my boss that I thought was good, but he couldn’t approve it. He took a look at it and said, “I’ll just fund the deal myself.”

That was a lightbulb moment for me. I thought, “Wait, you can be the lender? You can be the bank?” It was a whole new concept for me. I realized he had about a hundred loans in his portfolio, and the strategy was to offer subprime private loans, help people improve their credit, and then refinance them into traditional loans.

Years later, when Chris and I were ready to start our business, we wanted to start a mortgage company. This was early 2007. We set up the entity, got everything in place, but the mortgage market was starting to change.

Chris and I met an attorney who had owned a mortgage company and a title company. He suggested we start a hard money lending company instead. He could help us with the legal docs and title review, and even knew people who might invest in the deals. That was the beginning of Hard Money Bankers.

“Wait, you can be the lender? You can be the bank?” It was a whole new concept for me…That was the beginning of Hard Money Bankers.

Bryce
That’s an interesting shift. You guys were pretty broke when you started, right?

Jason
Yeah, we didn’t have much capital when we started.

Bryce
That’s amazing. I think it’s a great story for anyone who wants to get into lending but doesn’t have a track record or capital. What was it like starting with almost nothing and trying to make this work?

Jason
Absolutely. Not knowing what we didn’t know was almost a blessing. We thought raising capital would be the hardest part because we were under the impression that we had all these great deals. In reality, they weren’t really deals, but we didn’t know that at the time. We also thought we knew lots of people who could help, like brokers. But back then, the capital in the space was limited, mostly coming from older individuals people didn’t want to work with. DC and Baltimore were two separate markets. I grew up in DC, worked in Baltimore, and knew the dynamics well. We realized if we could be lenders in both areas, we’d be ahead of the game. Nobody else was doing both back then.

So, we started asking ourselves, how do we find deals? We even tried using the most basic methods, like dressing up in suits for meetings, thinking that was how you raised capital. We were in our mid-20s, didn’t have family money to fall back on, and our parents weren’t going to fund a venture like this. So, asking for that wasn’t even an option.

Luckily, an attorney helped us with legal documentation and suggested we tap into his network. He even helped us convert some of his family member’s 401k into a self-directed IRA so we could use that for lending. That was a small glimmer of hope. His network also introduced us to people who might be interested in investing if we found good deals.

At first, our business model was to broker loans, just like the regular mortgage industry. We’d find the deals, keep the points, and let others handle the interest. That backfired quickly when we realized investors didn’t want to know about the deal details; they just wanted their returns. We did all the work and had no compensation for managing the loan, which led to our shift. We adopted the note rate minus three model, where we take a percentage for servicing the loan. It started with 15%, investors got 12%, then we kept 3% for servicing. Now, it’s usually 12.99% or 13% for the loan, with investors getting 10%, and we keep 2.99% to 3%, along with the points.

We adopted the note rate minus three model, where we take a percentage for servicing the loan. It started with 15%, investors got 12%, then we kept 3% for servicing.

Bryce
That’s a great strategy. How did you get started with marketing and raising capital?

Jason
We tried everything—setting up investor presentations and inviting people we thought were high-net-worth individuals, though many weren’t. Despite not knowing exactly what we were doing, we made it work. One of the more unique things we tried was a website we called “I Hate My Stock Portfolio”—it wasn’t compliant, so we eventually took it down, but it was part of our efforts to raise capital. Surprisingly, some of the best investors we found were other hard money lenders who didn’t have the same deal flow we had. They’d see our deals and think, “I’d rather invest in a good deal with a solid 12% return than risk my own capital on a less certain deal.”

The first deal we did was in Ohio. We had no idea why it was in Ohio, as we typically lend locally, but it came our way, and we took it. The borrower owned several single-family homes and one commercial property, and we collateralized all of them. Luckily, the attorney who had helped us early on knew how to handle the legal side of things, so that was a big help. We charged 15% interest, five points, and a $1,000 commitment fee, which included a junk fee and valuation fees.

Bryce
Wow, what an incredible story. And from there, how did things evolve?

Jason
We were just starting out, so things moved slowly. That first deal stayed on our books for four years because the borrower had no exit strategy, but we learned a lot from it. We took the $7,500 from the deal and used it to fund our first official Hard Money Bankers account. We were officially in business. In 2008, we did either 18 or 23 loans in our first year. The next year, we did 56, and by year three, we had around 100 loans. Each year, we doubled our volume, and it kept growing steadily.

At first, it was just Chris and me, and we didn’t have defined roles. We were handling everything. If an investor called, we’d both talk to them. But over time, we split up responsibilities. Chris handled the back-end operations—CFO, accounting, servicing, and defaults—while I took the front-end with origination, underwriting, and processing teams. It worked out well, though it was a huge hustle.

We used to attend RIA meetings every night, dividing territories—Chris went to the DC area, and I focused on Baltimore. We were constantly on the road doing property inspections and valuations, working out of our cars with files and checkbooks in hand. Those early days were intense.

Bryce
That’s a real grind. It sounds like you were constantly juggling a million things at once.

Jason
We were! We’d go to the office for a few hours, then hit the road for inspections and meetings. I’d spend my days bouncing between Baltimore and DC, trying to beat traffic and fit in calls in between. It was chaotic but also incredibly rewarding. We didn’t hire anyone for the first five years—it was just us, making it happen.

Bryce
What a hustle!

Jason
It was wild, but I wasn’t working when we started. Chris was still working at SunTrust for about the first year. The good part of this business is that there’s low overhead, especially in the beginning. Sure, payroll, marketing, and other expenses add up, but at first, you can run this with almost nothing. I’m talking personal cell phones, personal computers, and just gas money. We never did a capital contribution into the business except for that first deal. That was our seed capital. After that, we took money on a per-deal basis, and eventually, it turned into monthly or quarterly distributions.

For example, after closing a deal, we made six grand and split it, taking out $2,500 each and leaving $1,000 in the hopper. Early on, until we grew, we could easily make $50,000 a year with very little overhead. That worked out well, and then we started doubling every year.

 

Bryce
Wow, 15 years ago, that’s a pretty good wage fresh out of college. That’s impressive.

Jason
Yeah, it worked, but we were definitely the young guys on the block. This was just a few years after YouTube started, so we were using cheap digital cameras to make videos. If you want to see some of those terrible YouTube videos, just check out our old videos on our YouTube page, Hard Money Bankers. They’re low quality, not just in video, but in content too! But we figured, let’s jump in and do it. We weren’t afraid to try. The only thing I was worried about was losing investors’ money. We were definitely more conservative back then, but not as much as we are now. We passed on some deals that were great and still wonder why we did that.

If you don’t have capital to start, or you’re raising it, the best thing you can do is have great deals. Investors will never say no to those. The key is to find the best deals because that’s how capital comes.

Bryce
Yeah, exactly. I tell people all the time, especially when they’re new to real estate, that they often think they don’t have capital. The truth is, they don’t know what they don’t know. I always tell people, if you’ve got a solid deal, the capital will come. It’s easy to find. The trick is finding those deals. If you don’t have any deals, spend four hours a day knocking on doors, and you’ll find something. Then post it in a RIA group or bring it to someone like you or me. If it’s a rockstar deal, the money will follow.

If it’s a rockstar deal, the money will follow.

Jason
Yeah, I completely agree. But newbies often think they have a good deal when they don’t. They don’t know what a real good deal is. Let me tell you a quick story. Back in March 2020, when COVID hit, a friend of mine who had millions invested with us said he was going to sit on the sidelines. He didn’t want to risk anything with the real estate market possibly crashing. I told him, “There’s a difference between being sidelined and just being more conservative.” I gave him an example.

Let’s say someone brings you a property in DC. They’ve got it under contract for $600,000, and they only need $300,000 for the loan. Would you do it? He said, “Of course, it’s a no-brainer!” I told him, “Well, that’s the deal I just got. I told the buyer to put 50% down, and we funded the rest.” During COVID, everyone else was sitting out, but we structured it in a way that made us feel comfortable. It’s all about being conservative but knowing when to pull the trigger.

Bryce
Yeah, that’s a good point. I still struggle with this, especially when I know it’s a great deal, the borrower is solid, and everything looks good. For example, say it’s a $150,000 purchase price, with a $350,000 as-is value, and not even factoring in ARV. That’s a really good spread. In that case, you’d still require the borrower to bring cash to close, right?

Jason
Wait, they’re buying it for $150,000 and it’s worth $350,000 as is?

Bryce
Yes.

Jason
And what’s the renovation budget and ARV?

Bryce
The renovation budget is around $50,000, and ARV is $500,000 to $550,000. It’s a screaming deal.

Jason
Yeah, it’s definitely a screaming deal. That’s not something you see often.

Bryce
But you would still require them to like bring cash to close, correct?

Jason
Well, let me answer it with this. The first thing I would tell them is, if someone called me and said, “Hey, listen, man, you’ve got $200,000 in equity—why are you even messing with it trying to reap additional rewards?” I would tell them to just take that $200K, wholesale it, or sell it, and move on. That would be the first thing I’d advise. I don’t typically see deals like that anymore, where there’s so much equity. Most deals are purchased for investor retail, which is more about buying at an okay price and flipping or adding value, but there’s not much room for huge profits without risk. We’ve done deals in the past where we did 100% financing, and I’ve seen property values skyrocket over the last decade. But in today’s market, it’s different.

A lot of properties have appreciated so much over the last ten years, with an even bigger jump since COVID. Some have even doubled in the last four to five years. This makes me nervous. If there’s a market correction, it could hurt certain areas, though others might not see much change. In my region, properties feel overpriced, and rents don’t support the prices. With rising interest rates, it’s hard to make rental properties work. Borrowers are walking away from deals, leaving lenders with the mess. I’ve had borrowers invest a lot of their own money and still end up in foreclosure. It’s not common, but it happens. And defaults, especially on construction projects, can quickly eat up equity.

Experience has taught us that the real risk comes when a borrower walks away, especially if they’re not managing the project themselves. We’ve seen situations where a property is only 50% renovated, and the lender is stuck with a half-finished project. We prefer to see borrowers put more money in upfront. If they’re invested from the start, the deal runs smoother. When borrowers have skin in the game, they’re less likely to walk away. My approach with borrowers is straightforward: I don’t want to babysit you. If you put down more money, it makes the transaction easier for everyone. The more vested they are, the quicker the draws and the fewer issues with micromanagement.

Experience has taught us that the real risk comes when a borrower walks away, especially if they’re not managing the project themselves.

It’s essential to have a good balance of funds upfront. If someone’s only putting in $27K cash to close on a $150K loan, that’s a red flag. I don’t want to compete with lenders who focus purely on low rates and high leverage. If a borrower is only concerned about that, I’ll let them know we’re the “Plan B” lender. It’s not about closing every deal—it’s about building solid relationships with clients who value speed, expertise, and reliability. Some borrowers prefer a straightforward transaction, and that works for us.

Bryce
Exactly, I think we’ve both talked about the importance of not competing on volume. It’s not about being a “points machine”. Cherry-picking the best deals is the way to go. I’ve had a mental shift too. There’s value in working with high-level clients who understand the value of good service and efficiency.

The difference between B2C and B2B is night and day. From my experience, B2C is a pain. I’ve sold $10/month software subscriptions, and some clients want everything under the sun. Then I’ve had $10,000 clients who just send a wire and say, “Let’s get started.” B2B is much smoother.

Jason
Exactly. That’s why we only run a mastermind for high-level lenders and charge a premium for it. We’re not in the business of babysitting. We’re happy to provide consulting, but it’s more about offering expertise and insight. We’ve had people reach out saying they have millions to lend but don’t know what they’re doing. We help them navigate that. And that’s how our mastermind group started. We didn’t expect people to value our insights as much as they did. As a result, we’ve developed a consulting arm alongside our lending business.

We also have a podcast, the Private Lenders Podcast, where we discuss everything from current trends to real case studies. We bring in other experts and share knowledge from our experiences. The podcast is available on all platforms, and it’s a great resource for anyone looking to learn more about private lending.

Bryce
I’ve listened to nearly every episode of the Private Lenders Podcast. It transformed my business, helped streamline our operations, and improved our systems. If you’re trying to improve your business, I highly recommend it.

Jason
It’s funny how much you learn when you start teaching others. We didn’t have mentors early on, just a lot of trial and error. And we’ve faced every situation you can imagine—borrowers passing away, defaults, and more. We’ve learned a lot from those experiences, and now we try to pass that knowledge onto others. It’s all about adapting to the situation. There’s no one-size-fits-all playbook for this business.

Bryce
That’s the beauty of this business—everyone operates differently, and there’s no right or wrong way. Some people stick to a formula, but others find their own path.

Jason
Exactly. We’ve been doing this for 20 years, and it’s worked for us. What we’ve learned, we now share with others, and that’s been fulfilling. Running our mastermind and helping others sharpen their skills keeps us on our toes too.

Bryce
Thank you so much for taking the time to chat today. This has been so helpful for me—and for everyone listening. Your experience and insights are invaluable.

Jason
Absolutely! I had a blast. Thanks for having me on.

 

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hardmoneybankers.com
Hard Money Bankers Podcast
[email protected]

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