How To Find A Hard Money Lender

How To Find A Hard Money Lender

Have you ever come across a screaming hot real estate deal, only to realize you didn’t have the funds to close it quickly? We’ve all been there as investors. Finding a hard money lender can be your ticket to snatch up those time-sensitive opportunities.

But not all hard money lenders are created equal. And finding the right lending partner for your business is crucial.

In this comprehensive guide, we’ll walk through everything you need to know to find the perfect hard money lender to fund your next money-making deal.

What Are Hard Money Loans and Lenders?

First things first, what exactly is hard money lending?

Hard money loans are asset-backed, short-term loans provided by private investors rather than banks. [How To Find A Hard Money Lender] is usually needed quickly, and the lenders make fast lending decisions based on the value of the underlying asset – typically real estate – rather than the borrower’s credit.

These loans are ideal for real estate investors who need capital to fund a project quickly, before selling or refinancing – like fix-and-flips, renovations, and new purchases.

[How To Find A Hard Money Lender] provides a fast way to get financing, usually in a week or less. But they typically come with higher interest rates and costs.

Pros of Hard Money Loans

  • Speed – close in days or weeks
  • Easy qualifications based on asset value
  • Funding power for time-sensitive deals
  • Flexible terms and conditions

Cons of Hard Money Loans

  • Higher rates and fees than traditional loans
  • Short repayment terms – often less than 1 year
  • Lower loan-to-value ratios required
  • Variable rates can increase over time

As you can see, [How To Find A Hard Money Lender] has its trade-offs. But when used strategically, it can be an invaluable funding source for real estate investors.

Key Factors To Consider When Choosing a Lender

Not all hard money lenders are created equal. And you want to find one that’s the right fit for your business goals and investing style.

Here are the most important factors savvy investors consider when shopping for a lending partner:

Loan Terms Offered

  • Interest rates – compare average rates
  • Loan duration – how long until it’s due
  • Loan-to-value ratios – typically 70-80%

Efficiency & Reliability

  • Speed of funding – days to close?
  • Certainty to fund – will the $ come through?
  • Responsiveness – good communication?

Flexibility & Customization

  • Loan size – minimum and maximum amounts
  • Loan purpose – just flips? Other projects?
  • Experience with different deal types

Fees & Closing Costs

  • Origination & processing fees – how much?
  • Prepayment penalties? Late fees?
  • Appraisal & third-party fees

Company Overview

  • Years in business – seasoned lender?
  • Loan volume – total $ funded
  • Number of loans issued – repeat clients?
  • Online reviews – what do others say?

Knowledge & Relationships

  • Market expertise – local experience?
  • Specialty – flips, new builds, etc?
  • Willingness to build a relationship

As you can see, the lender you choose can directly impact your success. So take the time to research and find one that aligns with your investing strategy and business goals.

10 Places To Find Hard Money Lenders

Wondering where to start looking for lending partners? Here are 10 great places:

Your Local REIA Group

Attending real estate meetups is a fantastic way to connect with fellow investors and lenders. Many have dedicated panels or mixers.

Real Estate Agents

Experienced agents often have relationships with local hard money lenders they can connect you with.

BiggerPockets Marketplace

This real estate forum has a directory of vetted lenders from around the country.

Google Search

A search like “hard money lenders in [your area]” is a good starting point.

LendingHome

This nationwide lender provides bridge loans from $75k-$15M+ at competitive rates.

Scotsman Guide

Directory of licensed mortgage professionals, many offering private funding.

Patch of Land

Online lender with a marketplace of vetted real estate debt financing providers.

LimaOne Capital

Top national lender focused exclusively on real estate investment loans.

American Financing

Provides fast bridge loans from $75k-$2M for investors nationwide.

LoanWell

Connects with local private lenders through their referral network.

Cast a wide net by exploring several of these options to find lenders that fit your needs.

How To Get Approved For a Hard Money Loan

Wondering what it takes to get approved? Here’s an overview of what lenders look for:

  • Credit score – A score of 600+ is usually sufficient, 650+ preferred
  • Equity in the deal – Plan for 20-30% as a down payment
  • Collateral – The property itself secures the loan
  • Experience – Some want to see your track record as an investor
  • Exit strategy – A realistic plan to pay back the loan

In terms of timeline, you can often get approved in 1 week or less. Here are the typical steps:

  1. Fill out a short application with your basic info, the property, loan amount needed, etc.
  2. Provide financial documentation – bank statements, tax returns, credit report, etc.
  3. Lender evaluates the deal – expected rehab costs, ARV, exit strategy.
  4. If approved, you’ll get a term sheet detailing the loan terms.
  5. Final underwriting and loan docs, then funding in a few days!

It’s a fast and streamlined process when you have the right lender.

Working With a Hard Money Lender: 10 Tips

Once you’ve found your lending partner, you want to nurture a win-win relationship built on trust and transparency.

Here are 10 tips for working smoothly with hard money lenders:

1. Clearly Communicate Your Needs

Be upfront about your investing plans, ideal loan terms, and projected timeline from the start.

2. Ask Questions & Get Clarifications

If you have any doubts or confusion, speak up! Don’t leave room for surprises.

3. Review All Documents Thoroughly

Understand every term and fee before signing on the dotted line.

4. Provide Organized Paperwork

Lenders appreciate borrowers who provide neatly organized documents.

5. Don’t Hesitate to Negotiate

Politely request better terms if needed – rates, duration, etc. Can’t hurt to ask!

6. Have a Profitable Exit Strategy

Lenders want to see you have a solid plan to pay back the loan.

7. Make Interest Payments on Time

Late fees add up quickly, so calendar all payment due dates.

8. Be Transparent About Any Delays

Appraise lenders early about problems to discuss options.

9. Maintain Regular Communication

Proactively share updates and quickly respond to lender inquiries.

10. Build the Relationship

View them as an ally and strategic partner in your business.

Following these tips will make the lending process smooth sailing.

Alternatives to Hard Money Lenders

Though hard money loans have advantages, they aren’t the only financing option. Here are a few alternatives to consider:

  • Private money loans – Borrowing from individuals you know at lower rates
  • Crowdfunding – Raising funds online from multiple backers
  • Home equity line of credit – Using existing home equity for cash
  • Transactional funding – Asset-based business financing products
  • Non-bank lenders – Companies like FundThatFlip, LendingOne
  • Traditional bank loans – More stringent but lower cost

Diversifying your access to capital from multiple sources is wise. Hard money lending is one arrow in your funding quiver.

Conclusion

Finding the right hard money lender is well worth the effort. When you secure a lending partner that’s the perfect fit, they can fund deals quickly and smoothly to accelerate your investing success.

We covered how hard money loans work, top sources to find lenders, approval criteria, ways to build win-win relationships, and alternative financing options – everything you need to strategically add these loans to your investing toolkit.

The key is approaching hard money lenders as valuable partners, not just transactional funders. Do your due diligence to find one that aligns with your business style and goals.

With the right lender relationship, you’ll have the fast funding source you need to act decisively when hot deals arise. Just make sure you have a solid exit plan to pay back the loan and maximize profits!

So go ahead and find that perfect hard money lender to start expanding your real estate empire. We covered all the tips and tricks to make it a breeze. Let the deals begin!