How to find a hard money lender

Author: Moshon Reuveni

When you need to get a real estate loan, and banks won’t do it fast enough, you can try to arrange the loan with private investors through hard money brokers.

There are two facts you should know about hard money loans:

A. Hard money loans are based mainly on equity. (Mainly but not only)

B. Not all hard money loans are the same.

It is a misconception that only equity counts in approving hard money loans. Strong equity pretty much guarantees that you can get the loan, but the maximum loan amount, the rate, and the terms are also subject to the borrower’s credit, income, and other factors. Because hard money loans do not have the restrictions that conventional and government loans have, you can find a huge number of hard money loan programs.

Knowing how to find hard money lenders will help you to save time and money when you must have a loan done, and no bank will touch you.

The most common mistakes when looking for hard money lenders

  1. Randomly searching for lenders
  2. Not having loan application and credit report
  3. Not having a comprehensive property profile ready
  4. Wasting time explaining loan request to random lenders
  5. Not getting large enough number of lenders to compete for the loan
  6. Accepting inferior loan program

Getting on the internet searching for hard money lenders, randomly completing forms on websites, or calling hard money lenders is not an efficient way to find hard money lenders.

Ten steps to close a loan with a hard money lender:

1. Prepare a loan request pitch. It should include all the important aspects of the loan requested, yet it should be too long. The purpose of the pitch is to get the lenders interested enough to call you and ask for more information before they approve the loan. A loan request pitch has three parts:

a. The request itself - how much money is needed, for how long, and how fast to fund.

b. The property pitch – Address, description of the property, LTV, and property condition.

c. The borrower pitch- Borrower credit, income, additional real estate, money in the bank, and experience.

Never lie or exaggerate any of the facts about the property or your financial situation. The lenders will find out about it sooner or later, and you should disclose it in advance.

  1. Search the internet for at least 20 hard money lenders and get their contact information
  2. Email the pitches you prepare in steps 1.
  3. Prepare documents: loan application, credit reports, bank statements, Bpo, or appraisals
  4. Get replies from interested lenders, answer questions, and provide additional documentation.
  5. Insist on getting LOIs or loan proposals in writing.
  6. Compare the results pick up the most promising lenders
  7. Check the lender's credibility and past performance
  8. Negotiate and pick up the best proposal
  9. Keep 1-3 lenders as a backup in case the lender you selected fails to deliver. Step #10 is important. Unfortunately, hard money lenders can delay funding or cancel the loan in the last moment, sometimes even after the borrower sign the loan document. Having a contingency plan is a must.

There is more to learn about hard money and other types of loans. The above is a very brief description of the steps needed. Use it or check the advance software solution of the Lendersa® super loan calculator.

Lendersa® is a fin-tech company that developed a new technology to find the most fitted loan programs based on any given loan scenario. Lendersa searches thousands of lenders loan programs in seconds and incorporates all the ten steps described below, plus giving you additional tools to analyze and compare loan programs for your client.