Hard Money Lenders

Hard Money Lenders make impossible deals, possible. They consistently lend when no one else will.

I have yet to see a conventional lender provide funds for residential real estate which needs rehab. It may exist, but I have never seen it in my 23 year experience.

Rehab projects are Hard Money Lenders primary focus. If you buy using Time Value Real Estate Investing principles, you will receive enough to purchase and rehab a property...with no money down.

These lenders are eager to lend money on good real estate deals. The move quickly and decisively in making sure your purchase is completed.

They take all the risks in allowing you to purchase properties. Especially for no money down transactions. In return they receive premium fees for the use of their money.

That is a reasonable trade off, since you are now are able to confidently write contracts on fantastic deals. The profit on these deals dwarf the extra fees paid.

Your credit rating is generally not a big deal, if your deals are good. However, your credit must be good enough to refinance out of their money, so they can recycle it.

Most Hard Money Lenders limit their loans to between 65-70% of a property's value. This is called "Loan to Value" or LTV. On a $100,000 property at 65-70%LTV, the loan would be $65,000 - $70,000.

As you can see, their terms force investors to pursue discounted properties, to obtain their financing. This actually serves as a protective net for new investors or those not familiar with an area.

These lenders absolutely know the value of your property. Though most will either use an inhouse appraisal or order an appraisal from a close outside appraiser, to have a hard copy.

If a Hard Money Lender turns down a deal, due to insufficient value, be very happy. They know values better anyone involved in real estate. This includes appraisers. They will know if an appraisal is legitimate. If they turn down a deal, you should not pursue it. They will have saved you from paying too much.

Most are active or retired investors, with a ton of experience. They usually manage a pool of money from a variety of investors, including their own money. They must lend to make healthy returns on their money. So if they will not lend on a project, it is generally for good reason. They want to lend.

Finding this type of Lender is relatively easy. Look in your Sundays Paper real estate area. You will usually see them in the "money to lend" section with small ads throughout the Real Estate area.

In Pt 7, you will learn more specific ways to find them.


From Hard Money Lenders, back to Investment Property Financing.