FInd Out How Hard Money Lenders Work

FInd Out How Hard Money Lenders Work

It’s easy to succeed in real estate as long as you get the funding for your investments from various hard money lenders. But even if you do find the right properties, you will not always get the loan with your lender.

90% of hard money lenders out there do not give hard money loans for properties that need work. Most of the lenders who do approve such loans don’t always keep their rules the same.

Most lenders won’t be able to fund all the deals despite of so many claims that they have all the money that you need. Successful real estate investors pride themselves on being able to distinguish between lenders who can help them and the lenders who can’t help them. That’s the secret behind their success with real estate…

Here are the different types of private money lenders that play the real estate game:

1. Commercial money lenders
2. Development property lenders
3. Bridge construction lenders
4. High-end home lenders
5. Residential hard money lenders

If your business model involves fixing properties and selling them for profit, it’s better to choose a residential hard money lender.

]]>

The fund source for all these lenders are quite different which tends to affect their decision making process. Some of these fund sources don’t approve loans to real estate investors that invest in properties that need repairs.

Given below are the various funding sources:

1. Bank lenders – Almost 70% of the hard money lenders rely on the bank for funds. These lenders do a complete check on the property before giving out a loan. They sell the various loans and their documents to individuals or firms in the Wall Street.

At Wall Street, they have rules when it comes to funding different properties. 90% of properties real estate investors put under contract don’t qualify for approval. These lenders are likely to reject your loan application for wholesale properties.

2. Lenders with private investors – There are certain hard money lending firms throughout the country that operate with a bunch of private investors. These private investors are high net worth individuals that are looking for a fifteen-twenty percent return on their investments. That’s why they trust the real estate more than the Wall Street.

These lending firms are called as private hard money lenders. Even though they don’t sell the loans to any external source, they tend to change their property approval guidelines often. There are actually two different kinds of hard money lenders.

Most lenders don’t have a stable decision making process. They change the property approval guidelines based on their needs. Such lenders are likely to give you a hard time.

You cannot be sure of your loan being approved even if you find the right property. You can’t rely on them to fund all your property deals every time.

But there’s a small percentage of private hard money lenders who keep their guidelines firm and have a background in real estate investing. Such lenders always stick by their rules when it comes to approving properties.

I’d suggest that you get their property approval rules in writing from these lenders and find properties that match their rules. Real estate investors with bad credit get loans from these investors as long as the property meets their guidelines. As a real estate investor, finding a good residential hard money lender is the first step to success.

Related Hard Money Lender Articles