Once you decide that hard money is the way to go, the next step is to find the right lender for you. Hard money loans can be useful tools for a real estate investor, however, not every lender will be a fit for your investment. As we all know, when you find a deal, you need to move quickly, but don’t let that need for speed discourage you from performing some basic due diligence on the lenders you contact.
Step One: Stop Comparing Hard Money Lenders with Traditional Lending Sources
The first thing that you have to do is stop comparing the rates and terms a conventional lender offers to the offers you will receive from a hard money lender. Hard Money loans are almost always riskier for a lender, and the rates and terms will reflect that. If you have perfect credit and can afford to wait 90+ days for a traditional loan, then a hard money loan is not right for you.
Step Two: Use Your Resources
So, where are you going to find a hard money lender? You’ve got a few options:
- Professional networking
- Local Real Estate Attorneys
- Google search
- Social media
- Referrals/word of mouth
Find a few different lenders to compare your options and make sure that you’re getting the best fit for your investment. Just because this is an alternative funding source doesn’t mean the rules don’t apply—they’re just a little different in some ways.
Step Three: What to Look For
Now you know where to look for a Lender, but what should you be looking for when you start comparing your options for hard money lending? Some factors are more important than others, but ultimately you want a reputable source that can fund your loan under terms that you can work with.
Look at things like:
- Reputation: The reputation of a hard money lender says everything. Check reviews and testimonials, as well as third-party reviews and ratings, to avoid scammers and bad deals.
- Speed and Flexibility: The best lenders know that you’re in a hurry to close a deal. They’ll have a simple approval and closing process that gets you exactly what you need with the terms you want.
- Rates and Terms: Speaking of terms, you need to make sure that you’re getting a good loan. Check out the interest rate and other terms of the loan to make sure that you aren’t paying too many fees and that you’re still going to get a good return on your investment.
Step Four: Start Funding Your Investments
Once you’ve found a hard money lender that you’re confident in and comfortable with, you can complete the application and approval process and get started on your next real estate deal. This is a high-stakes, high-stress business, but with a good lender on your side it can be less stressful than you think.
H&O Capital Funding has helped countless real estate buyers, sellers, lessees and lessors achieve their goals. Our legacy is unwavering commitment to the communities we serve. Houlihan & O’Malley Commercial Real Estate Services specializes in four distinct, yet overlapping, areas of business: Commercial Brokerage services, Private Mortgage services, Appraisal Services and Advisory services.
For more information on loans that we offer, visit our website.