CALL US AT (310) 734 4044

3 Reasons Why a Hard Money Lender Will Decline Your Loan

How many times have you looked at a real estate deal and it made sense on paper but then you discovered something that turned the deal sour? A couple of years ago I did a blog post on a survey of a list of hard money lenders in the industry. The results of the survey were pretty interesting for both real estate investors and hard money lenders.

For real estate investors who use hard money loans to finance their investment purchases, from time to time they are turned down for a loan. In some of these circumstances, a lender may decline a loan on an investment property even though the real estate deal makes sense on paper. But why?

Essentially the top 3 reasons that a hard money lender may decline to lend on a real estate investment property include:

1. High Crime Neighborhoods: If your property is located in a high crime or extremely distressed area. Sometimes this is where the good rehab properties are found, but if most of the houses in the neighborhood are all boarded up, most hard money lenders will pass on the loan.

2. Rural Location: The property is located outside of a major metropolitan area in a rural location where there are no sold comparables within 2 miles of the subject property. Hard money and private money lenders prefer to lend in major metropolitan areas over rural locations. Although a real estate deal in a rural area may look good on paper, if there aren’t sold comps nearby to support value, a hard money lender may turn it down. Also, smaller market, smaller pool of buyers. There are exceptions of course.

3. Low Cash Reserves: Real estate investors who are strapped too tight for cash may also be turned down for a loan. Cash reserves are not verified by all hard money lenders but some lenders will require bank statements.

To learn more our property management services for residential and commercial properties, please call us at (310) 734-4044 or visit us at

(No Ratings Yet)

Join our Team
Magna Capital Group, Inc is actively seeking for self-motivated, driven loan officers to become a part of our successful and growing... Read More
About Us
The principal of the company has over 30 years of experience in the industry. Our mission is to treat our valued clients with honesty... Read More
Magna Capital Group, Inc., Real Estate, Los Angeles, CA
Accredited Real Estate Services, Magna has 30+ years of combined experience in the Real Estate & Financial Services business. Read More
Magna Capital Group, Inc is a full service real estate and financial services company. We provide specialized services to our clients... Read More
Mortgage Rates
Current Mortgage Rates Current Mortgage Rates Get Widgets

Real Estate Most Recent News

Zell Is Cautious on Real Estate

Sam Zell gained the nickname "the grave dancer" in the early 1990s for buying beaten-down real-estate properties and riding them to huge recoveries. During the recent downturn, he rarely has made it to the funeral.

Standard Deviation in Manhattan

The owners of the Standard Hotel have resisted unsolicited offers for the trendy hotel. But now they have decided to put it up for sale.

Blackstone Revisits Hilton Debt Deal

As Blackstone Group prepares to return Hilton Hotels to the public market, it once again is planning a huge mortgage-backed securities deal that will test the debt market.

Developers Bet Big on Seattle

Office space is going up on faith that companies such as and Microsoft will fill it as the city's technology sector booms.

Hong Kong Infrastructure Costs Escalate

The scope of infrastructure development Hong Kong has in the works is extreme even by its standards, with the pace of construction taking a toll on labor availability and straining budgets

Behind Venezuela's Odd Property Boom

Venezuela seems an unlikely place for U.S. companies to buy commercial real estate. So why are DirecTV, Avon, GM and other firms snapping up office buildings in Caracas?