What Do Hard Money Lenders Look For?

Believe it or not, hard money lenders want the same thing you want – a shot at a great investment. Remember: investing involves putting up your time and/or money with the intention of realizing a profitable return. When you keep this concept in mind, it’s astounding just how broad the investing arena actually is. High rise buildings, apartment complexes, condominiums and luxury office space can become a reality – not just a dream!
If, for example, your credit rating is bruised and you’re pressed for time, securing a hard money loan for a shot at a great commercial property – that’s investing.
On the flip side, if an altruistic, financially secure professional discovers that they can make a nice return helping people just like you find the financing they need in order to build their real estate empire- even if all other avenues have failed – that’s investing too!
Of course, as a hard money lender works to decide if yours is a worthwhile opportunity, there are other things they’ll want to know.
What Your Hard Money Lender Will Want to Know…
There are several questions any hard money lender worth a grain of salt will want to know:
o While your credit rating isn’t as important to a hard money lender, they do want to feel confident that you can actually pay them back. This means you should try to gather your W-2s for the past few years, bank statements for at least the last six months, as well as what you’re offering as collateral in the event that you might possibly default on the terms.
o Hard money lenders – across the board – will take diligent measures to accurately assess the value of the property you’re trying to buy. In addition to third-party appraisals, most hard money lenders will require that a personal on-site evaluation is made. Because hard money lenders DON’T want to be stuck managing a delinquent property, they need to determine if your potential property can be profitably liquidated QUICKLY! This is the primary reason that hard money loan to value ratios are often stricter than those in traditional financing situations.
o Hard money lenders will require that you actively participate in the “due diligence” portions of your loan. This means that you’ll need to do your homework to insure that there are no other liens or suits associated with the property. If any are uncovered, they’ll have to be addressed in order for the transaction to progress any further.
o Finally, hard money lenders want to have confidence in your commitment and professionalism. You can help boost their confidence in you by returning phone calls promptly, responding to inquiries in a timely manner, and by actually doing the things you’ve agreed to do.
When it really comes down to it, a typical hard money lender is a lot like the rest of the world at large. They want a good deal. They’re enticed by the opportunity to make a nice profit. They want to handle deals that are secure. They want to team up with borrowers they feel confident about. They have empires that they want to build as well – and together, both of you can win.
If you can find a way to show them that your investment proposition is one that can satisfy all of their criteria, you’re well on your way to establishing a VERY strategic alliance.
If you can set their investment fears to rest, then they can do the same for yours!
A good, solid investment always involves the proverbial “two way street.” As soon as you embrace this fact, you’ll be surprised at how often you’ll hear opportunity come knocking!