Author Archives: Shawn Molem

Top 3 Reasons a Hard Money Lender Will Decline Your Real Estate Loan

1. Neighborhood: The 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. Location: The property is located outside of a major metropolitan area in a rural location where there are no sold comparable 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. Borrower’s Cash Reserves: Particularly on a rehab loan, a borrower who seems to be grossly undercapitalized is a sure decline. Lenders want to make sure a borrower can afford to carry the loan.

Beware of Bogus Lenders Posing as Private Investors

Have you ever had a hard money loan to fund and you were forced to go and look for funding? It’s a jungle out there. Because the world of commercial financing is unregulated by ‘Big Brother,’ there are a lot of criminals in the space of private money lending. You will find both brokers who collect upfront fees from borrowers without providing a loan. You will find bogus lenders hiding behind decent brokers too; these lenders have no intention to lend and are also known to charge upfront fees and then never deliver on funding.

Here are some red flags to look out for to help spot bogus lenders posing as private investors:
1. If you have a hard to finance deal and a lender or broker gives you a term sheet or Letter of Intent with almost no documentation.
2. Large upfront fees. Although legitimate lenders also charge upfront fee, pay attention to when a lender slaps you with an upfront fee. Also, do your homework online and see if you can find bad reviews. A trusted lender may have 1 or 2 disgruntled clients but this is a red flag.

Remember, if it sounds too good to be true, it probably is. Do your homework and don’t allow yourself to get caught up in a fraudulent lending scam

Private Hard Money Commercial Loans

Are you looking for funds to build or purchase a commercial real estate property like apartment complex or strip mall. Not to worry, now you can apply for hard money business loans. All you need to do is to have all your financial documents prepared and provide the lender with all the information they require to finance your project.

Private hard money lender are not traditional banker or financial institutions. They are a completely separate lender and their clients are higher risk from a traditional borrower. Mostly their interest rates vary an upwards range of 20 % as compare to other lenders. Most of the lenders that offer hard money business loans are helping clients that are close to financial distress on your commercial real estate venture.

Below are some of the things that Private hard money lender put into considering you for hard money business loans:

• Corporate credit rating. This shows a lender how you have handled your previous debts and how you have repaid them in a timely manner.
• Business plan. What is your business and how are you planning to make money? Since you are dealing with commercial real estate, you need to have other businesses committed to the building and leasing space. This shows the lender your investment is not going to lose money.
• Financial projects. Provide the lender with financial projection so they can see how timely you will be able to repay the loan.

Hard money lenders are typically found through the form of hedge funds and private equity groups.

Things You Should Know About Hard Money Lenders

If your are wondering how you can get a quick money, then you should consider applying for hard money. Hard money lenders are non-traditional banks who offer loans to property owners in exchange of money. Their terms and conditions are much more relaxed, however the rate of interest & fees charged is high as compare to traditional banks or financial institutes. The main criteria relies on whether there will be enough equity in their subject property that they can foreclose and still turn a profit. Anyone who has a pending foreclosure, bad credit or income that is difficult to prove may qualify for this type of loan. Since these lenders do not rely on the creditworthiness of the borrower, they ensure that if the borrower defaults then there are sufficient equity in the property over and above the amount of the loan.

Following are some of the things that should be kept in mind before approaching a hard money lenders.

1) Most hard money loans are short term loans so you need to make a exit plan before approaching the lenders.
2) Since the interest rates and terms are quite high and your real estate asset will be used to secure the loan, it is always good to have an exit plan.
3) Try to improve your credit score by paying off your debts so that you have a back up for refinance to pay off.
4) Go for a thorough research before locating a hard money lender. Select the lenders according to your needs. Once you provide your details about your loan request, the lenders will themselves contact you.

Approach Commercial Hard Money Lenders

Today there are number of commercial money lenders who are offering short term loans to borrowers with real estate backed properties as a collateral. The interest rate of private hard money lenders are higher if we compare to traditional banks or financial institutions, but still many people prefer approaching these lenders as it is easy to get loan approval from them as their lending criteria is much more simpler as compare to traditional lenders.

While approaching a financial institutions or banks they check all their criteria such as repayment capacity and credit history to justify the decision of whether to give a loan or not. On the other hand commercial money lenders have a different criteria as they are not credit driven or worry about the repayment capacity of the borrowers but assess the value of the property being kept against the loan amount. With the growing commercial money lenders it can also be seen that some commercial lenders offer only commercial bridge loans in deals like purchase and renovation of foreclosure properties, foreclosure bail out loans, rehab loans and mortgage loans for short term tenures like 1 to 5 years time.

Today in this fast communicating world a user can can apply online for the commercial hard money by filling in the form with all the details which shall be quickly processed within 5 business days as lenders do understand that investors are looking for quick money to invest in their business deals. It is up to the individuals and their circumstances to approach the hard money lenders as many benefit while some may end up paying heavy interest charges or losing their collateral due defaults.