If you’re thinking of approaching Hard Money Lenders for real estate it can be quite intimidating but it doesn’t have to be.
If you want a real estate deal that you can’t afford, getting a Hard Money Loan could be what you need. As long as you’re prepared, you’ll be fine. Just make sure that you have everything mentioned in these five steps covered.
If a Lender is going to take you on, they need to know that the property is going to be a safe investment which is fair enough. Take a good look at your potential property through their eyes. You may have fallen in love with it but if it’s not in a great neighbourhood, you may not get the loan. This is because Hard Money is collateralized with the property so if a Lender doesn’t see at least a return on their money, you’ll be wasting their time…and yours.
2. How are you Going to Repay the Lender?
These types of Loans are usually only for 1 to 2 years long. That is considered a short term loan. The Lender will ask how you propose to pay the money back so before you go and meet them, have a plan ready. They may expect you to sell or refinance the property. If you’re able to tell your potential Lender how you’ll pay up – you’re much more likely to get the loan.
3. Have all your Documentation Ready
Even though your Loan will usually be collateralized with the property, the Lender will probably want to know about your own financial circumstances. Again, this is fair enough if they are going to be loaning you a large sum of money. Take all the documentation you have regarding your income, assets and credit scores to maximize your chances of getting that loan.
4. Bring Your Research with You
The Lender might not be too happy to just take your word for it that your real estate is awesome. Make sure that you can answer questions about the property. Do you know how much other comparable properties in the area are going for? If not, find out and type it all up or print it out. If ‘your’ property is a fixer-upper, get contractors in and take quotes for the work to your Lender. It’s also worth taking photographs of not just your property (inside and outside) but of comparable properties and of the surrounding area.
5. Keep In Touch and Be Available
A potential Lender will be much happier if you quickly get any information that they may request and return it to them promptly. Give the Lender all your contact details and return calls as fast as you can. If you come across as not interested, why should your Lender be?
This is a business transaction so if you treat it like one – by being smart, polite, businesslike and respectful – you are much more likely to get the Loan that you need.
We wish you every success!