Hard Money

Before you apply for a loan, you should know a little bit about what Hard Money is. Hard money is a type of private investment that is often used to finance real estate transactions. These loans are usually provided to investors for a particular type of property.

Pros of Hard Money Lending

The money can come from many different sources, from personal relationships with hard money lenders, to national online lenders. Some lenders focus on investors who rehab and flip properties. This means that most businesses can get cash faster. Another advantage of a hard money lender is that they don't limit the use of loan proceeds.

When choosing a hard money lender, it's best to research their reputation and portfolio. While many hard money lenders don't keep a large amount of capital on hand, a genuine hard money lender will be willing to see collateral before committing to a loan. It's also best to choose a lender that offers competitive rates and terms. It's a good idea to have a few hard money lenders in your network.

Cons of Hard Money Lending

Although hard money is an attractive option for investors, there are some disadvantages to it. First, most people who consider a hard money lender have a good credit history. Because hard money loans are funded with no strict underwriting criteria, you may even be able to get one even if your credit score is not ideal. 

Rates tend to be high so be sure to shop around for hard money loans. You may be turned down multiple times before you get a hard money lender that will work with you. Be prepared to get turned down a few times until you find the right person to lend you money. 

Hard Money Tips

Some tips I've used that has been especially effective is to prepare an investing package. Go to Real Estate meet ups to network. Talk to small local banks. each time you request for a hard money loan and are rejected ask them why. 

Include more information to your request for the loan supporting the reason the previous lender rejected. Move on and build up the offer so that it becomes more enticing to the next hard money lender. 

Here is a list of ideas to add to your hard money loan request:

1. Provide your lender with an executive summary
2. W2s for 2-3 years
3. Tax Returns for 2-3 years
4. Proof of assets of other titles, deeds, and other documents of other properties you own. 
5. Proof of sale of previously owned properties or assets
6. Proof of rent payments if available
7. Provide previous successes in your real estate deals
8. List of Modifications and cost estimates you plan on making
9. Show lender images of the property
10. Detailed plan on how you're going to get the lender their money back plus their interest or fees. 

This list is a solid base for where to start. If it's not possible to get some of the listed items don't worry. This is why you ask the lender that rejected you why they denied it so you can build up the requests value for the next hard money lender you approach. 

This is a surefire way to get what you want from hard money loans. Rinse and repeat. Good luck with your deals!