Hard money lenders are different from traditional banks. They are private individuals who offer hard money loans to people. Sometimes it is hard to find them in the U.S. However, this article will guide you on what is hard money lenders, how to find these hard money lenders. Also, it will discuss hard money lenders for beginners and the best hard money lenders in California.
Before going into what is hard money lenders don’t you think we should first take a brief look at a hard money loan.
Hard Money Loan
A hard money loan is a type of loan that is secured by real property. Hard money loans most times are not what people consider first when trying to get a loan. Hence they are loans of “last resort” or short-term bridge loans. This type of loan is generally what is used in real estate transactions. However, the lenders are usually individuals or companies and not banks.
Hard money loans are essentially short-term loans, not more than one to five years. However, their interest rates are usually higher than they are for bank loans. Hence, no one would like to keep them much longer.
Now that we have known a little bit about what is hard money loan, let us now discuss what is a hard money lender.
What Is Hard Money Lenders?
The question should be who is a hard money lender? Because hard money lenders are individuals who give hard money loans to people who need them for real properties. Hard money lenders are not the usual commercial banks that offer loans to individuals. They often give these loans only to people who have experience in real estate investment.
However, hard money lenders aren’t subject to the same regulations that traditional loan lenders are. Hence, they are free to make their own rules about what credit scores or debt-to-income ratios they want their borrowers to have.
Indeed, you can find a hard money lender who will give you a loan even if you’ve been denied by traditional lenders. They are not concerned with the borrower’s creditworthiness, but the value of the property being purchased.
Nevertheless, a hard money lender may loan on any type of non-owner-occupied real estate. However, they often prefer cases with a fairly quick exit strategy. Hence, they are assured of their payment by the end of the loan term.
Hard Money Lenders California
Most times, borrowers often prefer working with hard money lenders in California than traditional banks. Maybe because either fund are needed in a short period of time or traditional banks are not an option. Indeed, the interest rates associated with hard money loans are high in California. However, borrowers oftentimes seek this type of funding in order to secure their loans quicker.
Furthermore, hard money loans for California are ideal for borrowers who are looking for a rehab fix and flip loan, buy to rent loan, bridge loan. However, one major advantage of California hard money loans is speed. Once a hard money loan is approved, the loan can be funded within days or weeks. However, it takes several months in a traditional bank and often doesn’t lend in this scope. Another benefit of hard money loans is flexibility. Traditional bank loans most times have inflexible conditions. While hard money lenders do have precise standards that a borrower must meet to be approved, they are usually more reliable than traditional banks.
Now let us discuss briefly on how to find a hard money lenders.
How Can You Find A Hard Money Lender?
Hard money lenders can be private individual lenders or small businesses. However, each one has several requirements for their lending criteria. Some of which are minimum credit score, property value, loan to value (LTV). These are some of how to find a hard money lender.
- Googling “hard money lender” with your city or state name (Example “Hard money lenders in California).
- Always attend your local real estate investment association (REIA).
- Try to Check websites specific to investing or general business websites, like LinkedIn.
- You can also ask a real estate agent who specializes in working with investors.
Nevertheless, collecting a hard money loan, real estate investors should consider the financing cost. Also, consider whether it’s worth it for the specific investment property in today’s market. Again, ask the lender what their lending guidelines are and what the funding process is like for their company. Then try to develop a relationship with them. Hence, the lender will allow you to close deals faster when you need to.
Let us discuss briefly hard money lenders for beginners.
Hard Money Lenders For Beginners
A good hard money lender is one of the greatest resources a real estate investor can have. First-time investors in the real estate business need the best hard money lender.
Beginner investors usually find it hard getting a lender to fund a deal. This is indeed true with fix-and-flip loans. The lender has no way of knowing if the borrower is competent in managing the construction and other things involve.
Hence, most private lenders only work with experienced investors. They expect a borrower to have some successful deals in their portfolio to get approval for a loan. They usually require some sort of verification of the previous investments.
However, for a flip, they may require the closing documents from the initial purchase and the sale. For income property, they might look for evidence that shows the borrower owns the property as well as recent income statements or tax returns.
Best Hard Money Lenders In California
There are actually no best hard money lenders in California. Let’s list a few of the hard money lenders in California.
#1. David Kutner- The Friendly Lender
He is one of the hard money learners in California. It opens at 9.00 am and closes at 6.30 pm. It, however, has 94 reviews and has a virtual consultation platform.
#2. First Choice Lending
This is also another one of the hard money learners in California. It opens at 9.00 am and closes at 7.00 pm. However, it has 29 reviews and doesn’t have a virtual consultation platform. But can also request information.
#3. MMC Lending
This is also another one of the hard money learners in California. It opens at 8.00 am and closes at 5.00 pm. However, it has just 23 reviews and has a book now bottom.
#4. Logix Federal Credit Union
This is also another one of the hard money learners in California. It opens at 9.00 am and closes at 5.00 pm. However, it has 81 reviews and also has a virtual consultation platform. They are into Bank and credit unions, mortgage brokers, and investing.
#5. Urban First Funding
The urban first funding is one of the hard money learners in California. It doesn’t have an opening or a closing time. However, it has 6 reviews and also doesn’t have a virtual consultation platform. They are only into mortgage Brokers with a request information button.
Conclusion
In conclusion, how to find hard money lenders is not easy especially for beginners. It should be noted that a good hard money lender is one of the greatest resources a real estate investor can have. First-time investors in the real estate business need the best hard money lenders.
What are hard money lenders FAQ
What are hard lenders?
Hard money lenders are individuals who give hard money loans to people who need them for real properties. Hard money lenders are not the usual commercial banks that offer loans to individuals. They often give these loans only to people who have experience in real estate investment.
What hard money lender means?
A hard money loan is a type of loan that is secured by real property. Hard money loans most times are not what people consider first when trying to get a loan. Hence the
