5 Experts’ Tips on How to Find Hard Money Lenders for Real Estate Investing in 2020
Finding a hard money lender to fund your real estate investing project is easy. Just make a search online and choose from many companies from the offered results. But where and how can you find a good hard money lender?
Checking reviews and information on their websites is not enough to make sure the company is exactly what you are looking for. When interviewing lenders, it’s important to know what qualities you are looking for and ask the right questions.
House Cashin reached out to reputable US hard money lenders and asked them how to choose a reliable private money lending company that you will want to use again.
Expert Tips by 5 Hard Money Lenders: Finding the Best Private Money Lender to Get a Loan From
#1. Eugene Oller
When looking for a good hard money lender, make sure you are able to talk apples-to-apples about loan programs between firms. The term of the loan is a very important aspect to touch base about first.
A 6 month loan vs a 12 month loan could be the difference in thousands of dollars in fees if not properly negotiated prior to closing.
Another aspect to clear up between lenders are loan-related fees. Many lenders will describe their fees up-front as a couple points and maybe a small fee. However, once at closing the borrower will see many other fees listed on the HUD that they were not aware of prior to closing. READ THE FINE PRINT ON ANY LOAN OFFERS.
Another aspect to consider when looking for a good hard money lender is the amount of research a lender puts in prior to making a loan offer. Your lender is your biggest partner in that they have the most money in play throughout the course of your project. Lenders not only provide funding, but are expected to provide ample feedback on the feasibility of the project.
This is one of the most useful things a lender can provide to you. Always ensure your lender is doing enough research for you to feel comfortable about the project before closing.
Eugene Oller has extensive experience in loan underwriting, banking and finance, financial analysis, and risk management. With a Bachelor of Business Administration from Baylor University and a year of experience of working at an asset management company, he is now an underwriter at Lone Star Hard Money—Dallas–Fort Worth Metroplex leading private money lending company that specializes in loans for residential and commercial properties.
#2. Shari Peterson
When you have a deal that has been accepted and you are ready to make some profit, the most important step is choosing a reliable hard money lender. Some questions you should ask are:
- How much money do I have to put down? Depending on your experience and the deal, you may need to put from 5% to 20% of the loan amount as a down payment.
- What if I don't have that amount of cash to put down? Can the hard money lender help you get that money?
- What are ALL of the costs I'll have for this loan? You should be given a clear idea of all of the costs, from the points to closing costs, inspection and appraisal fees, and interest rate. This can vary widely depending on your experience and credit score.
- How quickly can you close? It would be reasonable to expect that your lender should be able to close within 10-12 business days.
- What do I need to do to qualify? Usually there is a minimum credit score or cash reserves that you must have. Find out exactly what the lender requires.
- How quickly can I reach you? The last thing you want is a lender who doesn't respond VERY QUICKLY to your calls and emails. You should have their cell phone number and direct email.
- How many years of experience do you have? This is important. Every deal has its quirks and twists and turns. The more experienced your lender is, the more likely they will be able to navigate through all of the obstacles that may come up.
Shari Peterson began her career as a real estate investor in 2007 doing short sale flips, subject-to deals, rentals, and fix & flips. After the crash in 2008, Shari developed a network of private lenders to provide her the cash for closings in exchange for a fee. At that time, Shari changed her focus to provide transactional funding for wholesalers who are double closing. Over the last 10 years Shari’s business — Capri Capital LLC — has expanded to offer a variety of real estate investment services, including hard money.
#3. Chris Goulart
When looking for a good hard money lender, one thing you should look for is service. There are many hard money lenders out there, but not all offer personalized service.
Most people are using hard money loans because their transaction is out of the traditional lending box or they need funding fast. In both scenarios, having someone you can speak with and reach easily is of great importance. Nothing is worse than needing to close in ten days and having your chosen hard money lender refuse to return your calls!
When calling hard money lenders, you should discuss your scenario upfront. The person you speak with should be able to answer basic questions and be knowledgeable about the loan process. While you may not be able to get a firm quote upfront due to the nature of hard money, you should feel comfortable with the person you are speaking with.
Do they have experience in the business? Do they take the time to understand what your goal is with this funding request? These are questions you should feel out upfront, as having to change lenders in the middle of the process will only cause delays.
Chris Goulart started in the traditional mortgage industry in the early 2000's and started doing hard money about a year prior to the crash. During the crash, funding was difficult to obtain, so Chris moved into private money full time, specializing in helping people get funding who deserved financing, but had been turned down elsewhere. Now Chris is the Manager and Broker Associate at All California Lending.
#4. Bill Frey
You should look for the track record of the lender, their reviews online, and the source who has provided you with their contact info.
Reputable lenders will have their own website, can demonstrate prior closings, and have positive reviews and references out there. Beware - there are many scam artists looking to collect a deposit up-front, and show no results. We have a $289 application fee, and only get paid our commission when the loan closes.
Bill Frey has over 10 years in the commercial loan industry. After being a commercial loan officer and Vice President at three commercial lending institutions, he is now a co-owner of Bellwether Funding LLC— a Commercial Real Estate Financing firm.
#5. Ndukwe Kalu
Find a hard money lender that has been a real estate investor. We view ourselves as a partner with our clients that can offer expertise on how to structure a deal and execute the business plan.
You want a lender partner that has walked in your shoes and can guide your through the process. A lender that has been a real estate investor knows the intricacies that go into a deal, like the importance of getting draws out to contractors so that are stay happy and on the job site.
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