Have you been turned down by traditional financial institutions when looking for real estate investment finances? You should by now be aware that alternatives exist in the form of hard money lenders. If you have resolved to go this way, where do you start? What qualities or attributes should you look for when hunting for the most preferred hard money lender?
It is important to note that not all hard money lenders actually deliver what they promise. Do not settle for the first one that you come across. Instead, compare the lending terms, expertise and history of various hard money lenders before making up your mind. The following are basic yet profound attributes that you should have in mind.
Size of the hard money lender
A hard money lending company needs to be big enough to meet your expectations. The lender should have enough professionals to handle your loan request, process application and disburse funds quickly, efficiently and reliably.
You do not want to deal with a briefcase company where only one individual is the accountant, risk underwriter and credit officer at the same time. Let your colleagues, family members or friends who have borrowed money this way advise you.
Rich experience in the relevant sector
You might not want to borrow hard money to build your residential empire from a company that has only done commercial real estate lending. Essentially, the appointed lender must be thoroughly aware of the market dynamics not only in the sub-sector.
More importantly, they should understand the real estate ecosystem in your state, county, city or town. A wealth of experience comes with deep familiarity of government regulation, legislation, historical information, opportunities and risks in the industry.
Capital worth of the lender
If your proposed real estate investment is worth $250 million, you need to be sure that the lender has matching financial muscle. You do not want to engage a lender who already has loaned out too much money to other like-minded borrowers.
Note that some lenders will promise to finance you in installments as and when previous borrowers service their loans. If those investors default on their loans, you will be left with an incomplete project. If the lenders are worth their salt, let them show you their books and statements of accounts.
Soft qualities of professionals
Have you started your loan discussion with several hard money lenders? What are their communication skills like? Do they answer the phone whenever you call and reply their emails promptly? If the answer is yes, you are closer to starting a beneficial relationship.
Do the pros at your appointed hard money lender offer expert advice, tips and tricks of the industry? Learn from their expertise and fine-tune your real estate investment plan. You do not want to deal with stone cold lenders who never warn you of risks or notify you when opportunities arise.
Your process begins by finding a handful of qualified hard money lenders to communicate with and compare. Luckily, our platform makes that as quick and easy as possible. Simply answer a few quick questions about your upcoming real estate investment and we will automatically match you to hard money lenders across the country. Once you have settled down on a couple of hard money lenders, you can then compare quotes, interest rates and fees. If possible, talk to individuals who have successfully borrowed money with these companies and understand their experience.