Learn How to Get a Hard Money Loan

Demonstrate Investment Potential

After you’ve done your research, you must demonstrate to the lender that the property in question has potential. After all, they are more concerned with the property’s value than with your own financial situation.

Despite the fact that the loan is based on the value of the collateral, it helps to demonstrate real estate knowledge and that you know what you’re doing. Architectural designs, construction budgets, and contractor bid sheets will also be requested by the lender.

You’ll need to demonstrate the property’s worth, the surrounding neighborhood’s value, and its potential for growth, which you can achieve with publicly available data from a multiple listing service (MLS) like Trulia or Zillow.

Request a Loan

While typical loans might take months to process, hard money loans can be authorized in as little as two weeks. You’ll want to make sure that all of your documentation is in order, not just for the loan but also for the property in question.

Contractors and designers should be informed of the timeline as well, so they can begin working as soon as the loan is approved. Remember that the lender may still require personal or corporate financial information, such as tax returns, bank statements, or earnings reports.

This documentation should be ready to go. It’s also critical to maintaining contact with the lender throughout the application process and beyond—return phone calls and emails quickly. Because hard money lenders are not banks, they have substantially less capital on hand. If they believe you are uninterested in your project, they may move on to work with another borrower.

Take Care of Yourself

Real estate investing for novices is loaded with learning curve issues, but one that is very simple to overcome is removing your personal vulnerability. Never conduct business under your own name; always use a business name.