Be Careful Who You Source as a Hard Money Lender

Everyone is a Hard Money Lender?


With so many mortgage professionals finding they can’t make money on traditional loans, many of them are flooding into the private money lending industry and claiming to be a hard money lender. Most of these brokers don’t even have real lenders in their back pocket and many times will just refer your loans to another broker. A huge waste of time!

Then there’s the problem of the upfront fees. When you think you’ve actually found a real hard money lender, you will sometimes get slapped with an upfront fee. While some real lenders do charge upfront fees for inspections and appraisals, there are some fake lenders who pose as lenders and don’t really fund loans. These fake lenders just charge upfront fees to make money, versus making loans. This can be frustrating for borrowers who are eager to get a loan funded, only to find out they’ve been wasting their time with a fake lender.


Track Record and Recommendations are Important

When searching for a hard money lender, start with a reputable broker with a proven track record and with a variety of creative lenders in his/her back pocket. There’s a new hard money lender every day who pops up on any street corner. Use a seasoned hard money broker who has the best lenders on speed dial. Some of these hard money lenders don’t even use email, as many of them are just individuals with money. A seasoned hard money broker can get you the lowest cost, most creative financing out there and can negotiate with a lender to get you the exact financing you may require for a particular transaction.

If you’ve been searching for a hard money lender it can be a daunting and frustrating task. Navigate these uncharted waters with a seasoned, experienced hard money broker. Many people will tell you to skip the broker and go directly to the lender. But with the problems listed above, you are taking a risk of being scammed, or worse, getting the run around rather than getting the financing you seek.

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Benefits of Hard Money Loans

 4 Benefits of Hard Money Borrowing


To the inexperienced investor, hard money borrowing may seem like a most unusual and daunting way to find funding for a real estate project. On the other hand, more experienced investors understand that hard money borrowing actually offers some significant benefits to anyone looking to fund a single/multi-family or apartment deal. Here are the most important benefits:


The most common place to find hard money is through private money companies. These firms bring borrowers and lenders together to make their deals in a safe and thoroughly vetted environment. In addition, they offer a measure of real estate expertise that is difficult to find at traditional lending institutions. Finally, they provide access to a wide range of industry professionals – inspectors, appraisers and the like – that can help consummate a deal far easier, faster, and more affordably than with a normal mortgage.



One of the most significant benefits that hard money financing brings to the borrowing process is the versatility of the investors when it comes to meeting each other’s needs. While borrowers may need unusual terms, they are willing to pay for the privilege. In return for a slightly higher ROI, investors are willing to accommodate a wide range of payment terms from the borrowers. In addition, the seasoned investors involved in private money transactions are free to invest in any deal – unusual or not – because they have no loan committees or stockholders to report to. In short, they make their own decisions and can commit to any deal that they find attractive.



Hard money loans are consummated under the same parameters of traditional real estate mortgages. In addition to escrow requirements, appraisals and inspections are part of the process as well as all the necessary legal documentation to bind both the borrower and the lender to its term. In addition, these loans are usually structured so that the loan to asset value is relatively low. This means that both parties are quite interested in the deal being successful.



One of the best benefits of private money lending is that the lenders look to make their money from the interest payments made by the borrowers and not from any assortment of fees like traditional banks. While there will be some costs associated with completing a hard money transaction, they are generally defined upfront so you will know exactly what the loan will cost you prior to funding.

Call or contact California Private Money Lenders today and see how we can help you close your next real estate investment deal.

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