5 Point Hard Money Loan Checklist

Your Hard Money Loan Plan

There is no doubt that when looking to make a real estate investment, choosing a hard money loan is a great option. However, many people do not get approved for the loan because they were caught off guard with the loan application requirements. To ensure a better chance of having the loan approved, check out our checklist below.

 

The Hard Money Loan Application Checklist

 

Location:

It has taken some time, but you have found the right investment. However, the location may not be in the best of neighborhoods. This will quickly send a red flag to your lender. The collateral for the loan is intertwined with the investment property. The lender will only give you a loan if they feel that their investment is safe. You should have pictures of your property as well as the surrounding areas to give to your lender. This will allow them some visualization into what they are loaning their money to. Having a number of comps for the properties that surround yours will be helpful as well.

 

Repayment Plan:

How are you going to repay the loan at the end of the term? Hard money loans are for a very short time period. You are going to need a plan on how you will be repaying the loan. Whether you hope to sell the property or refinance it, your lender is going to want to know your exit strategy.

 

Documentation:

Even though the hard money loan is all about the investment property, your lender may need other documentation. They may ask for income verification, what other assets you may have, and what your credit is like. Having all your documentation together and organized will make for an easier process.

 

Bring Your Game Plan:

The Hard Money Lender or Private Money investor is going to want to know what your game plan is. If you are going to renovate the property, make sure you bring all quotes from any contractor that you have talked to. By specifically laying out your plan and the costs associated with the plan, your loan is more likely to be approved. If you have made investments in properties before, show your lender what you did with them. Your experience and track record will count.

 

Step-Up:

Make sure that you are ready to step-up to the plate. If your lender calls, do not wait two days to return their call. A sense of urgency is important with these lenders and they need to be reassured again and again that you really want this loan. If more documentation is requested, try to get it to them within a 24 hour window. This is not the time to lay back and wait to see what happens. If you want the loan, it’s up to you to communicate in a timely manner.

Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.

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Communicating with Hard Money Lenders

How To Communicate Effectively With Hard Money Lenders

Hard money lending is a very different animal than traditional lending for real estate investing. Instead of dealing with an employee checking off boxes in a file, when you work with a hard money lender, you’re working with an investor just like you. This means that your communications can be much more direct and much more symmetrical. After all, your lender is looking for the same thing you are — a profitable transaction.

 

Hard Money Lenders Want Deals

When you work with a traditional lender, the loan officer’s primary job is to protect the bank by not making bad loans. If he makes a good loan, nothing much will happen but if he makes a bad one, he could get fired. A private lender comes to the transaction knowing that there’s a cost to not making a loan. If he can’t work something out with you, his money will continue sitting at a low rate of interest. With this in mind, the best hard money lending conversations are held from an attitude of trying to make a deal happen, rather than trying to prevent one.

 

Be Prepared With a Deal Story

Since private lenders are investors like you, they’re usually looking for a deal story, just like you. This doesn’t mean that they are looking to make foolish or reckless loans. Instead, it means that hard money lending is about more than just checking boxes in the file. Exact numbers might not be as important if you can answer the lender’s questions and show how it is a good loan for him to make. This is one of the reasons that investors turn to hard money lending for deals that are lucrative but also outside of a traditional lender’s box.

 

Be a Partner

Hard money lenders can be partners. The nature of their financing means that they will take a more holistic view of you and your application package, just like a partner. In addition, many of them are former real estate investors. Talking with them like a partner won’t just make it easier to build a relationship that could lead to a closed loan. It could also give you the advice that you need to turn an almost-failed deal around or to turn a good deal into a great one.

Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions, about private money loans and private money lending.

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