Considering using a hard money loan? Expect to sign a personal guarantee, here's why...

[Account Closed]

Here's a tip for working with hard money lenders.

Don’t expect to get a hard money loan without signing a personal guarantee. Lenders want to know you are personally involved and have a real desire to see the project through to an exit.

There are many considerations for a lender when looking at a hard money loan request. The bottom line is the lender wants to know how it’s getting paid back. Having the borrower, or members of the borrower when the borrower is an entity, sign a personal guarantee adds an additional layer of security for the lender. The lender wants to know the borrower, or member(s) thereof, is/are serious about the loan and seeing it through to a successful completion and exit.

Do you have hard money loan questions or tips? 

[Jay Hinrichs]

@Account Closed 

I have wrestled with this in my 30 years of doing HML's and have gotten thousands of PG's but I can't name one that we actually went after.. the issue being those ( and this is generally speaking) those folks that borrow HML by the time you would be in a foreclosure situation and have to move against the PG there is little to get.. its very expensive and darn near impossible to collect.. Just because you have a PG does not on its face mean your home free by any stretch... Super strong borrowers NOw a days will find better rates etc.

Now its customary for Banks ( commercial banks to ask for PG's)  most do .

So while I understand it completely in function I am not all that enamored with them as some sort of recovery mechanism to a loan gone bad.