How to Find Hard Money Lender

Question

How do you find reputable hard money lenders that will lend in Ohio?

Corey Dutton · Answer

Cody Lutsch I would completely disagree. On of my investors has flipped over 400 homes and is a multi millionaire and is comfortably retired. He was doing 4 deals at a time for many, many years. He swears he never could have done it WITHOUT hard money lenders. They allowed him to quit his job and do rehabbing and flipping for a living. Your most expensive money is your OWN money. Your second most expensive money is your family, friends, or partner's money. Take that from a 62 year old guy who is fat, happy and retired from flipping houses.

Brandon Turner · Answer

Contact local flippers or real estate agents. It's really the best and easiest way!

Cody L. · Answer

Corey Dutton 9% interest only is amazing for hard money.  I'll borrow that all day long ;)

What I've found is once you get into the realm of "non traditional" financing, it's all of a sudden 15% and 4 points.    Traditional financing (even commercial) can be 4-5% and 0-2 points.   It seems there is a huge gap between the two that doesn't justify the risk change from a traditional financed deal to one that doesn't qualify.

Example: We own a property that's worth quite a bit.  We own it free and clear.  We can't pull out equity via a bank.  We could via a hard money lender but at maybe 50-60% LTV (meaning, their risk is basically 0).  At such a low risk, it's hard to bring yourself to paying a rate that reflects a great deal of risk.

Corey Dutton · Answer

Gauntlett Eldemire - a true transactional lender is only going to give you the loan for between 24 to 72 hours. That's a transactional loan. Anything over 72 hours automatically defaults to a 30 day loan which is the same as a regular hard money loan. You can get a 30 day term but you'll still pay the same interest and points if you got a 6 month loan from a hard money lender. This is my experience anyway...

Cody Lutsch - thanks. Yes you're right. Some of these hard money lenders really like to gauge their clients. We have a HML program that's 9% interest only, but it's only avail in the West. And yes, 9% is still pricey compared to bank loans. I find that HM is more expensive in the MIdwest and Eastern States. Supply and demand?

Cody L. · Answer

Corey Dutton: I'm not saying they don't have their place.  And if you're looking to be flipping 100's of properties including several at a time, that's the only way.  I started by doing flips using my own money and while I did well, you quickly hit the wall on how fast you can do things w/o hard money.

However, I've seen many people try to start their real estate HOLDINGS that way.  Unless you want to get out fast and have a solid exit (and have experience) I would still advise against hard money, IF OTHER OPTIONS EXIST.

A friend of mine wanted to buy a place to fix up and was going to go to a local HML.  After being quoted 4 points and 16% interest and a 12 month balloon, he contacted his dad who was able to get a traditional 30 year a ~4%, no points.

Gauntlett Eldemire · Answer

Thanks Guys I appreciate it. Im going to be more specific. I am really wondering how to find a short term lender in a transactional funding deal. Someone who would lend for less than 30 days. Where do you look and how do you find people who specifically do that.

Corey Dutton · Answer

Also, Gauntlett Eldemire - Ohio is tough. Try Brenda at Ohio Commercial Funding.

Cody L. · Answer

With respects to the hard money lenders out here (who do provide a needed service to people -- like payday loan companies), I'd try ANYTHING else first.  Do you have any friends/family that can help you get a traditional loan?  With a HML you'll still need to have your own capital invested, so maybe invest that capital with someone that can get a traditional loan.

Most hard money loans have crappy terms and should really only be used when 100% necessary.  I've used them in the past when I had to in order to close a deal but even when working with people that know I'm "good for it" I've had to pay 2 points and 12% which I felt was very high (yet still good next to most hard money loans)

How to Find Hard Money Lender

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