Rental Property Investor · Tampa, FL · Member since 2021 · 6 posts · 1 vote
I have a pre approval for a conventional loan at the moment but I would like to know what things do you look for when seeking out a hard money loan? Why are some better than others? And how does hard money over conventional help you on deals?
Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
5y
@Anthony Carrasquillo Hard money lenders, like any other industry have the goods and the bads. However, they've earned themselves a bad reputation (and a lot of it is deserved). Rates and fees usually get the most attention, but service is key. Are they trustworthy and do what they say they are going to do when they say they're going to do it? If not, saving a few basis points here or there is not going to help you grow your investment business. And that is the biggest difference between a good HML and a bank. Can you imagine texting a picture of a purchase contract to a bank and expecting them to close on it a week later? That's the level of service that an HML should give to their repeat clients. I think that is the number one thing you should ask HMLs - even before what are your rates or LTVs or fees or whatever, "Can you tell me what percentage of your business is repeat and referral?"
When I am searching out a HML I seek to work with local direct lenders who I can build a relationship with. If you have experience already with using hard money; I would start finding local people who might be interested in lending (not already a lender). This is where you can show your track record and state your terms; in other words you are creating private lenders who will have more advantageous terms, fees and rates. Look for people with retirement accounts and teach them about self directed accounts.
Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
5y
@Anthony Carrasquillo Hard money lenders, like any other industry have the goods and the bads. However, they've earned themselves a bad reputation (and a lot of it is deserved). Rates and fees usually get the most attention, but service is key. Are they trustworthy and do what they say they are going to do when they say they're going to do it? If not, saving a few basis points here or there is not going to help you grow your investment business. And that is the biggest difference between a good HML and a bank. Can you imagine texting a picture of a purchase contract to a bank and expecting them to close on it a week later? That's the level of service that an HML should give to their repeat clients. I think that is the number one thing you should ask HMLs - even before what are your rates or LTVs or fees or whatever, "Can you tell me what percentage of your business is repeat and referral?"
Lender · Baltimore, MD · Member since 2020 · 115 posts · 70 votes
5y
In general, a HML can offer quicker access to funds and often a more efficient process (less cumbersome as compared to going the traditional bank route). In terms of why some are better than others, a lot of it comes down to customer service. Are they a lender who truly wants to partner with you in terms of your success? Will you have a personal contact there, or will you be calling a generic customer service number if you have a question? How soon are they able to get you to the closing table? If the HML involves draw requests, how quickly can they fund a draw? What kind of documentation will they require? What do their customer reviews look like in the public domain?
Hard Money Lender · Middletown, NJ · Member since 2017 · 26 posts · 7 votes
5y
Hey Anthony,
I would say knowing they can close would be most important. Of course rate and terms are something to consider but knowing they can perform/close and protect your reputation in the process is key. Depending on experience, the market is 80% - 90% of purchase and 8% - 11% on rates so as long as terms are fair. The rest would be about a solid relationship in my opinion.