Strategies to get approved by a Hard money lender

Private Lending & Conventional Mortgage Advice

Strategies to get approved by a Hard money lender

Porltand, ME · Member since 2018 · 7 posts · 1 vote

Hi BP world, I’m writing today because I wanted to see if you guys can give me tips on do’s and don’ts to get approval from a hard money lender. My track record for real estate is none but I have good credit and a decent paying job. Thanks for the feedback

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Originally posted by @Mark Sewell:

You have to be able to correctly spell your hometown.

Beyond that, I'd say you are qualified! : )

Seriously, just pick up the phone and ask for an application. Fill it out and send it in. They won't give you much in the way of indication that you are approved or not approved, because with HM is more about the deal and less about you, the borrower.

Jay is correct and incorrect -- they don't expect you to bring in a monster good deal at 50% of ARV. That's like finding a unicorn. Find something close to 70% ARV and you'll be fine, even without experience. Even can be higher, but you'll have to bring more money to closing. What is more important is having a good handle on the ARV and your cost estimates for the rehab.

Definately I would say try to find somebody local, and here is why -- those guys know your market better, and they will check your ARV and walk your property in person. And the feedback they give you is gold, it's almost like having a mentor on your team to get started. Of course, they build that into your fees, but it is still worth it if you got a good deal. And they can also steer you away from bad deals before you do them.

I guess I did not explain it correctly.. what I meant was limited experience can be mitigated by equity in the deal either finding the equity or bringing cash in.. Granted 50% ARV deals basically do not exist for most .. the only folks that pull that off are wholesalers who are not telling a seller what their property is truly worth.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
Talk to hml’s.....have a deal with plenty of equity and have extra cash as a buffer.
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Caleb Jordan
Lender · Arlington, TX · Member since 2018 · 465 posts · 184 votes
7y
Your job will be irrelevant to a hard money lender. Good credit, extra cash as a buffer and good deal will be important. You will be limited in options because of your experience at first. But once you get some experience it will become easier and you'll have access to better interest rates and higher ltv.
There are some hml who will lend to those with no experience, but not many. But even if you can just buy a house as a primary residence on an fha loan it will count as some experience with the right lenders.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
lack of experience is mitigated by liquidity.. and equity into the deal.
so you take a deal at 70% arv and no experience could be tough to get that one to go.
you bring the same deal to the lender at 40 to 50% ARV and they may look past the experience..
also do not get sucked into paying ANY up front fee's for those that promise loans..
if you want to test the waters here are a few semi national HML you can check with these are all real
1. Lendinghome.com
2. Patch of land
3. Lima One
4. Lending one
then of course google your local market there are usually always local lenders that you can go introduce yourself to..
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Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
7y
You have to be able to correctly spell your hometown.
Beyond that, I'd say you are qualified! : )
Seriously, just pick up the phone and ask for an application. Fill it out and send it in. They won't give you much in the way of indication that you are approved or not approved, because with HM is more about the deal and less about you, the borrower.
Jay is correct and incorrect -- they don't expect you to bring in a monster good deal at 50% of ARV. That's like finding a unicorn. Find something close to 70% ARV and you'll be fine, even without experience. Even can be higher, but you'll have to bring more money to closing. What is more important is having a good handle on the ARV and your cost estimates for the rehab.
Definately I would say try to find somebody local, and here is why -- those guys know your market better, and they will check your ARV and walk your property in person. And the feedback they give you is gold, it's almost like having a mentor on your team to get started. Of course, they build that into your fees, but it is still worth it if you got a good deal. And they can also steer you away from bad deals before you do them.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Mark Sewell:

You have to be able to correctly spell your hometown.
Beyond that, I'd say you are qualified! : )
Seriously, just pick up the phone and ask for an application. Fill it out and send it in. They won't give you much in the way of indication that you are approved or not approved, because with HM is more about the deal and less about you, the borrower.
Jay is correct and incorrect -- they don't expect you to bring in a monster good deal at 50% of ARV. That's like finding a unicorn. Find something close to 70% ARV and you'll be fine, even without experience. Even can be higher, but you'll have to bring more money to closing. What is more important is having a good handle on the ARV and your cost estimates for the rehab.
Definately I would say try to find somebody local, and here is why -- those guys know your market better, and they will check your ARV and walk your property in person. And the feedback they give you is gold, it's almost like having a mentor on your team to get started. Of course, they build that into your fees, but it is still worth it if you got a good deal. And they can also steer you away from bad deals before you do them.
I guess I did not explain it correctly.. what I meant was limited experience can be mitigated by equity in the deal either finding the equity or bringing cash in.. Granted 50% ARV deals basically do not exist for most .. the only folks that pull that off are wholesalers who are not telling a seller what their property is truly worth.
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JLH Capital Partners51 Review
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3 Reply
Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
7y
Jay, this is huge, this part right here:
"also do not get sucked into paying ANY up front fee's for those that promise loans.."
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Mark Sewell:

Jay, this is huge, this part right here:
"also do not get sucked into paying ANY up front fee's for those that promise loans.."
YUP Fake Lenders are rampant and preying on new investors who simply dont know better.. facebook linkdin BP
all have fake lenders trolling heavy on them.
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Costin I.
Rental Property Investor · Round Rock, TX · Member since 2016 · 1k+ posts · 971 votes
7y
@Sean Jany If a HML doesn't want to lend on your deal, you don't have a deal and should run away from that house.
2 Reply
David Friedman
Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes
7y
Most hard money lenders lend based on the value of the deal, not your experience or income.
That being said, if you don't have experience or high income, they may charge you very high rates and multiple points when lending to you.
Reach out to several hard money lenders and ask them what it takes to qualify.
If you find a good deal, having a hard money lender do their due diligence, especially when you are first starting out, can be a huge asset to you.
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Grayson Wester
Lender · San Antonio, TX · Member since 2018 · 109 posts · 108 votes
7y
@Sean Jany I'm a hard money lender in Texas and we look at both the borrower (you) and the asset. Hard money lenders are all a little different, but most will look at:
- Your real estate experience
- Liquid assets (cash that you can get access to within a few days)
- Credit score
- Taxable income
- The numbers in the deal you're looking to get a loan for
If you find yourself lacking in any of these areas you can also bring in a co-borrower on the loan to help make up for any gaps. For example, say you have no experience, very little liquidity, but an incredible credit score and solid income. In that case, you'd want to find someone with experience and good liquidity to act as a co-borrower on the loan.
We'll lend to brand new investors, but the terms are a little different than what a very experienced investor will get. Hope that helps!
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Hannah Joy
Rental Property Investor · Eureka CA · Member since 2020 · 91 posts · 27 votes
3y
Every HML is somewhat unique, with their own qualifying criteria. Some will look at your average deposits over time, some don't care about your DTI and but do care about your liquidity. Some will give you a better rate and lower fees if you have investor experience, with differing methods of proving that experience. It can take a good bit of time to shop around for the right lender that matches your situation and your particular deal.
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