Which one comes first? Securing a hard Money Lender or the deal

Question

Hi All,

This is my first post to BP so bare with me. I've been listening for about a year and have read 3 or 4 of the "classic" real estate books. With all of this information I'm still a little fuzy on the timing between finding a deal and securing a hard money lender. Should one come before the other? I personally feel like a relationship should be established before asking random investors for money but that is my initial thought.

Shera Gregory · Answer

The way I would describe it is .. Network first to connect with potential hard money lenders, find a deal, circle back to the folks you already connected with. If you haven't already done so, look on meetup.com to see what real estate meetups exist in your area and try to meet some folks in person. A local hard money lender is a GREAT resource for a new investor. If they won't lend on a deal then it's not a deal.

Tom S. · Answer

@Sal Messina Usually the deal first, but you should certainly call around now to different lenders in your area and see what their criteria is. That way once you do secure a deal, you already have the required paperwork, downpayment, reserves, etc all set to go.

Welcome to BP!

- Tom

Welcome to BP!

- Tom

Jay Hinrichs · Answer

for me unless you have cash for POF at least in many markets if you dont have proof of a loan or funds

its a waste of time to go shopping.

I would just get your pre approvals form REAL legit lenders not all these fakers and crooks you see running around facebook linkdin and BP.

then go shopping.. last thing you want to do is waste all this time effort energy and money finding a deal only to come to the realization you cant fund it or finance it..

I know most on here will say find the deal the money will follow but after 40 plus years of doing this busienss I just dont subscribe to that one at all.

Account Closed · Answer

When I sold my house for all cash with a 10-day escrow (which became 12 days because of a weekend), the buyers got help with a hard-money loan. I approved their offer by looking at their personal bank account statements and verified they had the cash. Then unbeknownst to their realtor and my realtor, they showed up with a hard money loan. No problem for me, because escrow closed in the afternoon rather than the morning as the hard money lenders wired the funds to the title company that morning (a standard practice).

Because of how fast they found a hard money lender, I can only presume they had one lined up ahead of time on an informal basis. Once my buyers had the contract, they activated the relationship and got the approval. By keeping their cash, they were able to finance their remodeling costs of turning my as-is fixer-upper into a McMansion. They flipped the home several months later for a nice profit (based on a Google search of my old address -- I never had contact with them because the real estate lawyers advised against it).

Michael Glist · Answer

Get the deal first. This way it shows the lender you actually have a potential deal and are talking real numbers and not "what if" numbers. And if all else fails and you cant secure funding on your own you can always JV the deal.

Feel free to email me if you have any questions.

Which one comes first? Securing a hard Money Lender or the deal

Which one comes first? Securing a hard Money Lender or the deal

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