How do I get a hard money loan and where from

Question

Im looking to get my first property off of a friends father. its a 2 bed 1 bath single family home in a good location fully remodeled and rent ready he wants 45k for it but would probably take 40. I'm wondering where I could get info on a hard money loan and if you guys think its a good idea

Lore Postman · Answer

@Tyler Hardy Have you tried asking whether the dad would be willing to let you make principal and interest payments to him while you rehab and prepare to sell? He’d earn interest, and you’d have a much easier time than lining up hard money. You and the dad would work out the terms together.

Lore Postman · Answer

Sorry... just reread your post and saw it’s already rehabbed. Still try owner financing if the dad would consider it.

Jeff Cichocki · Answer

Hard money may or may not be institutionalized. Hard money vs private money is really more of a professional vs amateur thing.

Hard money lenders are pro's. We do it for a living. Most use institutional funds for their loans. Some of us also help place money for private people.

Private lenders are typically people who lend money, but it's not a full time gig for them. They are also not as educated. Most don't truly understand the legalities of things and many new lenders don't know how to secure their funds properly.

Both can be good sources of capital. It just depends on what you need and whether or not you know enough to take care of your private lender properly. If you use Hard Money, the broker/lender will take care of everything. If you are borrowing private money, it becomes your responsibility to make sure that you hook them up with a good attorney who can draft their paperwork properly. NEVER DO THEIR PAPERWORK FOR THEM. if you do the paperwork for them, you can get into a lot of trouble for practicing law without a license. You could get away with it for a while, but if a deal ever goes sideways and they hire an attorney to help fix the problem, it won't go well for you.

I have quite a few borrowers who have found private money, but they referred them to me for help. If you don't have an attorney who understands lending, it is a lot safer for you to send them to someone who can help them properly. In my area, there are few attorneys who really understand what we're doing and how to protect their clients properly.

Good luck!

Tom S. · Answer

@Tyler Hardy  To answer your question - no I don't think HML is a good idea because it's expensive, short term, and the place is already fully remodeled.

For a loan that size working with a local bank or credit union would probably be your best bet.  Or owner financing as others have posted.  Be sure for a rental you have funds set aside to "manage the business".  I keep about $5k-10k in reserves per rental property.

Good luck!

- Tom

Tyler Hardy · Answer

@Karen Margrave thank you

Oliver Carey · Answer

Hard Money/Private Money can provide up to 80/85% LTV on Purchases and Refinances at rates starting at 4% with a great FICO and can close in 2 weeks low doc and no do options

Odie Ayaga · Answer

Sorry it's missing a comma (sounds different in your head than on the page). "Hard money is institutionalized, private money comes from individuals". For instance, private money lenders don't typically have the licensing and funds behind them that hard money lenders do.

Lisa Eckman · Answer

@Odie Ayaga thanks for the reply, but I wonder if something is missing from this sentence (??). “Institutionalized private money from individuals...”.  Or maybe it has to do with the word “institutionalized”?  But both seem to be private money from individuals. What am I missing?

Odie Ayaga · Answer

@Lisa Eckman hard money is institutionalized private money comes from individuals who typically aren't running large operations but lending their own personal funds

Lisa Eckman · Answer

Can someone explain to me the difference between HML and a Private Lender?

How do I get a hard money loan and where from

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