Hard Money Loan Question

[Shayla Rogers]

Hi all, 

I need some clarity. Should I get a pre approval for a hard money loan before searching for properties. Or do I find the property first? 

[Aaron Byrne]

As with a lot of things...it depends. I say that as some HMLs are strictly collateral-based and thus need you to have a property identified first. Otherwise, there are HMLs who operate based off of credit, DTI/DSCR ratios, etc., and in those cases you can seek out the preapproval first as it is more based on you as the borrower.

Preapprovals generally are a benefit as they give you an idea of your buying power and strengthens your offer when pitted against other buyers (as Richard alluded to above). 

Perhaps a good place to start is finding a few lenders who offer competitive financing terms and products in the markets you are targeting. It never hurts to ask, so I encourage you to connect with them to ask if you can obtain a preapproval letter and what that process might look like.

Happy Investing!