Hard Money Lenders and Banks

3 Replies


I am currently looking for a new multifamily investment and was wondering if banks know about the money hard money lenders lend to you? In other words, if a hard money lender gives me 25k to finance portion of the down payment, am i required to disclose this information? 

I am asking because I am trying to purchase a 10 unit, but finance portion of the down payment with other people's money and pay the financed portion back as soon as I close on the loan with my LOC.

Thanks in advance.

Chris Morales

90+% of hard money lenders you talk to won't lend as a second lien (i.e. lend on downpayment). Another 90% won't lend less than 50k.

You probably want to find a lender called "gap lender" or a private lender. You can also search for Joint Ventures.

They'll find out in two ways:

1.  Your bank account shows you don't have enough money to close, so they'll ask where the money's coming from.

2.  The hard money lender will probably want to put a (2nd) lien on the property, and the title/escrow/attorney should disclose that to them.

If you're trying to find it with a bank, I doubt even gap funders / private money would work because the bank wants to see your skin in the game as a borrower.  JVs might work because the other person becomes a borrower to the bank as well, so their capital is qualified.

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