Being a hard money lender

Member since 2022 · 58 posts · 24 votes

Hello, my name is Jeanette. I am a current investor I’m looking to become a hard money lender. Is $100,000 a sufficient amount? What details can anybody give me such as what to look out for, what should be in the contract, and if anybody has any leads thank you for your time. I look forward to your responses

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Jeanette Land
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Member since 2022 · 58 posts · 24 votes
6d
Also, where can I go to find people that are looking for a hard money lender besides Bigger Pockets and Facebook groups?
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Sruly Goldschmied
Lender · United States · Member since 2026 · 16 posts · 4 votes
6d
Hi Jeanette, I've been lending for a long time. A few things I'd tell anyone starting out:
$100k can work, but in most markets that's one loan. That means one borrower is your whole portfolio, so everything below matters even more.
Lend on the property, but look hard at the person too. Talk to them, look at what they've actually done before, call a reference. Most of the problems I've seen started with the borrower, not the house.
Protect yourself on paper. First position lien, a lender's title policy in your name, and you listed on the property insurance. Have a real estate attorney in the state where the property is draw up the note and mortgage. Don't use a template off the internet.
Know your way out before you fund. If the borrower stops paying, what does foreclosure look like in that state and how long does it take? Wisconsin is a judicial foreclosure state, so if you lend close to home, plan for it not to be quick.
If there's a rehab, hold the rehab money back and release it in draws after someone confirms the work is actually done.
And start with a property you can drive by. It's a lot easier to learn when you can see the house. Good luck!
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Mike DoneyBusiness Member
Specialist · Milwaukee, WI · Member since 2019 · 14 posts · 2 votes
6d
As was said, with $100k you could potentially fund a deal, but not much more than that in today's market given where purchase prices have gotten and where rehab costs/materials are coming in.

I work for a hard money lender and I can say there is always an opportunity to start with one, but you'd need to make sure they have good experience and have skin in the game as well (typically 10-20% of the loan amount).

Check out Hard Money Scott, he's got an event this weekend and I'm sure some of the material will be about how to use and leverage OPM, which could help illustrate for you how you might start, or if there are other opportunities out there to get involved with real estate funding that reduce some of the overall risk or exposure.

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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
6d
Since you have high liquidity maybe you can look into getting a credit line and lend off that instead? Loaning out only $100k may not make much sense unless you do JV partnerships and get some of the upside of the deal and share the risk.
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