How to Get a Hard Money Loan

Whether you are a first time investor or a seasoned professional, you know that real estate is a good way to make a great investment for your future. Sometimes raising money for investment can be a difficult prospect. The good news is that there are many hard money lenders looking for projects. SFR Ventures, Inc. is one company looking for projects.

If you are considering a hard money loan, here are 6 steps you should take to help you succeed in securing the financing for your next great project.

Choose the Right Project

The first step is the make sure you have chosen the right project. A hard money loan is secured with the property that you are planning on purchasing. Some properties may be located in up and coming neighborhoods, so there is always a little risk involved. By being able to showcase the value and the possibilities of the property, hard money lenders may be able to see the potential of the property as well, plus the return value on their investment.

The End Game

The end result is just as important as the planning stage. Hard money loans are typically short-term loans. It’s important to have an exit strategy so that you don’t get caught unprepared and short of your renovation goals. Plus the hard money lender will want to know exactly how you plan to repay the loan.

Have the Right Documentation

Even though the property is to be used for securing your hard money loan, your lender like SFR Ventures, Inc. will also want to know about you as well. It’s important to have the right documents in place that will help you get the loan. You may be asked about your income and assets. Your credit score may also be part of the decision making. Some hard money lenders will also want to know what sort of financial investment you plan to put in as well. This is called the “skin in the game”.

Do Your Research

It’s very important to do your research. Sometimes the worst property on the block may bring the best return on your investor; however you do need to know the demographics of the area. It’s important that you are aware of what other houses within your area have sold for and to make sure that you don’t overbuild.

The Contractor

One of the most important steps is getting the right contractor to do the job right the first time. Work with your contractor to know exactly what repairs are going to be necessary to get the best return on your investment. Then you will be able to work out a budget for the project that shows all the costs that are going to be involved in repairs and renovations. You’ll also need to make sure that you’ve included any contingency moneys for those unexpected repairs that pop up during the renovation.

Bring Your A-Game

Your hard money lender will also want to make sure that your project isn’t going to create a financial black hole for you. As with having the right documentation, you’ll want to show the hard money lender that you have the right financial back-ups to get the job done. Again being able to use a portion of your own money in the project is a good way to show your lender that you are prepared to risk your own money.

Just remember that success in any project is being prepared. Be prepared, keep your lender in the renovation loop and get the job done on time and on budget.