Your real estate investment is unique in the market, which means you need the best hard money lender for you. Traditional loans are just about securing financing, but a hard money lender is, in many ways, a business partner. So be cautious about short lists of the “best hard money lenders in the nation,” and take the time to find the best hard money lender for you and your investment.
What is a hard money lender?
A hard money lender is a business or individual who provides private financing for short term real estate and construction loans. Hard money lenders are not restricted by the same regulations and requirements as banks and other traditional financial institutions. That means they can be more flexible regarding the individuals they lend to and the terms and conditions of those loans.
Hard money loans are ideal for investment properties like fix and flip projects and most construction jobs.
How to Find Hard Money Lenders
If you think a hard money loan is the best fit for your real estate investment, start by finding a few lenders to compare. There are several easy ways to find them:
- Google — Search “hard money lenders” and you’ll probably get some paid ads from local lenders, a map, and a list of top-ranked websites.
- Real estate agents — If you are working with a real estate agent, or happen to know one, ask if they or their colleagues know of any good hard money lenders.
- Flippers — If you’re flipping a house, you may have met other flippers in your area. If so, ask which hard money lender they work with and how their experience has been.
- REIA — Connect with your local Real Estate Investment Association for networking and recommendations.
How to Find the Best Hard Money Lender
Now that you have a few names, start evaluating your options. Browse the lenders’ websites, call and talk to a representative, and check social media and review sites for other people’s feedback.
A few key qualifications to help you find the very best hard money lender:
- Reputation — You’ll have to do a little legwork to uncover the lender’s true reputation, but it’s worth it. Check review sites, social media, and previous business partners. Ask REIA members, real estate agents, and other investors.
- Locale — The best hard money lenders are people and businesses in your area. National lenders aren’t as agile, and online hard money networks aren’t as reliable. You get a business partner when you use a local lender. Learn more →
- Speed — One of the key benefits of a hard money loan is speed, so make sure your lender can keep up. Top-tier lenders should be able to get your loan approved in under 48 hours and get you funding in a little over a week.
- Affordability — Hard money loans have higher interest rates than standard loans, because they’re so much shorter. Still, a good hard money lender should offer below 15% interest, and clear expectations regarding any other fees.
Beware the articles and blog posts that attempt to list the top hard money lenders. Those are nation-wide lenders, and usually not the best option. Look locally first. If you can’t find good service locally, then you may want to consider other options.
Evaluating Lenders: Other Questions to Ask
If you’re new to hard money loans, and not sure where to start, here are a few specific questions to ask:
- What documents are required to get a loan?
- Do you require an appraisal?
- Are you the lender or a broker?
- How do construction draws work?
- What happens if I need an extension?
- When do you collect interest?
- Can you provide a portfolio and/or references I can call?
You can get a lot of this information from a lender’s website, but try to make a phone call or schedule an office visit if you can.
Many hard money lenders have very similar rates, requirements, and terms—especially in the same city or state. Deciding which lender to work with may come down to the level of customer service you experience, and how comfortable you are with the lender.
Hard Money Lenders: Texas
If you’re looking for a hard money lender in Texas, our team would love to talk to you! We are one of the few locally owned and operated, direct hard money lenders in the state, and we’re passionate about what we do.
- No appraisals
- No junk fees
- No prepayment penalties
- Approval in 24 hours
- Financing in less than a week
- Competitive hard money interest rates