Hard Money Lender
Why Would You Need the Services of a Hard Money Lender?
By Buyincomeproperty.com
Oct 25, 2005, 23:02

If you’ve traditionally dealt with lenders who offered up mortgages and otherwise financed your projects, you may think that you’d have little need for a hard money lender. But there are some instances in which a hard money lender will provide solutions that you simply can’t find anywhere else. Take a look at some common real estate investing situations, and you’ll see that a hard money lender can be an important key.

You’ve found the perfect real estate deal and the profits are almost guaranteed to be good (as guaranteed as real estate deals can be). The problem is that the house needs some immediate rehab if you’re going to turn your investment into quick profit. And the problem with that is that the appraiser simply can’t see the potential that you see in the house. It won’t stand for the loan you need to make the repairs. A private hard money lender won’t need the assurance of the appraisal because the loan will be made to you personally – not against the house.

The catch – and of course there had to be one – is that you usually have to qualify for that personal loan, whether the hard money lender is a bank or an individual in the business of loaning money.

You may find that it’s easier to find a private hard money lender who isn’t normally in the business of lending money but sees the potential for profit from this project. Depending on the size of the project, a private hard money lender could be the best solution.

One of the most important steps comes before you approach a potential hard money lender, because you have to know how much money you need.

Consider a situation in which you have purchased a fixer upper and need the help of a hard money lender to get the repairs made so the house can be put on the market. You go to the hard money lender and explain the details of the transaction as they currently stand. This lender says it sounds like a great idea and asks how much you need. If you haven’t done your homework, you won’t have an accurate answer ready. Three things can happen at this point. You can hesitate and the hard money lender will figure that you aren’t nearly as organized as you need to be, or you can pull a number out of a hat and hope it’s enough to complete the project without scaring off your hard money lender.

The third option (and the one you hope will happen) is that you’ll have a list of repairs already compiled along with expected expenses for supplies and labor, and that you’ll hand that to the hard money lender with the confidence that it’s right on the money.

A hard money lender is a good option for making your real estate venture an immediate profit. Finding a reliable hard money lender and establishing a good relationship with that hard money lender may be the way to make those potential profits a reality.