Tag Archive for: #Hard Money Loans

Why a 12% Hard Money Loan Can Cost You LESS Than 8.5%

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At first, it sounds crazy. Why a 12% Hard Money Loan Can Cost You LESS Than 8.5% does not seem to make sense. However, once you break it down, it becomes very clear. The truth is, the interest rate is only one part of the total cost. You also have to look at fees, points, and most important, time. Because of that, a higher rate loan can actually put more money in your pocket on the right deal. So, let’s walk through a simple example to show you how this works and how you can use it to protect your profits.

What Is Hard Money (and Why It Matters)

Hard money is simple. It is a loan backed by real estate. However, it works very different than a bank. Instead of focusing only on your income, it focuses on the deal itself. Because of that, it can move fast, which helps you win deals that others miss. In addition, it stays flexible, so it can fit projects that do not fit inside a bank’s rules. So, while banks stay inside the box, hard money works outside the box. And because of that, it becomes a powerful tool for investors who want speed, flexibility, and more control over their deals.

The Big Myth: Lower Rate = Lower Cost

Most investors believe that a lower interest rate always means a cheaper loan. However, that is not always true. In fact, sometimes a 12% loan can cost less than an 8.5% loan. At first, that sounds backwards. But once you look at the full picture, it starts to make sense. The truth is, the rate is only one piece of the puzzle. You also need to look at fees, time, and how long you will hold the property. Because of that, focusing only on the rate can actually cost you money.

Real Deal Example (Simple and Clear)

Let’s walk through a real example so you can see how this works. In this deal, the purchase price is $450,000, and the rehab is $50,000. The after repair value is about $700,000. The lender will fund 90% of the purchase and 100% of the rehab. Now, there are three loan options to choose from. The first option is a hard money loan at 12% with one point and almost no extra fees. The second option comes in at 9.75% with higher points and added fees like draws and inspections. The third option has an 8.5% rate but includes even more fees and processing costs. At first glance, the lower rate looks better. However, we need to look deeper.

Now Let’s Look at Time (This Changes Everything)

Time is the key factor that changes everything. First, if the project takes about three months, the 12% loan actually comes out cheaper by about $2,600 to $4,000. This happens because you avoid many of the upfront fees and extra costs tied to the lower rate loans. Next, if the deal stretches to six months, all three options come very close in total cost. This is the break-even point where rate and fees balance out. However, if the deal goes longer, such as nine to twelve months, the lower rate loan becomes the better option. This happens because interest has more time to build, and over time, the lower rate saves more money.

The Simple Rule (Easy to Remember)

So, here is the simple rule you can remember. If the deal is short, a higher rate loan can often cost less. On the other hand, if the deal is long, a lower rate loan will usually win. Because of that, you always want to match your loan to your timeline. This one shift in thinking can save you thousands of dollars on every deal.

Why This Happens (Plain English)

Now let’s break down why this happens in simple terms. First, points are just prepaid interest. So, when you pay points, you are paying part of the interest upfront instead of over time. Next, fees like draw fees, inspection fees, and processing costs can add up quickly. Even though they may seem small, they slowly eat away at your profit. Finally, time multiplies everything. The longer you hold a deal, the more interest you pay, and the more those costs grow. Because of that, time plays a bigger role than most investors think.

A Quick Example You Can Feel

Let’s make this real. Imagine you expect to make $40,000 on a deal. Now, each extra month you hold that property costs you about $4,000. So, if your project runs three months longer than planned, you lose $12,000. That is a big hit. And in many cases, those delays happen because the funding was not set up correctly from the start. Because of that, having the right loan and enough funds ready can protect your profits.

Why Hard Money Can Be the Best Choice

Even though hard money often has a higher rate, it can still be the best choice for many deals. First, it allows you to move faster, which helps you finish projects sooner. Next, it reduces delays, which keeps your costs down. In addition, it often has fewer hidden fees, which means more money stays in your pocket. Finally, it allows you to complete more deals each year. And when you do more deals, your total profit grows.

Protect Your Profits with Better Funding

You may have heard this before: you make your money when you buy, but you protect it with your funding. What this really means is that you need to choose the right loan for each deal. You also need to match your loan to your timeline. In addition, you should always look at the total cost, not just the rate. Because every deal is different, your funding should be different too. When you take the time to do this right, you keep more of your hard-earned profit.

The Smart Move: Run the Numbers First

Before you move forward with any deal, take the time to run the numbers. First, compare at least two or three lenders. Next, look at the full picture, including rate, fees, and time. Then, test different timelines to see how the cost changes. When you do this, you can clearly see which loan is best for your situation. This is exactly why tools like a loan optimizer are so valuable. They help you make smart decisions based on real numbers, not guesses.

Final Thought

So, yes, a higher interest rate can actually cost you less. However, this only works when the deal moves fast. That is why smart investors do not chase the lowest rate. Instead, they focus on the best loan for the deal in front of them. Because when you choose the right funding, you do more than save money. You protect your profits and set yourself up for long-term success.

Watch our most recent video to find out more about: Why a 12% Hard Money Loan Can Cost You LESS Than 8.5%

Hard Money: The Out-of-the-Box Loan Real Estate Investors Need

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Real estate investing is full of deals that don’t fit the normal rules. However, that’s often where the best opportunities are found. That’s why understanding Hard Money: The Out-of-the-Box Loan Real Estate Investors Need can change how you look at funding. Instead of getting stuck when a deal doesn’t fit the bank’s box, you can move forward with speed, flexibility, and confidence.

What Is Hard Money?

When real estate investors talk about hard money, they are talking about out-of-the-box lending. So, what does that really mean? Most loans today come from big lenders. However, those lenders work inside a tight box. They want perfect deals, clean properties, strong credit, and clear history. But here’s the problem—not every great deal fits in that box. That’s where hard money comes in, and because of that, investors can move forward when others get stuck.

“In-the-Box” vs “Out-of-the-Box” Lending

In-the-Box Lending (Traditional Loans)

Most lenders want a simple and safe deal. For example, they prefer a single-family home, sometimes up to 3–4 units. In addition, they want a credit score over 700, past experience, and money into the deal. Also, they look for strong comparable sales nearby. So, in short, they want everything to fit neatly into their system.

Out-of-the-Box Lending (Hard Money)

On the other hand, hard money looks at deals in a different way. Instead of asking, “Does this fit our rules?” they ask, “Does this deal make sense?” Because of that, hard money can fund deals that others won’t, and that is why it plays such a key role for investors.

Why Investors Need Hard Money

Real estate is not always clean and easy. In fact, many of the best deals are messy, unusual, or time-sensitive. So, if you only rely on traditional loans, you will miss out. However, when you use hard money, you gain speed, flexibility, and opportunity. More importantly, you gain control over your deals, which helps you move faster and make better decisions.

Real Examples of Out-of-the-Box Deals

Let’s make this simple. Here are a few real-world examples that show how hard money works.

Example 1: Quick Flip (2–4 Weeks)

Sometimes, you find a deal you don’t want to fully rehab. Instead, you clean it up, list it fast, and sell it quickly. Traditional lenders usually won’t touch this type of deal. However, hard money can step in, and because of that, you can move quickly and lock in profits.

Example 2: Double Closing (Wholesale with Ownership)

In some deals, you buy the property first and then sell it to another buyer. This is called a double closing. Now, many lenders won’t allow this structure. But again, hard money can step in and help you complete the deal smoothly.

Example 3: Land Deal

Here’s a simple example. You buy land for $300,000, then you split it into 8 lots, and after that, you sell each one for $75,000 to $100,000. That creates strong profit potential. However, most lenders will say no to this type of deal. Meanwhile, hard money sees the opportunity and focuses on the upside.

Example 4: Small Town Property

Many lenders avoid small towns because there are fewer sales and fewer comparable properties. Because of that, they feel the deal is too risky. However, some of the best deals live in small towns, and hard money works well in these areas. So, instead of missing out, you can move forward with confidence.

Example 5: Finish a Project Loan

Let’s say you are 80% done with a project, but then you run out of money. Now, the project slows down, and as a result, your profit starts to shrink. However, hard money can step in, fund the remaining work, and help you reach the finish line faster.

Example 6: Bridge Loan

Sometimes, you need to buy a new property while selling another one. That’s where a bridge loan helps. It allows you to move forward without waiting, and then once your old property sells, the loan is paid off. Because of that, you keep your deals moving instead of getting stuck.

What Hard Money Really Cares About

This is where things get simple. Hard money is not focused on perfection. Instead, it focuses on the deal, the exit plan, and the opportunity. In other words, does the property have value, can you sell or refinance it, and is there profit and equity? If those three pieces work together, then the deal can work, and that is what really matters.

What Hard Money Does NOT Focus On

Unlike traditional lenders, hard money is more flexible. For example, your credit score matters less, your experience is not always required, and your income is not the main focus. Instead, the deal leads the way. Because of that, even a first-time investor can succeed if they find the right opportunity.

Why This Matters for Your Profits

Here’s the truth most investors miss—the best deals are often the hardest to fund. So, if you only use traditional loans, you move slower, miss deals, and lose profits. However, when you add hard money to your strategy, you move faster, close more deals, and increase your profits. As a result, you create more opportunities over time.

Simple Story to Bring It Together

Think about this like driving across town. If you have full funding, it’s like hitting every green light. On the other hand, if you have some funding, it’s like hitting every other light. And if you don’t have funding, it’s like hitting every red light and sitting in traffic. So, who gets there first? More importantly, who makes more money?

When Should You Use Hard Money?

You should use hard money when the deal does not fit the normal box, when you need speed, when you need flexibility, or when you see a strong profit opportunity. Because at the end of the day, if the deal makes sense, hard money can help you make it happen.

Final Thought

Real estate investing is not about perfect deals. Instead, it is about finding good deals and having the right funding to close them. So, don’t let the “box” limit your success. Because when you think outside the box, that is where the real profits live.

Next Step

If you have a deal that feels a little different, that might be your best deal. So, take a second look, run your numbers, and get a second set of eyes. Because the right funding can turn a “maybe” deal into a real profit.

Watch our most recent video to find out more about: Hard Money: The Out-of-the-Box Loan Real Estate Investors Need

Are Hard Money Loans Still Worth It in 2025?

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Today we are going to answer the question, “are hard money loans still worth it in 2025?” Let’s get back to the basics. What is a hard money loan, and why are investors still using it in 2025? Over the past few years, new lenders and Wall Street money have entered the space, creating some confusion. But true hard money lending is still here—and it continues to be one of the most powerful tools for real estate investors who need speed and flexibility.

Fast Alternative to Banks

Banks can feel like a slow-moving ship. Yes, they’ll get you there, but it can take 15 to 45 days to close a loan. Hard money loans, on the other hand, move fast, like a speedboat.

Because they’re asset-based, hard money lenders focus on the property more than your personal income or credit score. That’s what makes them so appealing. You can close quickly, often in just a few days, and grab good deals before anyone else.

Example:
One investor needed to close in two days. The property had title work and insurance ready. While another buyer waited 30 days for their bank loan, this investor closed fast and won the deal. That’s the power of hard money.

What Properties Qualify?

Hard money lenders focus on real estate that makes business sense. That means:

  • Fix and flips

  • Fix and rentals (like BRRRR properties)

  • Commercial properties

  • Non-owner-occupied real estate

If the deal makes sense and the asset protects the lender, it usually qualifies. These loans are not for primary homes or owner-occupied properties.

How Fast Can You Close?

Speed is one of the biggest advantages. Once the title and insurance are ready, many hard money loans close within a couple of days. Because investors often compete with cash buyers, that speed can make all the difference.

What Do Hard Money Loans Cost?

Hard money isn’t free, but it’s fast and flexible. Here’s what you can expect:

  • Rates: 10% to 14% (simple interest)

  • Points: 1 to 3% of the loan amount

  • Fees: Usually small, such as legal or doc fees ($500–$1,500)

You should never pay application or draw fees on a true hard money loan.

Repayment Terms

These are short-term bridge loans, typically lasting 6 to 18 months. Most don’t have prepayment penalties. So, if you pay it off in three months instead of six, you won’t get hit with extra fees. That flexibility gives you room to adjust your strategy and refinance when the time is right.

Does Credit Matter?

Yes and no. Hard money lenders don’t care about your credit score, but they do care about your credit history. They want to see that you pay your lenders on time. A quick background check will also show if you have liens or judgments that could cause issues at closing.

Think of it this way: credit scores don’t matter, but credit habits do.

How Much Can You Borrow?

That depends on the lender. Some use Loan-to-Value (LTV), while others use After Repair Value (ARV).

LTV lenders base the loan on what the property is worth today. ARV lenders look at what the property will be worth after improvements. Because of that, ARV lenders usually lend more and often cover part, or even all, of your rehab costs.

Example:
One investor bought a property for $155,000 and planned a $50,000 rehab. The ARV was $300,000. The lender covered 100% of the purchase and rehab costs. The investor only needed to cover closing costs. That’s the kind of leverage ARV lending makes possible.

How Do Draws Work?

Most lenders give a small amount upfront—usually 10% to 20% of the rehab budget, to get started. After that, funds are released in draws as the project moves forward.

To get a draw, you’ll submit receipts and photos showing completed work. Many lenders now use virtual inspections that take only 5–10 minutes. Once approved, funds are released within a couple of days.

Example:
An investor received $15,000 upfront for demo work. After submitting photos and invoices, a five-minute virtual inspection confirmed progress. The draw was funded within 48 hours. That’s how fast modern hard money lending works.

Red Flags to Watch For

Be cautious of anyone charging application fees or upfront money just to “see if you qualify.” That’s a big red flag. Most reputable lenders don’t charge these fees.

If a lender wants money before reviewing your project, walk away. Chances are, you’re paying for something you’ll never get.

The Application Process

Getting approved for hard money usually happens in two stages:

  1. You, the borrower – This includes a background and credit review, plus proof of funds for your portion of the project.

  2. The property or deal – Lenders look at your scope of work, exit strategy, and overall plan.

If both make sense, you’re good to go. Remember, hard money lenders want good deals—for both you and them.

Final Thoughts: Still Worth It in 2025?

Absolutely. Hard money loans remain one of the best tools for real estate investors who need speed, flexibility, and funding based on the property, not their personal finances.

They’re not for every situation, but when you find a great deal that needs quick action, hard money can help you win it.

Ready to Get Funded?

If you’re looking for a hard money loan, send us your deal and we’ll review it. Whether it’s your first project or your fiftieth, we’ll help you see if it makes sense, and get you funded fast.

Watch our most recent video to find out more about: Are Hard Money Loans Still Worth It in 2025?

Hard Money Loans and Your Credit Score

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Today we are going to discuss hard money loans and your credit score. Hard money loans are a favorite tool for real estate investors. They offer quick funding and flexibility when time is tight. But what about your credit score? Does it matter as much with a hard money loan?

Here’s the good news: hard money loans focus more on the deal than your credit score. Lenders look at the property itself—the value, condition, and potential. That means you can get funding even if your credit isn’t perfect.

For example, let’s say Sarah wants to flip a property. Her credit score is 640, not great but not terrible. Traditional banks might hesitate, but a hard money lender sees the home’s potential. If the numbers work, Sarah can still get the loan she needs.

However, credit isn’t ignored completely. A better score can help you snag lower rates or better terms. If your score is shaky, some lenders might charge higher interest to offset the risk.

Think of it like this: with hard money loans, your credit score is the backup singer, not the star. The property and the deal take center stage.

Contact Us Today! 

Is your credit score where it should be? Contact us today to find out more about a usage loan and how you can boost your credit score quickly.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist now to see what changes you need to make in order to get on the right path.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

VRBO Investment Properties: A Smart Way to Grow Your Income

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Thinking about owning a vacation rental? VRBO investment properties are a great way to earn extra income while building long-term wealth. These properties allow you to rent out homes or condos to short-term guests, usually in popular vacation spots.

For example, imagine owning a cozy cabin in the mountains or a beachside condo. By renting it out on VRBO, you can earn nightly income while still enjoying the property yourself when it’s available.

One of the biggest perks? Short-term rentals often bring in higher income compared to traditional long-term leases. If your property is in a high-demand area, a few booked weekends could cover your mortgage payment for the month.

Of course, success with a VRBO property requires smart planning. Location is key. Travelers look for destinations that offer great attractions, beautiful scenery, or unique experiences. You’ll also need to think about property management, like cleaning and maintaining the home.

Done right, VRBO properties can be a game-changer for your financial future. They help you pay off debt faster and enjoy life more, giving you both cash flow and a fun asset you can call your own.

Ready to learn how to get started? Contact us today to find out more! We can walk you through the process from choosing the right property, to financing options, and even tips to maximize your profits. 

Contact Us Today! 

Is a VRBO right for you? Contact us today to find out more about investment properties!

Free Tools For You! 

We also have free tools available! Download the Quick Deal Analyzer to see if your potential property will be a good investment.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Real Estate Investing: Busting Hard Money Myths

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Real Estate Investing: Busting Hard Money Myths

Today we are going to be busting the hard money myths!. While there are a lot of people who question hard money, it is still considered to be common sense lending. To clarify, common sense lending is a form of lending that does not focus on the same things that traditional lenders do. Instead, all hard money lenders are looking for a good return. Hard money lenders are not the loan sharks that many people make them out to be. Let’s dive in and explore some of the hard money myths that are bustling around the real estate community.

What will hard money lenders focus on?

Hard money lenders are able to do things that traditional lenders can’t. First and foremost, hard money lenders are not concerned with an investor’s credit scores or income. Their main concern is what the income of the property will be. Traditional lenders on the other hand, will be requesting your income verification from the past two years. Another big difference between hard money lending and traditional lending is that hard money lenders will look at the properties ARV instead of the amount that you are buying it for. To clarify, ARV stands for the after repair value of the property. 

Hard money lenders are taking a big risk, they must be taking more.

Since hard money lenders follow different criteria than traditional lenders, it leads many to assume that hard money lenders are taking more. For example, banks right now are charging between 8.5% and 10% on their short term or bridge loans. Hard money loans however are between 10% and 11%. In taking a closer look at origination fees, banks are at 1% or 1 point, whereas hard money can be anywhere between 1.5% to 2.5%. To clarify, a point is the amount that you pay the lender for their services. On a $200K loan at 1% you would pay $2,000. However at 2% you would then owe $4,000 in origination fees.  So while hard money lenders do charge more, they have less restrictions that could prevent you from getting the money you need for your investment.

We don’t want your property! We just want a good return.

While there are good lenders and bad lenders, the majority of hard money lenders just want a return. The last thing that we want is your property, because we would have to fix it up and sell it in order to get our money back. However, on rare occasions we do have to take back the property if investors don’t pay for 6 to 9 months. Unlike banks, hard money lenders are typically real people lending their money. This might be money from their savings or even their retirement plans that they are investing for a better return. They want a return so that they can live the life that they want, and give you the money you need to live the life you want by real estate investing.

Time is money!

Here at Hard Money Mike we have the ability to help more people than traditional lenders, as long as the loan makes sense. If the investor has a good property we won’t have to take 3 to 4 weeks to decide whether or not we will do the loan. Instead, we would be able to close the deal quickly without having to deal with the hassle. Another thing to keep in mind is how long it takes to get the money you need. We give you your money at closing so that you won’t have to wait for the first draw. Don’t wait! Make things faster and easier today by getting a hard money loan! 

Hard money will cost you less in the end!

While there is a slightly higher cost when using a hard money lender, they are able to finance more than traditional lenders can. The speed allows you to get you into a deal quickly by getting you your money quickly, and in turn allows you to finish your project in a timely manner. Remember, if you pay your contractors on time, they will continue to work on your projects and complete them within your timeline..

Which lender is best for you?

There is a use for both a hard money lender, as well as a traditional lender. Banks are a great source for investors who have time, money, experience, and two years of income. By using traditional lenders you would not only be able to save a little money, but you would also have a longer period for repayment. A hard money lender on the other hand is best for quick deals. They also lend based off of the ARV, so you would be able to get more money for your project. Which is best for you? Contact us today to find out more!   

We are here for you!

Do you have a project in mind that you need to price out? We would love to run through the numbers with you and see if the deal will work for your needs. Are there any hard money myths that need busting? Give us a call!

Watch out most recent video to find out more about Real Estate Investing: Busting Hard Money Myths.

Top 5 Hard Money Loan Options

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What types of hard money loan options are out there for real estate investors?

Hard money (sometimes called private money) loans are often the key to getting started in real estate investing. 

Most hard money lenders have a lot of options and many even have particular specialties. This article explains what’s out there so you’re equipped to have discussions with lenders.

Here are the top five loans that you’ll encounter in the hard money industry.

1. Fix and Flip Loan

The nice thing about a fix and flip loan is that it has everything to do with the property. Even if you’re less experienced as an investor, if the property has potential, hard money lenders will listen.

If the value is there, hard money lenders could fund up to 100%.

2. Bridge Loans

You’ll typically use a bridge loan to either purchase or refinance a project. There are a few places where they generally show up:

Bridging Gaps Between Projects

If you’re currently working on a project but you come across another great deal, a bridge loan can tap into that equity. You can use this money this as an opportunity to efficiently line up your next project.

A bridge loan would put a small lien on a property that’s about to go up for sale (or is currently being sold) which gives you money to purchase your next project.

Finishing and Buying Properties

Hard money moves more quickly than large, standard bank loans. If the clock is ticking and you need to either pay or lose the deal, a hard money bridge loan can save the day.

Wholetailing

Bridge loans can also work as a crucial part of wholetailing. Wholetailing involves anything from purchasing a discounted property and performing basic fixes to outsourcing renovations altogether. 

Typically, wholetailing only requires simple funding, often 60-90-day loans.

3. Gap Loans

You can explore gap funding to cover all sorts of money holes that might show up as you go through a project:

  • Down payments
  • Getting a project started (consider funding for escrow draws)
  • Completing a project
  • Carrying project expenses (like HOA fees)

You can even use gap loans to pay off old investors if you have someone who’s ready to move on. Treat your investors well and make sure you have the financial flexibility to let them out if they need.

4. Usage Loan

A usage loan is a private non-reporting loan that helps you pay off your credit card balances. If you’re using your personal credit card for business, this can be an important way to raise your credit score.

Real estate investing is all about leverage, and a lot of banks see your credit score as a reflection of your ability to use leverage well. 

The higher your credit score, the better terms you’ll often find for loans. 

5. BRRRR “Buy” Loan

The two big ticket items in the BRRRR method are 1) the purchase, and 2) the refinance.

Hard money loans come into play on the purchase side of a BRRRR. Because hard money is so flexible, it can also often fund a good portion of the rehab. 

Questions?

These are the top five hard money loan options, but if you’re looking for something else, just ask! Remember, hard money lenders are often smaller companies and individuals. They all have preferences and specialties, so get to know them and let them get to know your project.

If you’re interested in learning more, check out the free tools on our website or our YouTube channel where we discuss other tips and tricks for successful investing.

You’re always welcome to reach out to us at Info@HardMoneyMike.com if you have any questions or would like to discuss a deal.

Happy investing!

Hard Money Lending: 9 Things You Should Know

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What should you know about hard money lending before looking for your first deal?

The real estate investing world revolves around using other people’s money strategically to build wealth for you and your family. If you’re new to the table, it can be tricky to get Wall Street companies to back your deals, but hard money lending is a different game. 

If you’re new to real estate investing, chances are hard money loans (also called Private Money Loans) are going to be the key to your success. 

Here are 9 ways that hard money lending is a unique and great option for new investors. 

1. Hard Money Lenders Tend To Be Relational and Local

Most hard money lenders are relational. Hard money lenders are frequently either individuals or smaller companies, so personal connection really does matter.

They like to invest in their local communities in projects that will help build the local economy. Even if you’re a new investor, by building a good relationship with small, local lenders, you can still find the finances you need.

2. Loans Are Not Score-Based

Unlike large banks, hard money lenders aren’t tied to particular credit scores. 

You should still be honest with your lender, but the score typically matters less than the type of project and the LTV (loan to value).

3. Terms Are Not Based on Experience

In hard money lending, deals aren’t usually based on experience. Instead, lenders look closely at the individual deals. 

If a particular deal has a good chance of creating wealth, you’ll likely find an investor.

4. Hard Money Lending is Flexible

If you have a unique property or project that falls outside of what larger banks will back, it’s probably a good option for hard money.

Flexibility is one of the most important distinctions with hard money lending. If the LTV is good and that lender wants to invest in that area, you’ve got a good chance of making a great deal.

5. Hard Money Can Fund More

Hard money loans can actually fund up to 100% of your project depending on the LTV. 

If you’re strategic about the projects you take on, you can increase your leverage by choosing good properties and going through a hard money lender. 

6. It’s Fast!

Hard money lending is fast. 

Typically, you can close deals in days instead of weeks. Because the real estate market moves fast, this can be a great option to make sure you’re not missing out because of slow lenders.

7. You Can Do a Lot with Hard Money

You can use hard money for all sorts of things. From gap funding to purchasing costs to usage loans that raise your credit score, hard money isn’t limited to only one aspect of investing. 

It’s good to find multiple hard money lenders in your area because a lot of them have expertise in particular areas.

8. Use it to Pre-Fund Escrow

One of the great things about hard money is that you can use it to help get projects moving. Because escrow typically works as a reimbursement system, you usually need to personally fund your first (and sometimes second) escrow draw. 

Especially as a new investor, the first few escrow draws can be a huge strain financially. 

With the flexibility of hard money lending, you can use that loan to cover those draws. Then, once you’re able to access those escrow funds, you can pay off the hard money loan. 

9. Hard Money Lending Comes in all Sizes

As mentioned earlier, hard money lenders are sometimes willing to fund up to 100% of the purchase cost. 

They’ll frequently fund $50,000 or $110,000 loans whereas a lot of the big equity firms don’t really like this size loan. 

Time to Invest!

If you’re new to investing, remember that leverage is king. Leverage—the way you use other people’s money—is how you generate wealth and income.

Reach out and find the local hard money lenders in your community. 

We have a few tools on our website that can help you find resources in your area. Check out our location pages to find hard money resources in your area. You can also download our free Loan Cost Optimizer to help you compare different loan options.

As always, feel free to check out our YouTube channel or reach out to us at Info@HardMoneyMike.com for more information.

Happy investing!

How to Get Approved by Hard Money Lenders

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Knowing what hard money lenders look for is key to winning the real estate investment game.

Real estate investing is all about creating wealth and income by leveraging other people’s money. 

Hard money loans (also sometimes called private money loans) are a crucial part of that money.

What is a Hard Money Loan? 

A hard money loan is a loan based mainly on the property or the investment that you’re working on. It’s less focused on the investors themselves, as hard money lenders tend to look more at the property and LTVs (loan to value). 

Hard money lenders look for great deals. If a project is a good deal for you, you’ll likely find lenders willing to back you up.

Another benefit of a hard money loan is its flexibility. Hard money lenders allow higher loan to values and, depending on the property, sometimes will lend up to 100% of the total cost.

This is super important for new investors who need money to get started.

When to use a Hard Money Loan?

There are all sorts of loan options out there, but hard money is particularly useful in a few scenarios:

  • Closing quickly: Hard money loans are a lot faster to come by than traditional bank loans.
  • Unique Projects: Private lenders aren’t bound by the same restrictions as large firms.
  • Higher Loan to Value: If your deal needs a higher LTV, hard money can be the best deal.
  • Credit Score Trouble: Hard money lenders are more concerned with the value of the property than your personal credit score. You can also use a hard money loan as a usage loan to raise your credit score. 

How to Find the Perfect Hard Money Lender

Since hard money lenders are often smaller, private individuals or companies, it can take some work to find the right fit for you. 

If you’re starting with a Google search, know that local lenders likely won’t appear on the first page with the paid promotions from large banks. Click through a few pages of results to find what you’re actually looking for.

1. Look For Local Hard Money Lenders

Hard money lenders gravitate towards local markets in smaller communities. You can check out our location pages to learn more about resources we’re connected to in your local area. 

Finding local real estate investment groups can be a good way to start making connections.

Also, engaging with online forums like ones on BiggerPockets can help you find other investors and lenders in your area.

Local connection goes a long way in the hard money game, and you’ll need to take time to network in your area.

2. Create Relationships

Private money lenders are often very relational. 

Because of this, you’ll need to take time to call and talk to them. Make sure they know that you know what you’re doing.

Learn the language to help build their confidence in you and your project. 

Additionally, some lenders may even ask to see the property you’re asking them to invest in. Making sure you give them all the information they ask for is critical in your relationship with them. 

Similarly, just like they’re trying to determine whether you’re the right fit for them, you should also look at multiple lenders. The relationship between lenders and investors is a two-way street, and it’s important both of you feel confident about the deal.

3. Make Them Feel Comfortable

Remember that hard money lenders are typically individuals or small companies. Each loan is important to them.

Let them see your numbers. Let them see an example deal. Even if you’re just starting out, show them an example of potential loan to values, and be prepared to show your work.

The more you know about your contractors, purchase price, rehab costs, etc., the more you’ll ease their concerns.

Although it takes time to prepare this information, it can make a huge difference. This is your business, and doing that preparation shows your lenders that you’re competent at your part of the job. 

4. Make it Easy for Your Lenders

Finally, don’t make your lender chase you down to follow up. Have everything ready before they ask and pass it along early in the process.

Prepare a package ahead of time that has all the necessary information enclosed to the best of your ability:

  • Comps
  • ARV info
  • Scope and timeline of work
  • Team members
  • Contractors
  • Realtors
  • Insurance agent
  • Title info

The easier you make it for your lender, the more likely they’ll offer you a great deal.  

Show them that you know exactly what and how to break down a property and that the equity is there. This lets them know their loan is protected by a solid property with a good plan for generating income.

Questions?

Hard money lending is all about relationships. If you build a good relationship, you’re far more likely to find the lenders you need.

We have a few tools that can help you shop around for the perfect hard money loan. The first is our location pages. You can use these to find resources in your area.

The other tool we recommend is our free Loan Cost Optimizer download. It’s easy to use, and it can help you compare different lenders to find the best deals.

If you’re interested in a hard money loan or have questions about how to find lenders in your area, feel free to reach out to us at Info@HardMoneyMike.com.

Private Money Loans: 5 Tips to Find the Safest Loan

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What should you look for when considering private money loans?

Real estate investing is one of the most lucrative markets out there. It’s still creating millionaires and opening the door for families to build generational wealth. But how can you get your foot in the door?

Especially if you’re a newer investor, we’re here to help you figure out how to do this by finding the right lender for you.

Why Private Money Loans? 

Private money loans—also often called hard money loans—are particularly helpful in real estate investing. These particular loans are more flexible which make them perfect for unique projects or projects in rural areas that larger banks may see as less valuable.

If you’re in real estate, you understand that leverage is king. Hard money is an important part of that leverage. However, even as you’re looking for private loans, make sure you shop around so that you can negotiate the best deal possible.

But how can you go about finding a good private money loan? 

1. Shop Around for Loans

No matter where you are in your real estate career, you should always shop around. Even if you’ve had a good experience with a lender in the past, still look around to see if you can find better deals. 

Talk to different lenders. Especially with hard money, each lender will typically have a specialty. This means that each project you do might fit best with a different lender.

This can feel overwhelming, so we’ve created a free tool called the loan cost optimizer. It’s easy to use and can help you find a better deal for your project.

2. Ask For Referrals

If you ask Google to find a good lender, two things are going to happen: First, you’re overwhelmed by the sheer number of options. Second, the ones you’re most likely to see will be paid promotions or paid advertisements.

One of the best ways to avoid this is by asking for referrals. If you know other people in your area who are in the real estate game, ask about their experiences with their lenders. 

Did they charge what they said they were going to charge? How accurate was the lender’s original quote? Did they close on time? Was the contract solid?

Finding a good lender is about more than the on-paper costs. You want a lender who’s reliable and trustworthy, just like they want reliable clients. 

3. Check the Reviews

If you can’t get a referral from someone, the next best thing (and something you should do regardless) is to check the reviews.

Platforms like Google have made it super easy for people to leave reviews for companies. Check out what people are saying. 

Although reviews aren’t always entirely accurate, if a private money lender has a lot of negative reviews about trying to change the terms of a loan, that could be an issue. 

4. Get The Private Money Loan Details in Writing

You don’t ever want to be stuck in a situation where you thought you had a specific agreement, but it doesn’t come through because it was just a verbal comment.

Make sure you get a clear terms sheet that outlines everything the lender said. If you have other important conversations, ask to get an outline of that conversation in writing. Even an email works!

5. Review All Paperwork Carefully

If possible, find a lender who will provide the settlement statement a day or two before closing so you don’t have any surprises. This gives you time to review the paperwork carefully before finalizing the deal. 

Always make sure you know the default rates and other potential charges that might show up. Even if you don’t expect delays in your projects (no one does), read all that fine print carefully so you know the facts.

If You Want Additional Help… Ask Us!

Here at Hard Money Mike we specialize in private money loans. These loans are flexible and perfect for investors working in smaller communities, but it can take some time to find the right loan for you.

If you want a quote, have questions, or want to learn more about private money loans, reach out to us at Info@HardMoneyMike.com.