How to Choose a Hard Money Lender

Once you are ready to invest in commercial real estate as part of your investment portfolio, you need to then decide on a place to get financed. 

A few things to think about when going to choose a place for financing….

Choose a firm that only specializes in hard money lending. There is a difference between a hard money lender, a private lender, and a traditional lender. Hard money loans are specifically meant for residential and commercial real estate. The specialists make sure all servicing, origination, and other requirements are completed correctly. 

Try finding a local investment property lender. Hard money lenders are always thinking about the equity of the property. They will come and survey the property before issuing a loan because the equity of the property is their protective measure against default. If the lender is local they should already know the area well enough that the inspection process is easier and faster to go through.

Once you find a lender always read the fine print. If you’re not sure on what certain sections of the contract are stating. They may try coursing you into a bad deal or mislead you into think you are receiving a certain rate. 

Understanding what your needs are before trying to find a lender. If you are able to understand what kind of investor you are, you will be able to niche down and find the cheapest rates. Make sure to understand what kind of lender they are. Some lenders offer only to residential, only too commercial, or they do both. Understand if the lender is either a direct lender or a broker. A direct lender is capable of making a decision faster since they have their own source of capital where a broker is a middle man and will have to discuss back and forth between you and their lender. 

Some questions to think about when choosing a lender that may make the process go faster.

-Does your property meet the lender’s qualifications?

-What is the lender’s fee?

-How long has the lender been in business?

-What is the lender’s reputation with the community?

-Is the lender’s staff licenses and/or certified?

A hard money lenders real job is for you to succeed. If your property is profitable the lender earns a return on the investment. If the deal is successful you are more likely to come back for future projects.