5 Tips for Choosing the Right Hard Money Lender

Nov 30, 2021 | Blog

Non-U.S. citizens looking to buy property in the U.S. aren’t limited to purchasing pre-owned, fully built homes. With the right type of lender, foreigners can get new construction home loans to execute their real estate goals. Who is the “right lender” in this situation? A hard money lender. These types of lenders don’t require the strict red tape of banks or other financial institutions, and instead will help a foreigner acquire a loan based on the merits of the deal. To get started, read our tips for foreigners getting new construction home loans, and how to find a trustworthy hard money lender with the right experience.

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Who is a Hard Money Lender?

A hard money lender is an individual, investor, or funding group that will lend money to borrowers based on common sense and the overall merits of the deal.

Unlike traditional lenders, hard money lenders don’t have a strict set of requirements for borrowers or require multiple layers of proof that they will pay back the loan.

Instead, they will evaluate a borrower’s situation, plan, and exit strategy. This will all be included in the borrower’s executive summary. Many times, loan approval can be determined over a quick phone call.

The right hard money lender is more concerned about building relationships with borrowers rather than sifting through piles of documentation. This relationship will establish the trust and transparency needed from both sides for a successful deal.

Who Should Get a Hard Money Loan?

Hard money loans are perfect for those with more complicated situations or multiple properties that traditional lenders won’t deal with.

This typically includes real estate investors, house flippers, bridge loans, or self-employed borrowers and business owners.

Hard money loans work for people who need loans fast and need them in large amounts for investments.

Tips for Choosing a Hard Money Lender

If you’re new to hard money, it might be confusing to know where to begin. Not all hard money lenders are the same, so it’s important to know how to choose one that is going to be as honest, respectful, experienced, and efficient as you need.

Check out these 5 tips to help you find the right lender.

1. Find a Firm that Specializes in Hard Money

Once you’ve performed some initial research on what hard money lending is, you can search for a lender in your area.

Scroll through each lenders’ website to make sure they specialize in hard money loans, and that they originate and service loans in-house.

Reach out to a member of the team to start asking questions, and to inquire about the group’s specific experience and areas of expertise. You’ll find out a lot about a lender from this initial conversation.

2. Search for Reviews and Referrals

Search for reviews and referrals to help you narrow down your list of lenders. You can ask groups you’re interested in to connect you with referrals or search for them on your own.

Private lenders specialize in making complex loan scenarios fast and simple. Understanding their experience is important to your success, and they know it. A good lender will be more than willing to earn your trust, just as you will need to earn theirs.

Insisting on honesty and transparency from the start will help both parties be successful.

As you begin working more closely with a lender, carefully review all paperwork and be sure to ask plenty of questions about the process and the specifics.

3. Focus on Best Value vs. Lowest Rate

With hard money lending, there’s so much more to it than grabbing the lowest interest rate. If a low rate is your only focus, low-rate promises could even lead to a compromise on service and other terms.

Instead, focus on the best value: competitive pricing plus expertise, professionalism, honesty, and reputation.

A great hard money lender also can provide a valuable relationship for years of deals.

4. Compare Speed of Approval and Funding

Before you begin your search for the right lender, you need to understand your plans and goals. This helps you communicate the type of time frame you need.

While hard money loans take much less time to get than conventional loans, each lender will provide a different time frame depending on their process.

Avantgarde Lending, for example, provides an immediate review of your loan scenario and funding in as little as seven days.

Know your time frame so you can ask upfront the timing your lender needs, and compare this across your list of potential lenders.

5. Choose Local

Servicing loans out of state can be a challenge for many reasons, but a local lender will have valuable insight into the local market.

They will be able to better assist you with your project, and more quickly if you’re in the area. Not to mention, there’s a higher level of comfort and trust in being able to work with someone local.

Avantgarde Lending has the most experienced hard money owner-occupied and business purpose loan officers in California and Colorado.

How to Get Started

The right lender will be eager to answer all of your hard money questions and hear your unique loan scenario. These lenders specialize in the types of loans that are more challenging and unusual — which institutional lenders can’t do.

Avantgarde Lending’s highly trained loan officers are ready to structure mortgage options for your unique scenario.

We offer California and Colorado borrowers:

      • Owner-occupied or non-owner-occupied consumer or business purpose loans
      • Single-family, multi-family, commercial, industrial, construction, and land loans
      • Loan amounts from $50,000 to $20 million
      • Loan-to-Value up to 70% (deal specific)

If you’re ready to get started, click here to submit your loan scenario. We look forward to helping you find the perfect loan for your unique situation.

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Need help? Ask us

Are you new to using a private lender? Ask us how it works. Learn how to close more deals with this option. Do you have a particularly challenging or unusual real estate transaction that institutional lenders can’t do? Ask us to review it.

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