3 Things You Ought To Know About Hard Money Lenders
Real estate investors have long used hard money lenders to finance their real estate investments for reasons of speed and flexibility. But for those who have never taken out a non-bank loan before, there are certain things every real estate investor should know about hard money lenders. Here are just 3 things every real estate investor should know:
Not Every One of Them Is Legit
There are a lot of loan scams in the hard money space so be wary of fake lenders who don’t have the ability to do a deal. Most of them are just collecting upfront fees from borrowers!
Protect yourself by reading this post: How To Avoid Lending Scams
Don’t Assume a Hard Money Loan is Like a Bank Loan
The process of obtaining a hard money loan is completely different from the home mortgage loan process that is typical at your bank or credit union. For example: documentation requirements, valuation determination, speed of funding. These are just three examples of how the process differs greatly between the two types of lenders.
Never Expect No Documentation Just Because it’s a Hard Money Loan
So many people assume that just because it’s a hard money loan that there are absolutely no documents required, e.g. loan application, credit report. Although the documentation requirements of a hard money lender may be LESS than a bank lender for a loan approval, it does not mean they are non existent. Each lender has its own list of documentation requirements, so ask and don’t expect or assume that there’s no documentation required.
These are just 3 important things that every real estate investor should know about hard money lenders. Are you a hard money lender yourself, or are you a borrower who is seeking private money financing? What else would you add to this list?