7 Hard Money Tips That Will Keep You Out of Trouble

Video Transcription

I’m Corey Dutton and I’m a private money lender. Today I’m going to give you some “Hard Money 101.”

This topic is about, 7 Ways to Get Yourself in Trouble With a Hard Money Loan.

Hard money loans can be great! They can make real estate investors a ton of money. But if you’re not using these loans properly, they can get you into a lot of trouble.

Let’s talk about  7 ways that hard money loans can get you into trouble:

#1: The lender not funding and losing your earnest money:
This a huge way that you can get into trouble. You go to a lender and you’re depending on this hard money lender to fund your loan by your deadline or you’re going to lose your earnest money. The lender drags its feet, wastes a ton of time, and then declines your loan. If this is a purchase, this means that you’re going to lose your earnest money. That’s a huge risk. So make sure you’re aware of that when you engage a hard money lender on a purchase transaction that you need to close quickly.

#2: Paying Upfront Fees to a Hard Money Lender:
Paying upfront fees such as appraisal fees, inspection fees, attorney fees, and then never getting a loan? That’s a really fast way to get yourself into trouble with a hard money loan, particularly if you’re going out to multiple lenders trying to get a loan and each one of them wants an upfront fee. And then not one of the lenders actually funds the loan? This is a huge risk to watch out for when looking for hard money loans.

#3: Getting Involved With a Predatory Lender:
Let’s face it there are a lot of hard money lenders out there that just want to own your property. Their intent is that you will default on your loan, or that you will make some sort of mistake and fall behind on your payments, and then they’ll foreclose on your property. Their intent is that they’ll make all the profit on the property and not you!

There are a ton of private money lenders out there that are predatory. That’s one reason why you should be dealing with a professional or licensed private money lender if possible.

Do not mess with these random people out there who are not professional lenders that say to you, “Oh sure, I’ll lend you the money!” Because guess what? Those people are typically going to be the most predatory because they aren’t professional, legitimate private money lenders.

Let me give you 2 examples:
I know a borrower that was doing a flip. She had a loan with a hard money lender for 90 days. He didn’t give her any copies of the loan documents at closing.

And according to the loan documents, if she didn’t pay that loan off within 90 days, on day 91 she got slapped with a $15,000 fee!! So guess what? That lender just goes out and buys himself a new car on day 91. And then he tried to foreclose on her property after it was all repaired and ready for resale. This is a prime example of predatory lending at its finest! Watch out.

Let me give you another example. I had another borrower that borrowed money from an unlicensed private money lender that was in her real estate club. This was just some random business associate that the borrower met via the local real estate investment club. This private lender gave the borrower a hard money loan on a handshake for a 90-day loan.

The 90 days go by and this private lender slaps this borrower with an extension fee of 2 points a month, or 2 percentage points of the loan amount per month. On this loan, it was $5,000 a month she was paying in extension fees! The lesson learned is to be sure to read the fine print in your loan documents and watch out for predatory lenders like this! If they are not professional lenders or licensed, stay away! Sometimes you think you’ll get a better deal by getting a loan from a private individual, “friend,” or a business associate, but you won’t.

#4: Not Having a Solid Exit Plan to Pay the Loan Off in a Short Period of Time:
You’ve got to have multiple exit strategies on these loans because these are short-term loans with high-interest rates. Let’s say you don’t sell the property in the time that you think you’re going to sell it? Or, let’s say your exit strategy is to refinance the loan with another loan, and you can’t get approved for that loan?

Guess what? If you can’t pay the loan off in a short period of time you’re going to be paying an extremely high-interest rate for months, and months, and months. And eventually it’s going to catch up with you, eventually you’re going to fall behind on your payments, and eventually, that lender is going to foreclose on your property.

So make sure you have a solid exit plan and always know what you’re going to do if this happens, or that happens, in all different types of scenarios. Because you can’t just count on one exit strategy.

#5: Underestimating your Project Costs or Experiencing an Injury or Illness:
Let’s say you’re doing all of the work on the property yourself and it’s a rehab. If you hurt your back for example, and you’re the one that’s doing the work, how will you finish the project within your budget?

I’ve seen it happen. One of my borrowers was doing all the work himself. He didn’t have a contractor, he was in there doing all the sweat equity himself. Guess what? He hurt his back. He couldn’t go back on that job, and he couldn’t afford to hire a contractor to finish it, otherwise, he would go over budget. So he got himself into trouble quick!

I’ve also seen borrowers that underestimated their project costs from the start of the project, which is a very common thing that new real estate investors are going to do. And that’s a really quick way to get yourself into trouble with a hard money lender, because if the hard money lender is giving you rehab money and they’ve given you a certain amount for your rehab, and then you go over budget.

Where are you going to get the rest of the money to finish the project? Are you going to be able to go out and get another loan from somebody else? Probably not.

#6: Market Collapse:
If your plan is to buy a property and in 4 months, 6 months, after you fix it up and add a bunch of improvements you’re going to resell it. What happens if the market collapses in that time frame? That’s a huge way to get into trouble with a hard money lender because you are stuck paying on a high-interest rate loan. If you can’t sell the property for what you’ve got into it because the market collapses or someone lists a better house for less money on the same street? What will you do?

#7: Getting into Too Much Debt:
This is called “over-leveraging” yourself. Leverage is debt. So if you’re over-leveraged, it means you have too much debt.

I’ve seen borrowers take out a first, second, and a third mortgage on a  property to get it purchased and rehabbed. And then guess what? They’re paying the interest payments, interest payments are high, beginning to stack up, and then all of a sudden before they know it, they owe more money than the property is worth!!

With the interest and the fees you’ve paid to hard money lenders, there’s probably not going to be a lot of profit left there for you if you get into too much debt.

In conclusion, make sure you know what you’re getting yourself into when you take out a hard money loan. Please spread the word and share this video with someone that you know that may be out there looking for a hard money loan for the first time. Or someone that you know that maybe doesn’t understand all of these risks because it’s important to know what you’re getting yourself into with a hard money loan.

Like I said before, you can make a ton of money using hard money loans in real estate, but you can also get yourself into a lot of trouble if you don’t understand all of the risks.

If you have any questions or comments about this post or any of the risks I’ve discussed here, please leave your comments in the comments section below.


Beware of Broker Chains and Joker Brokers

Beware of broker chains and excessive broker fees. A “good” loan broker can get your loan funded quickly. (A broker is someone that takes your loan directly to the lender to get funded). A “good” loan broker is worth its weight in gold!

Any fee you pay to a “good” loan broker is money well spent. And why? Why not go directly to the lender? A good loan broker knows all the “real” lenders because the good broker has worked with all of the real lenders before. A good broker is going to submit your loan to multiple lenders simultaneously. And what does that do? That increases the chances that your loan is going to get funded!

Now what is a “bad” broker that you want to stay away from, and why are they bad? Let me tell you more. A “bad” broker, I like to call them “Joker Brokers.” A bad broker doesn’t know who the “real” lenders are. A bad broker is going to just take you to another broker, and then that broker is going to take you to another broker, and then that broker may or may not be connected to a “real” lender. So, before too long, that bad broker is going to get you involved in what’s called a “broker chain.”

Now what is a broker chain? You may or may not have heard this term before, but it’s exactly what I just described. You go to a bad broker and this broker doesn’t know who the real lenders are. They haven’t closed loans with any real lenders. They think that brokers, other brokers out there who are actually brokers, are the real lenders. So they’re taking your loan request to a broker, who then takes it to another broker, who then takes it to another broker, and that’s your “broker chain.” It’s a chain of brokers.

So what’s bad about that? Well guess what? You have to pay every, single one of those brokers a fee in that broker chain. And that’s why they’re bad. So if you find out that you’re in a broker chain?  Fire those brokers and start over.

Paying Excessive Broker Fees

This brings me to my next topic which is paying excessive broker fees. Watch out for excessive broker fees. This is where I’m going to talk a little bit more about the “Joker Broker.” And why do I call them Joker Brokers? Because as a private money lender these brokers are pure comedy, they are just laughable. Let me give you an example.

I had a broker come to me to fund a deal. He sends me 15 different e-mails in a row about this loan request.  And in the subject line of every, single email, there were the letters “FW:” (which means “forwarded”). The broker had forwarded those 15 e-mails directly from the borrower, and each one of those e-mails had infinite number of attachments. But guess what? In all that information the broker sent me, there wasn’t even a loan amount listed! I couldn’t even find the property address!

After hours of sifting through these 15 different e-mails, I went back to the broker and I said, “Yes, we’re interested in the loan, can you tell me a little bit more about this deal?” The Broker didn’t know anything about this loan! Nothing. He went blank! But the best part? Within a few minutes he emailed me yet again, and this time he sent me his “fee agreement.” I opened it up and I just about fell off of my chair. This is where the comedy comes in. This is where I say these joker brokers are just laughable.

Guess what it was? It was 5 loan points he wanted as a broker fee! 5% of the loan amount as a fee for forwarding me a bunch of e-mails from the borrower, and not knowing one snippet of information about the loan request! (It was a $3.5 MM loan amount with a fee agreement of 5 points, 5% of $3.5 MM is a $175,000!) He had done no work, he had just forwarded me all of those emails with attachments from the borrower directly. The broker didn’t even know the loan amount, or the property address, off the top of his head when I called to discuss the loan with him.

So I laughed in his face. And you know why? Because I don’t want to deal with a borrower that would sign such an agreement and pay a lazy broker like that an excessive fee. Why? Because it proves they’re stupid. And if you do the same thing when you’re out there looking for money, you’re probably going to get laughed out of the room just like he did. Let me give you another example of a joker broker.

These joker brokers send me e-mails and they’re attaching all of this sensitive information, private information, about the borrowers. And in these email attachments you’ve got social security cards, you’ve got driver’s licenses, you’ve got tax returns! This is sensitive information! Most asset-based lenders don’t even ask for that stuff until they’ve preliminarily approved the loan request, if at all. But these joker brokers, they’re sending this sensitive information to a private lender in the first e-mail, and guess what? Not even a loan amount listed! Not even a property address listed! Again, this is why I call them “Joker Brokers.”

If you’re looking for a loan, a “good” broker is worth its weight in gold. But a “bad” broker that creates “broker chains” and charges excessive fees is going to cost you time and a grip of money. And if you’re a borrower, and you’re out there looking for money, make sure you know what broker you’re dealing with, and determine pretty quickly, is this a “good” broker or “bad” broker?

And if you’re a broker that’s watching this, and you’ve taken offense because maybe you’re doing this kind of stuff? You might want to change your business model because it doesn’t work for private money lenders!

If you have any questions, complaints, or comments, please leave them in the comments section below. If you found this post useful, or you know someone looking for a loan that’s gotten themselves in this position with a broker, share this post with them!


Hard Money Interest Rates Explained

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Let’s say you’re getting a hard money loan and the lender quotes you an interest rate between 12 to 14 percent. Whoah! That sounds insane doesn’t it? That sounds insanely high when right now the average interest rate from a bank is 4 to 6 percent. We’re talking 12 to 14 percent folks. That’s double digit interest rates, right?

Now let me explain to you how hard many interest rates actually work. Most of the loans that you’re getting from a hard money lender are going to be very short term in nature. Somewhere between 1 to 12 months.

So let’s say you only have that loan for 4 months. You’re buying a property, you’re fixing it up, and some at some point in the future, 4-6 months down the road, you’re going to resell that property.

So let’s say you have this hard money loan for 4 months and the interest rate is 12 percent. How do you figure that out? That’s 4 percent not 12 percent, 4 percent. So how do you figure that out?

You take 12 percent. That’s your annualized interest rate and you divide it by 12 months, that’s going to give you 1 percent a month.

If you hold the loan for 4 months, that’s 1 percent a month, so that’s 4 percent, not 12 percent.

Hard money interest rates aren’t as high as they seem to be. Sophisticated real estate investors know how to use hard money lenders to make more money. To make more money in their investments by getting these loans paid off in 4 to 6 months. To walk away with an interest rate that’s actually 4 to 6 percent. That’s on par with what banks are charging.

If you have any further questions for us, leave them in the comment section below.


What Is a Hard Money Loan?

Why is it called a hard money loan?

A hard money loan is called such because for any loan you must have some form of collateral. In order to get that loan and in this case it’s called a hard money loan because you’re using a hard asset. Now what is a hard asset? It’s any asset like real estate that can be liquidated quickly for cash.

Why do you get one?

Hard money loans are commonly used by real estate investors to either purchase or refinance real estate.

So who gets one this type of loan?

Well regular people, anyone who is seeking a real estate loan that needs to move quickly. Someone who’s seeking a real estate loan and may have poor credit, or no income to prove a higher high enough income to qualify for the loan.

Also anyone who has a piece of real estate and wants to refinance that piece of real estate and pull the money out and use it for other purposes such as for a business or investing.

Still have questions or looking for hard money loan? Leave your comments below. And if you found this useful Please Like and Share.

Hidden Fees of Hard Money Lenders You Didn’t Know About

Hard Money Lender Fees
unsplash-logoBen White

What happens if you arrive at a loan closing and discover some additional fees charged by your hard money lender on the settlement statement? Hard money lenders may have some additional fees, but they may not be “hidden” after all. A lender’s fees may be right there in plain sight, you just need to know where to look. So how do you find out all of the fees so that you can better compare options among lenders?

(Disclaimer: Watch out for any fees paid prior to a loan closing. This could be an upfront fee scam).

What are the most common fees charged by hard money lenders?
Every lender charges points, but points are not considered junk fees. Most hard money lenders disclose the points they charge, so points are typically not hidden fees either. It’s the “other fees” that a lender charges that may be junk fees.

For example, many lenders charge an underwriting fee, this is in addition to the points charged. Underwriting fees can be as high as $2,000, in addition to points paid to a lender. Other lenders may charge a legal fee or a document preparation fee at closing. These additional fees charged at closing can be anywhere from $500 to $1995.

And if you have a rehab loan with a repair funds escrow, there may be even more lender fees after a loan closes! For example, after a loan closing, a rehab lender will often charge a fee for each draw from a repair escrow for repairs to a property.

How do you find all of a lender’s junk fees before you go to the loan closing?
Look at the fees listed on a lender’s website, check your emails back and forth with the lender, look closer at the term sheet or letter of intent given to you by the lender. Are the lender’s junk fees somewhere that you may have overlooked until arriving at the loan closing? When it doubt, ask! Ask a lender to give you a list of all fees that are in addition to the loan points. Clarify which fees are charged upfront before closing, which fees are charged at the closing, and if any fees are charged after closing.

Do the numbers and compare your loan options
When comparing fees charged by different lenders, first make sure you know ALL of the fees that are charged by each lender. Total up all of the points and junk fees for each lender. Then compare your options side-by-side by using the fee totals for each lender. Which lender has the lowest, total fees?

Beware of upfront fee scams whereby lenders charge fees BEFORE a loan closing
As discussed previously in the ‘disclaimer’ above, always be wary of paying any fees prior to the actual loan closing and funding. There are a ton of upfront fee scams pushed by fake lenders who have no intention of making loans. These scammers are just charging upfront fees with the promise of giving a loan. But how do you spot these scams and avoid them? Check out a video we did on this topic called, “5 Red Flags to Spot a Loan Scam.” Watch that video to avoid getting involved in an upfront fee scam.

Also, make sure you close the loan at a title company, and never wire your funds directly to a lender. The title company will provide you with a final settlement statement at the loan closing that lists all of the fees and amounts. But the moral of the story, make sure you know all of the fees a lender is charging before you get to the closing table!

Do you have questions or comments on this topic?   Please leave them below.

Why Hard Money is Better Than Taking on A Partner To Make A Profit

hard money vs business partner

Aren’t the interest rates on hard money loans just ridiculously high? Why would anyone borrow hard money funds rather than take on a partner?

Let’s compare the cost of a hard money loan with taking on a partner. Then you decide what’s a cheaper option.

The first question to ask yourself is, how much of your final profit will a partner take? 35%? 50%? 60%? Let’s say you find a partner that will take 50% of your final profit. You’re better off using a hard money loan rather than use that partner. Here’s why:

  • Hard Money Loan for $100,000: Hard money loan interest rate = 12% annually. On a $100,000 loan you pay loan fees of 3% or $3,000 when the loan closes. Then you pay 1% per month ($1,000 per month) until the house sells. Let’s say it takes you 4 months to fix up and resell a house. The total cost of the money for that 4-month time period is $7,000. ($3,000 in loan fees + $4,000 in interest payments). Let’s say your profit is $23,000 on this flip. After the cost of the hard money loan, you’re left with $16,000 in profit.
  • A Partner loans you $100,000 and takes 50% of your final profit: Let’s say your profit is $23,000 on this flip. After you give your partner 50% of that profit, you’re left with $11,500 in profit. 
  • This is a difference of $4,500 over a 4-month  time frame. Over 6 months it’s a difference of $2,500.

The double digit interest rates charged by hard money lenders may seem high on the surface. But when you compare it with the cost of taking on a partner, it suddenly becomes a better option, doesn’t it?

Get to know all of the hard money lenders that lend in your area on a first name basis, so when the right deals do come along, you can take them down and make a profit! Want to know how you can get started using hard money on your next deal? Reach out to us today and let’s get started!

What’s the difference between a hard money loan and bank loan?

Many people have this question, especially if they’ve never gotten a hard money loan before. So I’m going to tell you the biggest differences between a hard money loan and a bank loan.

What’s the biggest difference?

The speed. A Hard Money Loan is known for its fast approval and it’s fast funding timelines. The time from when you apply for the loan initially, until the time that it funds, is MUCH faster than a bank. Sometimes we can even fund in 24 hours!

Typically a bank loan is going to take you anywhere from 4 to 6 weeks to get closed, and sometimes longer depending on the transaction, especially if it’s a commercial property that’s underlying the loan.

What’s the second biggest difference between a hard money loan and a bank loan?

Your requirements needed for a hard money loan. The requirements for approval are far less than they are for bank loan.

A hard money loan is called that because it’s based on a hard asset. It is going to be the approval process for that loan is going to be based on the actual asset itself: e.g. the property characteristics and the value. A bank loan is based on the credit score of the borrower and the income of the borrower. Banks are going to look at the tax returns for the borrower’s income or they are going to look at the payment history on the credit report.

Hard money lenders typically don’t look at that credit reports or income. So it’s a totally different process with regard to how you get approved for the loan itself.

In summary, a hard money loan is a lot faster, from the time you apply until the time you’re funded. A hard money loan has far less requirements than a bank loan because it is based on the “asset”versus your income or your credit.

How to get a hard money loan in 24 hours



Video Transcription

Every day someone approaches me and they wanna close a loan quickly sometimes in 24 hours. So how do you close a loan quickly in 24 hours or in say a week. Well I’m going to tell you what you need to close a loan quickly. So what do you need to close a hard money loan quickly?

1. The Purchase Contract
If it’s a purchase you need a copy of the purchase contract. And that’s the entire purchase contract. Any addendums that have been signed together with that contract need to be provided to the lender as the full contract. So make sure you have a copy of the entire contract ready for the lender.

2. Preliminary Title Report
Number two you’re going to need a title report a preliminary title report. The lender is going to want title insurance on their loan on this property. So you if you don’t have a preliminary title report ready to go. Make sure you have at least the title companies contact information that the lender will use to then offer that a preliminary title report to prepare for the closing. Number three, escrow, escrow contact information. In some states that title and escrow is the same company so in some states you don’t need to worry about this third item.

3. Title & Escrow
This third, this third requirement to close your Hard Money Loan quickly. But in some states the title company and the escrow company are two separate entities. So make sure you have the contact information for the escrow company that will be handling the escrow part of your transaction and give that to the lender so that they can set up the closing and the funding with the escrow company as well.

4. Access To the Property
Typically a lender is going to want to know what is the access to the property. Can I get in and do an inspection? Is there someone in there? and it’s not possible to access? I’m going to need to do a drive by? What is the access information? Is there a realtor that’s going to let me in? Are you going to let me in? Provide the access details, access information to the lender immediately as well so the lender can coordinate  a site visit or a walk through to view that property.

5. Property Value
What is the property value? That is going to be the lenders primary question in this whole approval process. If you have a comparative market analysis (CMA), give that to the lender.  If you have a broker’s price opinion or if you have an appraisal that’s already been performed. give that to the lender immediately so the lender can satisfy the value question.  Which is typically one of the biggest questions that a lender is going to have. What is the property value and how do we prove that.

6. Down Payment
The last thing you are going to need to get your hard money loan closed quickly. Know what your cash to close requirements are going to be. Is the lender going to require some form of a down payment? Are you having to cover the loan fees or any other closing costs? If it’s an auction are there any auction fees any transaction fees that you’re going to be responsible for? So know what are your cash requirements going to be to close on this loan.Don’t be taken by surprise at the 11th hour when the lender tells you you need to bring in $12,852.63  and you have only $5,000 .

Hopefully this video has shed some light on the items that you’re going to need to close your Hard Money Loan quickly.

How To Make a Profit Flipping Homes Using Hard Money Loans

make a profit with hard money rehab loans

Famous reality t.v. shows like ‘Flip or Flop’ or ‘Fixer Upper’ focus on the process but not the profit. They leave out important details like true costs, permitting nightmares, and houses that just won’t sell. Don’t let yourself get caught up in the fantasy of these Hollywood flipping shows. House flipping takes hard work, patience, research, and of course, lots of money.

But let’s dig right in and talk about the money part. It takes money to flip houses and make a profit. Chip and Joanna Gaines of the show ‘Fixer Upper’ have endless Hollywood production budgets for their flip projects.

But how does the average person get the cash to get started in house flipping? The ideal way to do it is with your own cash. But who has cash sitting around like that? Not many of us. Partners steal all of your profits, using family money is often a mistake.

So how do you get the money you need to get started in the business of house flipping? Enter hard money loans.

You may have heard a real estate coach or fellow colleague talk about hard money loans. The name “hard money” kind of hits you in the gut, it has a bit of a negative ring about it. But just like any tool, it can work to create great things, but it must be used properly.

Hard money loans are nothing more than a tool used by successful real estate investors to make a profit flipping houses. But how?

Here’s how to make money with a hard money loan

  1. Find all of the hard money lenders that lend on properties in your target locations. Get well acquainted with their requirements, their process for closing loans, and the price of the money.
  2. Get a bad property in a good location under contract using a proof of funds letter from one of your chosen hard money lenders. This will help you compete with cash offers because hard money financing is perceived to work very much like cash offers.
  3. Close on the property using a hard money loan.
  4. Fix the house and get it on the market and resell it as soon as possible.
  5. Pay off your hard money loan and then use it to fund your next deal.

Even real estate investors who have their own cash to work with rely on hard money lenders to fund their deals.

But why use hard money loans if you have enough of your own cash to do a real estate flip? Let’s imagine that you’re in the process of rehabbing a house and a new property suddenly comes on the market that’s perfect for a flip? If all of your own cash is tied up in the house you’re currently rehabbing, how do you take down the second house? Enter hard money loans.

Do you have a deal to present to us for approval? Get pre-approved and a letter of intent so you can start making money with a rehab loan.

Can you get a hard money loan with bad credit?

You want to buy an investment property and you need to borrow money to buy it but you might have bad credit.

You’ve heard or read somewhere that hard money loans are the types of loans that real estate investors use to buy investment properties. But you worry that maybe you won’t be able to qualify for a loan to buy real estate because you’ve had some credit problems in your past.

The good news is that most private money lenders don’t consider your credit history when approving loans on investment properties.

Most lenders are looking at the real estate asset that will be used as collateral for the loan rather than looking at your credit score. This is why they are called hard money loans, because they are loans against “hard” assets like real estate.

However there are some hard money lenders that do consider your credit score in loan approval. As you seek out lenders that lend in your geographic areas and compare interest rates and fees, make sure to ask each of them how credit score influences their lending decisions.

If credit does weigh in as a factor for approval, the next question is, what is the minimum credit score requirement that they require? Some lenders will give a higher interest rate to borrowers with a low credit score, while other lenders may increase the down payment requirement of a borrower with a low credit score. Always ask the credit question upfront if you are unsure. You may also search in the lender’s website for specific requirements regarding credit.

So, can you get a hard money loan with bad credit to purchase an investment property? The answer is yes.

Of course you can. Foreclosures, bankruptcies, low credit scores, short sales.

No problem. And why? Why is a hard money lender going to lend to you if you have bad credit, whereas a bank won’t?

Well the answer is because a hard money lender is an asset based lender. This means that a hard money lender is lending on the real estate as collateral.

The Four C’s

Now a regular lender looks at the Four Cs. The four Cs when they’re determining whether to approve a loan or not approve a loan.

Credit is one of the four Cs. But what are the others?

Collateral, which is what we mentioned, the real estate, the property.

Character, the experience of the borrower or other characteristics about the borrower to weigh in into the lending decision.

And then finally, The Cash, how much cash do you have to bring into a purchase or if you already own the property, how much cash has been put into the property to date?

When you’re searching for hard money lenders and you’re comparing your options among lenders, make sure you know what the minimum credit score requirement is of that hard money lender because some hard money lenders yes they do, they have a minimum credit score requirement.

Know what that minimum requirement is before you get too far in the application process.

In fact, private money is one of the most popular means by which real estate investors with poor credit are able to purchase investment properties. While most hard money lenders don’t care about the credit scores of their borrowers, there are some lenders who do have credit score minimums or other credit-based criteria.

Do your homework on the specific requirements of each lender when comparing your loan options. If your credit score will affect your interest rate or will increase the amount of your down payment, you need to know!

By asking questions upfront about how credit score influences a lender’s lending decisions, you will avoid any surprises later down the road that may kill your real estate deal.

If you have more questions about this contact us or leave a comment below.