Most hard money lenders are usually less concerned about your credit, and more concerned about how much equity is in the property. After all, the property is their collateral, and they will be first in line if anything goes wrong. Hard money lenders often will only lend up to 65% of the after repair value, also called loan to value (LTV). Obviously you will have to negotiate a great deal to meet this qualification.
Hard money lenders can often fund your deal in 24 hours. The interest rates can range from 12 to 20 percent. It is not called hard money for nothing! There will probably also be points involved. A point is 1% of the loan.
The requirements will vary by lender, so be sure to check around. There will most likely be an application and some other forms to fill out. There are probably several hard money lenders at your local REIA meetings that want to lend you money! Be sure to join your REIA as soon as possible. You can also find additional hard money lenders at the link below.
Hard money can work very well for some properties, it is expensive, but the lending requirements are somewhat less stringent and the turn around is super fast. Who cares if you pay $17,000 for a short-term loan, that enables you to quickly close a $50,000 deal!
Once a relationship is established with a hard money lender, there is very little formality involved to get funding. It can be as simple as making a phone call and picking up a check, which allows the deal to be closed very quickly. In fact many times a hard money lender is calling the Investor to ask if they need more money.
By: Chris Parks
© 2010 Money Market
