You’ve examined the zoning laws and chosen your desired property or plot of land. Now it’s time to find a reputable lender that’s ideal for your circumstances. Choosing the right hard money lender can be a challenging, time consuming enterprise. There are various ways to find a reputable hard money lender. Before you begin a Google search for “hard money lenders” in your area, be ready to do your homework. To help you choose the type of loan that’s right for you and finally purchase the land you want, here are several points to remember.
Ask your existing network for trusted recommendations. Start by attending local real estate investor club meetings, which are usually well-attended by hard money lenders interested in networking with potential borrowers. You can also ask trusted real estate brokers and conventional mortgage brokers and other real estate professionals for referrals of experienced hard money lenders. Research options by paying attention to a potential lenders list of recently closed deals, loan portfolio and loan criteria. Lenders such as Kennedy Funding Financial have built a solid national reputation as a high-end direct private lender with innovative new lower-rate lending program focused on specific property types.
Once you’ve compiled a list of potential lenders, contacting each and present your loan scenario to find the most suitable lender to fund your deal. Schedule an interview to choose the lender with whom you feel the most comfortable.
To secure the best rate for a hard money loan, have multiple lenders to compete for your business. Fees vary according to lenders. Hard money lenders will compete on fees, interest rates and quality of service, which includes the ability to fund a deal quickly, being more accessible to the borrower during the term of the loan as well as flexibility on terms in the event of unforeseen events or special borrower requests. However, to take advantage, be well-organized with all necessary paperwork ready for inspection. Be prepared to impress upon prospective lenders that your proposed project meets their loan criteria and risk profile.
Pay attention to relevant differences between hard money lenders. These differences will impact your relationship during the life of the loan. This includes lending criteria such as loan-to-cost and loan-to value guidelines; the types of real estate on which they lend; minimum and maximum loan size; the geographic region they serve; industry reputation; and level of service.
Be sure to ask about risks such as lost time if a lender does not perform; lost deposit if a one is required, penalties for missed or late loan payment and market risk and execution risk on the underlying project.