in today's video i'm going to be going over how to get approved for a hard money load and just a
little background on me i've gotten quite a few hard money loans over the last five to 10 years
and i've also worked with quite a few hard money lenders and have a pretty good understanding of
how the business works uh so that being said let's jump into the video alright so to start with what
exactly is a hard money load well it's basically a short term usually uh six to 12 month higher
interest rate type of loan and a hard money lender they specialize in funding deals for investors so
these could be fix and flip properties they could be rental properties they could just be
an investor that needs some cash for a short term period of time but they basically provide funding
where a standard bank wouldn't be able to do that at least with the flexibility that a hard money
lender has and a hard money lending company it's basically just cash that's raised from the hard
money lender from different investors and they pay their investors a certain percentage and then
charge the borrower you know a certain percentage and keep the difference and because it's basically
just their own cash they can typically fund deals you know some hard money lenders will say they
can fund a deal in as little as like three to five days i've never actually seen that happen
usually you know it might be like a week two weeks three weeks you know standard closing is about 30
days but sometimes in these motivated seller situations or a property needs a ton of work
you know they can get these deals closed pretty quickly and what's great about hard money loans
is that it's not necessarily based on the borrower they are more concerned with the
assets so if you find a great deal but you have terrible credit terrible this and that you know
they may take that into account a little bit but at the same time if they find a great deal they
want to fund it they're always looking for good deals so if you bring them a good deal
they're more concerned about the property than you know looking at all your bank statements
and tax returns and that type of thing so how do you find all these hard money lenders well each
city is going to have about 10 15 20 maybe if it's like la or new york you know there might be 100 or
200 different hard money lenders like reputable hard money lenders and the way you find them is
pretty easy you can go into facebook real estate investing groups and i can guarantee within the
last week someone's probably said hey who are some recommended hard money lenders and if you spend a
few minutes browsing around you can probably start building a list of like five or ten you can also
just go on google type in hard money lenders for your area and you can find ones you know with with
good reviews and testimonials and things like that and then lastly just through networking with other
investors or other real estate agents you can ask them hey who are some good hard money lenders and
they should have no issue whatsoever telling you that in fact some real estate investors might even
get a referral fee for telling you about the hard money lending company so don't be afraid you know
sometimes investors don't want to share their contractors or marketing strategies but when
it comes to hard money lenders there should be no problem with that and when you're getting started
i would recommend going with like a bigger name local hard money lending company because there are
hard money lenders that will land you know they might be based in california and they can lend
on deals in washington dc but at the same time the process is going to be a little bit slower
obviously they don't know the market as well there's usually going to be more paperwork
so when you're getting started i would i would just work with a local lender eventually sometimes
the more national ones can have better rates and when you get a better you know comfort level with
hard money lending then you might look around at different options like that so after you've built
a list of let's say five to ten maybe even as many as 15 hard money lenders the next thing you need
to do is find a deal so you need to bring them a deal obviously and i have a video i'll put it
right here on how to basically find really good off market deals pretty much nationwide so you
need to find them a deal and they like to lend at the 70 arv you know mayo formula range and each
property each area is going to be different but that's what you should try to shoot for
and the closer you can get to that range the less money that you're going to have to bring
to the table so if you find them a great deal you submit them you know the numbers on the deal
they can usually pretty quickly tell you you know whether or not they would lend on it and
how much they would lend you and at what rate when you bring them a deal they're going to ask
you you know your house flipping experience how many deals have you done in the last you know
six to 12 months and if it's like your first deal with them they're probably going to charge you a
little bit more just you know after the first deal usually the rates go down and you get more
of like a working relationship but for the first one they'll probably charge you a little bit
more just to you know get started and just about all hard money lenders are going to want you to
bring something to the table usually it's going to be like around 10 if you have like a really
good deal because they always want some skin in the game they're willing to land on discounted
real estate but they still want an extra layer of security with you putting money into the deal and
the thing that i liked about working with hard money lenders when i was first getting started
was that you know when you're getting started everything looks like a deal so i would submit
them some properties and they would say you know what that's actually not a deal so it's good to
get like a second set of eyes on some of these um deals that you're doing because they don't want
to lend money on a bad deal unless they're like just a complete loan shark which there are hard
money lenders out there like that there's very few and far between but that's why you want to
go with the reputable you know local one and i actually meant to say reputable so hopefully no
one's going to call me out in the comments section here so if they approve your deal the next step is
you would have to send them the contract your scope of work you want to be as detailed
as possible you're going to need to send them photos insurance information your title company
and sometimes hard money lenders they have their own preferred title companies because
there's different title companies out there with different reputations different ways of doing
business and sometimes they will have you you know use their own title company and obviously
the more information and photos and descriptions and everything like that that you give the hard
money lender the less of a headache it's going to be for everyone so if you just give them very
basic info they might need to send like their own appraiser out to the property your own inspector
so you want to try to have as many photos and be as detailed as possible now after the title
company does all their title work title exam usually that takes like a week or two depending
on you know how complicated the title is sometimes with these distressed sales it might be probate
inherited you know tax liens going on so sometimes the title work can take a little bit longer but
after the title works done you're basically good to close so you know usually you can get it closed
in you know two to three weeks you know you can tell a seller and so long as it's a good deal
that you can get this thing closed and you know as little as three weeks you can even tell them look
we'll try to do it in two weeks we'll try to do it in three weeks but we'll just put 30 days
in the contract just in case there's any issues with title work and after you close on the deal
and typically you're going to have to bring you know at least about 10 percent uh to the table
sometimes it can be less if it's like an amazing deal sometimes it can be more if it's not such a
great deal but after you close the seller gets their money you take title to the property most
hard money lenders are going to have what's called a construction draw so based on your scope of work
you might have said okay it's going to cost 75 000 to renovate this property and if they approve your
repairs they're going to have in the construction draw 75k and it's usually going to be broken down
into like you know three or four or even five different payments and these payments are going
to be based on different milestones so you'll say okay it's gonna you know cost 15 000 to the floors
and painting and then once you do that you have to come out of pocket for that and once you do
that and take photos of it and it's complete then you send that to the hard money lender and then
they'll release uh the funds for that you know for that work that was done and so if you're not
organized with all this it can be a little bit of a hassle so that's why you really want to be very
specific very organized have everything in a row make sure everyone's on the same page and that's
why i also recommend trying to get your own like personal lines of credit trying to get your own
helocs because if you have like 50 000 in credit that you can use this is your own credit card
you're basically paying the same interest rate and you don't have to rely on anyone else you
know approving or not approving the work that you're doing so after you've gone through every
construction draw maybe it takes you know two three four even six months to complete the project
then obviously you would list the property i always recommend getting staging and professional
photography and pricing it correctly pricing it to sell quickly almost pricing it under market
to get it bid up a little bit and that's how you're going to get the premium price and then
once you get it listed and get it sold then the lender the hardware letter gets their payment and
then you get whatever is remaining after you know closing costs and fees and things like that and
in the event this has actually happened to me before where my property my project went over
the time limit uh that the hard money lender allotted i i think it was a six month term and
it was like going on seven eight nine months and so sometimes they'll have more expensive
fees so that's why you know you really got to be on top of everything and speed is key
you know you want to start renovating that thing as soon as you close like the day you
close on it because you want to get ahead of your time frame so that you don't have to pay
all these expensive fees you know if there was some type of delay so if you have any questions
about getting approved for hard money drop them in the comment section below and i'll also put
a link to a recommended lender in my area in the washington dc market and chances are they might
do other areas as well depending on where you live so thanks a lot and i'll see you on the next video