The reason many investors use a private hard money lender is because they fund the project quicker and the criteria is less of a hassle then that of a bank.

When you purchase a loan with a bank, they require you to disclose proof of the following:

•    bank statements showing the down payment
•    paystubs
•    W’2s
•    Credit score of 620 and above

They also take from what used to be 30 to 45 days to look over the entire file of the applicant and give you an approval for closing.

Nowadays they take from 45 to 90 days to give you an approval for closing and that is no exaggeration.
However, a private hard money lender only requires the following:

•    A good property that can be sold for 35% more than the loan amount after repairs

That is it!

moneyhand

They do not run a credit check or ask for any financials. They base their approval on the project, not the person.
It is very wise that you already know the real estate game before getting any money from this type of lender because you need to know how much the house can sell for after repairs and how much repairs need to be done on the home.

This is because it would not make any sense to take money from a lender if it does not cover the repair cost.
What I mean by this is if a home is worth $100,000 after repairs and the private hard money lender is only going to give you $65,000. Then that $65,000 has to cover the price of the home as well as all repairs.

If it doesn’t, then you really have no deal.

Always make sure the loan amount can cover all costs.

Just a little note:  You should also try to include your three month mortgage payments into the borrowed amount as well.

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Filed under: Hard Money Lenders

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