Many budding investors desire to get sizeable loans to finance their real property development. However, bank loans are far too rigid and require lots of paperwork. That’s why more investors are preferring hard money loans: these are more flexible, easy to finance and demand significantly less paperwork.
It’s easy to get a hard money loan today. Paying this kind of loan is an easy, hassle-free process that can be negotiated between lender and borrower.
Here are 5 tips to find the best hard money borrower:
Sensible interest rates on loans
Naturally, private lenders will offer elevated interest rates compared to banks and other conventional lending institutions. These high rates are brought about by the huge risks taken by private lenders. Delightfully, hard money loans are much flexible and easier to fund compared to conventional loan types. That’s why most real estate investors prefer getting hard money loans. Before settling on any private lender, conduct some research to find out the different interest rates imposed by notable lenders. Next, select a lender that can offer a workable interest rate on your loan.
Transparency and accountability
This is another critical factor to consider when selecting the best hard money lender. Does your private lender have a proven track record? Are there any references you can ask? Ensure that all legal documents are provided for you to read and sign. These documents include the contract, term sheet and closing documents. Assess them cautiously and check whether all fees have been listed – you don’t want those last-minute surprises suddenly popping out of nowhere.
Flexible loan terms
The main reason that hard money loans have gained tremendous popularity is that they offer more flexible terms. For instance, borrowers can discuss the terms of payment with private lenders and reach a middle ground. It’s essential that you first check the terms and conditions highlighted in the legal documents. Ensure that you’re comfortable with these terms going forward. In certain cases, some loan parameters can be adjusted based on your desired loan term and funding needs. However, you can breathe easy: hard money loans have way more flexibility than bank loans.
Reputation and track record
Your lender of choice should have a proven track record of excellence as well as a remarkable customer service. If a private money lender has a good track record, it’s a green light to transact with them. But if the converse is true, then steer clear. Investigate whether your preferred lender is responsive to customers’ concerns and inquiries. You can also check out their website to see what other clients had to say concerning their services. You can locate this in the customer reviews section.
Get sufficient knowledge first
Before requesting for a hard money loan, it’s important to research about how different private money lenders operate. Look for a lender that possesses vast experience in real property development. Such a hard money lender will provide helpful insight in case your project hits a snag. In addition, your lender should be immensely knowledgeable and qualified.
These 5 tips will help you get the best money lender around.