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Hard Money Lender Investors

Does Your Credit Score Matter When Dealing with a Hard Money Lender?

Posted by Ken Meyer on Tue, Aug 22, 2017

 no credit loansNew to the flipping business? The questions are sometimes as daunting as making that first purchase for flipping. The next big question, are hard money lenders in California really that concerned with your credit score? You will have a need for quick turnaround hard cash on the course of your growth in housing renovation and resales. Understanding what the lenders are looking for is a critical step in getting those loans.

 

Having a shaky credit score leads to problems with getting the initial house loan, contractors for the work, materials suppliers, laborers. Credit scores may not be the hurdle you think with a hard money lender. Don't borrow trouble by trying to avoid this type of loan believing that you won't qualify.

 

To get ready to approach a hard money lender there are some steps you really want to be thorough with:

 

  • Detail your entire plan. Show your purchase record, your rebuild plan and schedule, your current investment, and most specifically your exit plan for the sale.

  • If you have prior sales, even if is just one, show the beginning to end process as an example of your work.

  • If you have no prior projects show them a successful project that you have followed and studied that is close to what you have planned. Detail the differences and similarities as well as the budget as they did it and as you see it in your own market.

  • If you have other properties in process, bring that portfolio to the table.

  • Show them what the money is for, example, you have findings that must be corrected once you opened the walls or ceilings on the demolition portion of the reno that were not in the initial estimates. It could be having to switch suppliers mid-project due to performance issues. Let them know up front.

Credit scores are a valuable asset, but not the only criteria for being a good flipper. Hard money lenders are more focused on a solid entry and exit strategy working with someone who has their plan together and as solid as possible. Bring them your best projection as well as your supporting background. Show them that you are making progress and that you have facts to back up the rest of your project.

 

These are the things that a hard money lender is most concerned about. They need to know that you are doing the proper business plan to make this flip work well and on time, as close to within budget as possible. This is a risky business, hard money lenders don't do business with someone who doesn't have their own business success in mind, regardless of a stellar credit rating.

Have your plan and facts together, present them in a professional manner, be ready to back up your presentation with knowledge. When you are ready, we are here.

 

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