Finding affordable and readily available investment funds for real estate deals can be a daunting and unrewarding task. The vast majority of traditional lending institutions are bound by government regulations and internal oversight committees.

For these reasons, financially savvy borrowers will often look to private or “hard money” lenders to finance many of their real estate deals. These lenders are experienced and astute business people in their own right who are able to evaluate and approve loans without resort to any outside authorities.

Still, these lenders require a certain degree of professionalism and documentation to convince them that a loan is worthwhile. Here are three “must haves” that will help ensure that you maximize your chances of funding your real estate deal with hard money lenders: 

1. Be Prepared

Do your homework and have and excellent understanding of your deal so that you can present it properly and explain it in detail. Associated facts and figures should be spelled out with perfect clarity and no questions left unanswered. In addition, it is advisable to have pictures of the current property and, if possible and warranted, offer a complete breakdown of the rehab costs.

2. Understand the Investors

Passive real estate investors are just like you in that they want to evaluate the risk to reward ratio before deciding to invest. Your project may be too complicated or too risky for a traditional lending institution to back but if it offers the right return, you will find plenty of experienced “hard money” investors interested in your deal. In addition, these investors can often provide valuable advice on how to structure the loan terms to make them more appealing. 

3. Offer the Right Security

Private money loans are very similar to traditional mortgages in that there is real property securing the loan and that there are appraisals, inspections, escrow requirements and a legally binding contract. This simple reality makes obtaining a hard money loan easier than you think.

Where to Start

Finding hard money lenders to fund your real estate investments may seem like a daunting challenge. It does take time and energy on your part but many of the details can be handled by private money lenders. They have the resources, expertise and experience to bring both borrowers and investors together in a practical and mutually beneficial manner.