For many investors, finding financing for your real estate deal is the most challenging part of the process. Without cash on hand to acquire a distressed asset, they are left scrambling to put together the funds. No matter where they turn, they run into obstacles that prevent them from closing the deal. With friends and family, they might not be able to put together enough up-front funding. Traditional lending institutions may require lengthy application processes, in-depth credit analysis, and property valuations; that’s if they decide to at all.
Hard money financing is one of the most straightforward financing vehicles available to real estate investors. Lenders such as The Hard Money Co. require very little from our borrowers before we show up to the closing table with funds. But it's not just what we do require. Our biggest differentiator from other financing options is that we reduce barriers to transactions wherever possible, which gets you into your deal as fast as possible.
This blog will outline the things you need in order to get a loan from The Hard Money Co.
What do I need to get a Hard Money Loan?
The application process at The Hard Money Co. is short and simple, and we've covered it extensively elsewhere on this site. But even prior to applying, there are a few things you will need to demonstrate you're ready to be approved for financing. If you're able to check the following items off your list, you're ready to move forward with The Hard Money Co.
- An Opportunity
- A Strategy
- Cash Savings / Financing Partners
At this point, you might be a little skeptical. We recognize that these don't look like the same requirements you might receive from a bank, and that's because we're not like a bank. We want to be your partner on your real estate investing journey, and in order to convince us you're the right investor to attach our name to, we just want you to prove you're ready with these four things.
A Property Ready to Invest In
This should go without saying, but for us to lend money to your real estate investment you have to show us the property you're looking to acquire. You'd be surprised at how many applications we receive that are looking for funds first and a property second. If you're a would-be investor without a property in mind, that's okay! We occasionally list opportunities on our website and can point you to a range of resources in your market that have distressed assets available. When you find that perfect opportunity, we'll be here for you.
That said, if you do have that ideal property at your fingertips we're ready to listen. Assets that draw our attention the most are properties in rapidly growing markets that have dramatic upside potential. With a little bit of sweat equity, these homes will increase in value by 20-30% or more, all of which is profit potential for the investor. Investors get bonus points if they've found comparable properties in the area that have recently sold for these higher prices. These details are secondary though, and we'll review them more in our next requirement. But if you have a property ready to go, you're already ahead of the game.
A Proven Investment Strategy
The opportunity is important, but you also need to know what to do with it. If you come to The Hard Money Co. with the best opportunity in the world but can't articulate what you intend to do with it, we're going to be skeptical of your ability to succeed. Real estate investing is simple, but it's not easy. There are multiple proven strategies, readily available online that will take you step-by-step through your first real estate transaction. These include fix and flips, buy-and-holds, the BRRRR Method, and countless more. While we won't go in-depth on these strategies in this piece, we expect that you have a base level of knowledge about how you want to proceed with your investment.
In addition to picking your strategy, we also want you to know the basics about the opportunity at hand. What is the purchase price? What are the anticipated repairs that need to be made and how much will those cost? How long will the project take? Am I going to exit the hard money loan by selling the property or through a refinance?
Again, these are not difficult questions to answer but they do require you to put some forethought before you receive your funds from The Hard Money Co.
Cash Savings or Another Financing Partner
The Hard Money Co. will bring the bulk of the financing to your investing deal, but we also need you to have some available cash as well. The reason for this is simple. We need to ensure you have skin in the game too. Remember when I said that we view this relationship as a partnership? This goes both ways. We'll be there for you with funds, expertise, and advice throughout the process, but we expect that you're also committed to a successful repayment of the loan.
The specific amount of funds you will need to move forward depends heavily on the details of your investment opportunity, but reviewing our loan calculator is a great place to start.
The most important thing that we look for in our applicants is a desire to be successful and, to be honest, this may be the most important requirement of all. People may bring the other necessary elements to the table, and they might get in the door, but it quickly becomes evident that they are missing this last key component. Real estate investing may be simple, but it's not easy. You're going to encounter obstacles both in the acquisition phase, and every other step of the way.
Success ultimately will be determined by whether you have that internal motivation to push through challenges, overcome obstacles, and succeed by any means necessary. With nearly 20 years of experience as a hard money lender, and many more as real estate investors, it is obvious who has what it takes and who doesn't.
Chances are the simple fact that you're reading this today means you have the ingredients necessary to be a successful investor. Why don't you keep that momentum and see if you have what it takes to go all the way?