1. It’s Not Just A Hard Money Lender You’re Seeking. It’s A Consultative Partner.
The best hard money lenders won’t just facilitate a short-term loan for your investment property; they’ll be a consultative partner throughout the entire experience. What that means for you, as the borrower, is that you’ll have someone at your side throughout every step of the process, from initial due diligence, construction, and all the way through the final sale or renting and refinancing of the property.
2. The Best Hard Money Lender Cares About Your ROI
You want to be working with a lender who brings you confidence in your investment. A lender cares because they want to get repaid, but they also want to help create repeat loans and prosperous investors. Everyone wins in this scenario.
The best hard money lender will calculate your costs and expected return to coach you on how to obtain the profit you’re seeking. Similarly, if the profit you’re seeking isn’t possible, they’ll inform you of that, too.
3. If You Get A Great Rate, It Doesn’t Mean It’ll Always Close
Make sure the hard money lender you select is going to be able to close on your loan.
You can do this by getting referrals from other investors to ensure their loans were approved swiftly and without issue. Besides other investors, title companies are a great resource of intelligence on hard money lenders. If you inquire with local title companies that the lender has worked with, you can inquire about issues with loans or to ensure that hard money lender’s loans went through smoothly.
4. Restructure Deals To Protect Your Investment
If you are new to real estate investing or if you are experienced but haven’t done a deal and lost money, you won’t know what to look for. The best hard money lenders do. They’ve seen it all.
The best hard money lender will bring their experience to the table and coach you to ensure that any bad loans or projects that have gone sour don’t happen to you. Often, a restructure of a deal is recommended and the best hard money lender will coach you on how to do just that.
5. Don’t Be Fooled By A Loan’s Structure. The Best Hard Money Lender Is Transparent.
Don’t make a mistake of borrowing from a hard money lender solely based on the rate. Ensure you understand all potential hidden fees (underwriting fees, application fees, etc.) that may come into play with your loan. Some hard money lenders will sell investors on low rates, only to tack on fees that are hidden until you move forward with your loan.
Ensure you understand the overall cost of the loan and all of the associated fees upfront. This will allow you to confidently select the best hard money lender at the beginning of your process.
6. The Best Hard Money Lenders Have No Upfront Costs
A trick some hard money lenders use is upfront costs. These are often used to lock you in and prevent you from backing out once hidden fees are introduced or terms are unfavorably changed.
The best hard money lenders have no upfront costs and don’t use sneaky tactics that bind you to working with them.
7. You Want A Hard Money Lender With A Smooth Approval Process.
Whenever you’re talking to a new hard money lender, an important question to ask them is: is there another party that has to approve my loan?
Make sure that the loan that’s being sold is going to get approved by talking to the decision maker. Resist working with a hard money lender with a back office committee that needs to approve your loan. This structure risks delays and disapproval of loans, which can cause borrowers headaches – especially when you’re trying to move fast.
8. Familiarity With The Area You’re Looking To Borrow For Is Key.
Block-by-block variants in cities and towns across NY, DE and PA make a huge difference in the profit and ROI you’re seeking from your investment property. You want to make sure your lender knows the area that you’re borrowing for and the value of rehab-to-flip, rehab-to-rent or other investment property.
Without the block-by-block knowledge of going rates, how will your hard money lender be able to calculate construction costs against your profit goals?
9. Access A Robust Network Of Contractors, Material Suppliers And Industry Professionals.
Hard money lenders witness hundreds or more investment property projects each year. As a result, they become keenly aware of the best of the best contractors, material suppliers and industry professionals in the various regions they serve.
The most trustworthy parties who perform a fair and timely job are what investors seek for their investment projects. The best hard money lender can refer you to the exact party you’re looking for to help contribute to your project’s success. Ultimately, accessing a hard money lender’s referral network can help save money (and time) on your project.
10. Make Sure Your Hard Money Lender Disperses Funds Swiftly
As the construction process begins on your investment property, you want to make sure the lender pays materials suppliers and contractors in short order. Some lenders won’t disperse money until a week or two later after work is performed or materials are delivered.
Swift payment by your hard money lender eliminates the need to pay out of your own pocket or having a contractor stop work until they’re paid.
Work With Ashmore Partners, The Best Hard Money Lender Serving PA, NJ, DE
All clients work directly with an Ashmore Partners co-founder to ensure stellar advice and consultation by experienced real estate investors. Our rates have no junk fees and no hidden fees. All clients receive access to our profit calculator to estimate your costs and gain visibility into a projected investment return.