When purchasing a new home, families usually assume mortgages from traditional lenders, such as banks and credit unions. In contrast, real estate investors are more open to borrowing money from alternative lending sources; very often investors tap into hard money loans California, especially when they want to flip or they have credit concerns and want quick approval. These private money lenders provide financing based on property value rather than using creditworthiness as a primary consideration.
They loan as an investment and expect a relatively quick repayment turnaround. These tips will help you partner with a hard money lender that you can trust.
Consider Your Purpose
Lenders vary in their specialty areas. These range from commercial real estate to multi-family residences products. Make sure your lending choice is comfortable with your investment focus and has a strong track record in that area. Of specific concern, many hard money lenders will not provide financing to prospective private resident owners; if that is your focus, you may need to research to find state-centered lenders, such as private money lenders California.
On that note, you may want to consider lenders who are able to access your prospective properties in person, which you may find to be a prerequisite for many of them. You can certainly investigate national private investment companies; however, a group that performs a hard visual inspection will be able to provide a more reliable, objective assessment of your investment prospect. If the inspection generates roadblocks to your financing, you can trust you have a reliable partnership in which the private money lenders have your back.
You obviously want to avoid back-alley lending practices. As part of your lender research, you need to check that the company is registered and licensed with appropriate state agencies. Look for those registered with professional real estate organizations and your State Department of Real Estate. Your lender must also employ a specialist with a Real Estate Broker License, or one of the company owners must possess one. Obviously, you need to avoid any lender who skirts these requirements.
Look for Recommendations
Consider turning to other real estate professionals for hard money lender referrals. They may be able to vouch for particular lenders based on their experiences. While the list is not all-inclusive, these professionals may be able to offer advice:
- Title Specialists
As with most services and consumer products, hard money lenders are subject to both professional and personal online reviews. These resources can be helpful in both your initial research and after you have narrowed down your list. Remember to be critical of reviews; do not accept all at face value. When researching, build your base of knowledge, comparing what you have learned with the information presented in reviews, and be prepared to read between the lines.
In the end, you will want to find a hard money lender you can work closely with; this dictum applies to their locality, specialty area and trustworthiness. For example, you should weed through Los Angeles hard money lenders with a solid reputation if you live in Orange County. If you do your homework you can find a private money lender that you will happily partner with over many years.