Table of Contents

Introduction …………………………………………………… 2

What is hard money ……..……………………………………... 3

Who uses hard money …………………………………………. 4

Where to get hard money loans ………………………………... 6

Hard money lending today……………………………………... 6

How to apply for a hard money loan …………………………... 8

Why use hard money loans …………………………………..... 15

Hard money loan tips …………………………………………. 21

Conclusion ……………………………………………………. 28

 

  

 

 

 

1  

Introduction

If you a received a copy of this 28-page report, you just moved a step closer to

boosting your real estate investing career with the help of hard money loans.

Although hard money loans are considered great “deal savers” by many entrepreneurs

and property investors, there are some who are still reluctant to take advantage of the

benefits that these non-traditional loans bring. Because of the misconceptions of

many people on hard money lending, they would rather use personal savings or

traditional loans to finance a real estate deal.

After reading this handbook, you will discover why hard money is the perfect type of

financing for your business deals, especially real estate investments. You will also learn

all the things you need to know about when getting a hard money loan.

2  

What iis Hard MMoney?

Hard m

small len

compan

determin

is asset-

that a p

money is a t

nding com

nies, and c

ned by asse

-based, the

property, o

type of cre

mpanies inst

redit union

essing the v

credit sco

or “deal,” i

ative finan

tead of ins

ns. It is p

value of th

re of the b

is good, th

ncing usuall

titutionaliz

rimarily as

he collatera

borrower is

he hard m

ly provided

zed lenders

sset-based

alized prope

s not impo

money loan

d by private

such as b

and a loan

erty. Becau

ortant. If a

will be p

e investors

anks, mort

n’s eligibili

use hard m

lender beli

rovided to

s and

tgage

ity is

oney

ieves

o the

borroweer.

Th

pro

Ha

loa

a b

fas

to

his type of

ovide long-

ard money

ans, or sho

borrower

st solutions

close a bus

f lending is

-term finan

is usually

ort-term loa

to obtain

s to a finan

siness deal

s not mean

ncing soluti

used as br

ans, that en

temporary

cial problem

quickly.

nt to

ions.

ridge

nable

y but

m or

 

In real

property

valued a

lender. S

estate inv

y’s after re

at $100,000

Some lende

vesting, har

paired valu

0 in good c

ers go as hi

rd money

ue (ARV).

condition, t

igh as 70%

lenders ge

That is, if

the borrow

% of the AR

enerally pr

the proper

wer, can usu

RV. Interest

rovide arou

rty offered

ually get $6

t rates, on t

und 65%

d as collater

65,000 from

the other h

of a

ral is

m the

hand,

3 

usually r

for finan

months

lender. T

to repay

range from

ncing fees.

to three y

This setup

y his loan an

m 10% to 18

The repay

years, depe

provides s

nd they hav

8% and len

yment perio

ending on t

security for

ve to forec

nders may c

od is relativ

the agreem

r hard mon

lose the co

charge two

vely shorter

ment betwe

ney lenders

ollateralized

to five poi

r and it ran

een the bor

in case the

d property.

ints of the

nges from t

rrower and

e borrower

loan

three

d the

fails

 

Althoug

borrowe

matter,

structur

Who U

Typicall

borrowe

fit their

those w

standard

sponsor

Fannie M

gh obtainin

er, securing

can be extr

ed properly

Uses Har

ly, hard mo

ers when a

r needs. Th

who cannot

ds set by

red financi

Mae and F

ng hard m

g hard mo

remely ben

y.

rd Money

oney loans a

traditional

hey are als

comply w

banks or

ing institu

Freddie Mac

money loan

oney for a

neficial to b

y Loans?

are pursued

l loan does

so pursued

with the len

r governm

utions such

c. For insta

ns can be

real estate

both the bo

e quite ex

deal, or a

orrower an

pensive fo

any busines

nd the lend

or the ave

ss deal for

er if the de

erage

that

eal is

d by

not

d by

nding

ment-

h as

ance,

4 

a real estate investor may opt to use hard money if he can’t qualify for a conventional

loan. He may also use this type of financing if the bank or the mortgage company is

taking too long to process his loan application.

A hard money loan is a great financial tool for those who, due to a number of reasons,

can’t or don’t want to qualify for conventional financing. Investors and entrepreneurs

with poor credit scores, bankruptcies, no verifiable income, or too much debt are

encouraged to use hard money. Investors who are just starting out and are short of

investment capital can also benefit from this type of non-traditional lending.

In particular, hard money is extremely useful for real estate investors. Many real estate

entrepreneurs use this method of financing, especially if they have little time to close a

deal. Hard money loans are also ideal for property owners with unfinished or

undeveloped properties and are in need of short-term financing. In addition, hard

money loans can be used for both commercial and residential real estate transactions.

Aside from obtaining real estate, hard money loans can also be used for building and

land acquisition, real estate development, second mortgage, non-bankable

transactions, foreclosure bail-out, and emergency financing, among others.

5  

Wheree to Get HHard Monney Loanns

As men

are the u

money l

tioned earl

usual sourc

loan by visi

lier, private

ces of priv

iting the lo

e investors

ate money

cal bank or

and small l

. That bein

r governme

lending com

ng said, a b

ent-run len

mpanies wi

borrower w

ders.

ith huge ca

won’t get a

apital

hard

To secu

experien

sources

willing t

however

ure hard m

nce workin

of lenders

to fund re

r, a borrow

money loans

ng in the

s because

eal estate p

wer may go

s, a borrow

lending in

they work

projects. If

directly to

wer can ap

ndustry. H

k directly w

f he doesn

the private

proach a m

ard money

with privat

’t require

e lender.

mortgage b

y brokers

te investor

the service

broker who

are also g

s who ma

es of a bro

o has

good

ay be

oker,

 

When ap

have a g

have an

Hard M

pproaching

good amou

exit strateg

Money L

g hard mon

nt of equity

gy in case s

Lending T

ney lenders

y in the pro

something g

, however,

operty offe

goes wrong

borrowers

ered as colla

g with the d

have to en

ateral. They

deal.

nsure that t

y should al

they

so

Today

Man

busi

boom

the

in t

ny hard mo

iness in t

ming real

recent year

the hard m

oney lende

the late 1

estate mark

rs have see

money len

ers went ou

1990s due

kets. Howe

en a resurg

nding busin

ut of

e to

ever,

gence

ness.

6 

Hard money lending has reestablished itself as an important aspect in real estate

investing.

As many banks and institutionalized lenders left the playing field or tightened their

underwriting guidelines, the demand for hard money loans has surged dramatically in

the last few years, prompting non-traditional lenders to return to the market. A recent

study by the Mortgage Bankers Association showed that over 90% of lenders that

took part in the survey have or plan to return to the business in 2010.

One of the reasons why the hard money lending business is showing an increase in

activity and enjoying a boost in reputation these days is that borrowers are more

comfortable with the rates and fees being charged by hard money lenders. Interest

rates and fees have dropped remarkably to the point that they are almost the same or

close to the rates being charged by banks, mortgage companies, credit unions, and

other traditional lending institutions.

7  

How tto Apply ffor a Harrd Moneyy Loan

 

to secu

If you’re

surely w

So befo

property

profit?”

and seek

To help

real esta

the basi

when in

uring a hard

e not convi

won’t be ab

ore you ev

y that is su

If you are

k funding f

you decide

ate investor

c formula r

nterests, clo

d money loa

inced that

ble to convi

ven bother

urely profit

very certai

for it.

e on this, b

rs when de

rehabbers a

osing costs,

65% A

an.

1.

Inv

Find a C

vestment

Convincingg Real Esstate

The

mo

lend

Sim

e procedur

ney loan

ders thoug

mply follow

es for appl

vary per

gh use the

these steps

lying for a

lender. M

process be

s and get cl

hard

Most

elow.

loser

the deal yo

ince a hard

r looking

table. Ask

in that this

ou will need

d money len

for a cred

yourself m

s specific in

d financing

nder to pro

ditor, look

many times,

nvestment w

g for will yi

ovide the f

first for

“Will this

will lead to

eld profits,

funding as

an investm

s deal bring

o gains, the

, you

well.

ment

g me

en go

below is a s

etermining

and other i

and other

simplified f

a real esta

investors u

expenses a

formula use

ate investm

se and it co

are calculate

ed by rehab

ment’s profi

ould be mo

ed.

bbers and o

itability. Th

ore complic

other

his is

cated

ARV - Exppenses = Puurchase Priice

8 

For exam

raise its

for othe

mple, a fix

price to $

er expenses

xer upper m

100,000 yo

s. In this ex

may be sold

ou need to

xample, the

d for $100,

spend $15

e computati

,000 once r

5,000 for re

ion will be:

repairs are

epairs and

completed

another $5

d. To

5,000

$65,000 - $$20,000 = $$45,000

In this c

rehabbe

interests

beyond

money l

getting a

case, the m

ed house at

s because y

that maxim

lenders wil

approved f

maximum o

$100,000,

your total ex

mum offer,

ll notice th

for a loan.

offer you ca

you’ll earn

xpenses is

, then you

his and will

an give to t

n $35,000 m

$65,000). I

probably f

spot it as

the seller is

minus other

If the asking

found an “u

a mistake.

s $45,000 (

r expenses l

g price of t

unconvinci

You can s

(If you sold

like closing

the seller is

ing deal.” H

say goodby

d the

g and

s way

Hard

ye to

 

If you s

the lend

and poin

stumble in

der as well

nts due.

the decisio

. The first

on-making

step to ac

stage, you

ctually getti

be

cer

“Is

reh

mo

tha

their

u are likely

ing a hard

eing able t

rtain inves

s this ha

habbing?”

oney lende

at will yield

r money an

to fall befo

money lo

to determi

stment is w

andyman

Keep in m

ers will onl

d profits so

nd give the

fore the eye

an approve

ine wheth

worth mak

special w

mind that

ly finance d

you can re

em the inte

es of

ed is

her a

king.

worth

hard

deals

eturn

erests

9 

2. Find a Reliable Hard Money Lender

There are various ways to search for a lender in your area. You may want to ask

friends and colleagues for referrals or publish newspaper ads. You can also do it

online, which is much easier. You can visit www.RehabHardMoney.com, which

contains the largest database of hard money lenders across the United States.

Once you’ve found a lender, contact it (or him/her if it’s a private money investor)

and inquire about the requirements. Usually, they will need the documents mentioned

in the succeeding portion of the handbook, the first of which is the executive

summary.

3. Write an Executive Summary and an Exit Strategy

An executive summary is simply a summary of the investment you wish to make with

the help of the hard money loan. Remember two words when doing it: “short” and

“details.” A single paragraph of a few sentences can actually serve as a good summary.

Do not burden hard money lenders by writing a novel. They’d buy a book if they

wanted long literature. Plus, think of it this way: If you had to read three stories in a

day, in a few hours, which one will you read first, the long, the medium, or the short

one?

10  

The exe

the deta

ecutive sum

ails that you

mmary mus

u must inclu

st be filled

ude in the

with detai

summary:

ils despite iits concisenness. Heree are

• AAmount of loan needeed

• R

 

• T

The firs

from an

property

develop

The oth

you will

example

market f

your op

4. Fill O

Reason for bborrowing money

Timeline of f the investmment

st two term

n existing l

y, how mu

ment on it

ms are well

lot, the tim

uch you’ve

.

self-explan

meline mus

already inv

natory. If yo

st include t

vested in it

ou are borr

the date or

, and when

rowing to b

r year you

n you plan

build a buil

purchased

to do the

lding

d the

next

her part of

l use to get

e, what wou

for a few m

tions with

Out a Loan

f your exec

t out of the

uld you do

months? If

experts or

n Applicat

cutive summ

e investme

o if the hou

you don’t

with more

tion

mary is you

nt in case y

use you reh

have a clea

experience

Nex

lend

rele

ur exit stra

your initial

habbed is n

ar exit strat

ed investor

xt, secure

der. Make s

vant infor

ategy. This

l plan does

not sold afte

tegy, make

rs.

is the me

s not work.

er sitting in

sure to dis

thod

. For

n the

scuss

an applica

sure you d

rmation. Y

ation form

do not miss

You can a

m the

s any

avoid

11 

hassles like having to resubmit the form by properly reviewing your application before

giving it to the lender.

5. Include a CMA and a Lot of Pictures

A comparable markets analysis (CMA), or simply comps, is a good way to support the

ARV you established in your application. If you’ve already performed your own

comps on the property you want to buy, send it to the lender as well. Make sure it has

lots of pictures of the actual property, the comparable properties, and the

neighborhood in general. Also, you may want to ask the lender how he or she wants

to receive the information – some prefer printed documents while others prefer the

convenience of online media like emails and photo- and video-sharing sites.

6. Submit a Contractor’s Estimate

If you’re planning to rehab a property, and most likely you are, be sure to include a

contractor’s estimate. This document will support your estimate on repair expenses.

The estimate, which should be easy to understand and in writing, will give the lender

an idea on why you need such amount for repairs. Also, ask your contractor to draw a

timeline of the repairs.

  

  

12  

7. Backk Up Your Bid

 

it will b

“creditw

your “as

• R

re

b

• C

k

d

H

w

sp

e approved

worthiness.”

ssets” to en

Real estate p

eal estate t

boats and pl

Cash – Thi

know how t

default in ca

He will be r

will be able

pecified tim

d. That doe

” So, to ba

nsure that y

properties –

that has su

lanes, again

s is one w

to handle m

ase some em

relieved to k

e to pay f

meline.

esn’t mean

ack up you

you appear

Most

to see

evalua

money

the pr

good

n though th

ur bid, prov

more cred

traditional

e a good

ate borrow

y lenders, w

rospective d

and a pote

hat you don

vide the len

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l lenders li

credit sco

wers. In the

what is mo

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ential mon

n’t need to

nder with i

ike banks w

ore when

e case of

ore importa

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ey maker,

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hard

ant is

eal is

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n on

– This is o

ubstantial e

n, as long a

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equity. You

as they have

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u may also

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include o

al equities.

Simply put,

ther assets

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way of show

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mergencies

know that

for holding

wing the h

also eases th

s happen du

you have s

g costs, in

hard money

he lender’s

uring the c

ome mone

n case the

y lender th

s worries of

ourse of yo

ey because

project go

hat you act

f you endin

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that means

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tually

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ment.

s you

d its

13 

• E

b

h

ca

ex

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Experience

because of t

have made g

an still pres

xperience.

xperience.

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their exper

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usiness for

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trust. Yoou build trrust by cha

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credit hist

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d, be sure to

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8. Subm

Trust

mit All D

Documentts and BBuild

atting with

When

organiz

lender

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the lender

you compl

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for evalu

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and submit

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still do so

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14 

loan. Ta

or return

if you in

Prioritiz

alk about yo

n them pro

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our plans a

omptly in c

the applica

ng docume

after you co

case you mi

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ntact you th

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Why UUse Hardd Money LLoans

 

Hard m

very pop

will lea

investm

You wil

money loans

pular amon

rn why yo

ments.

ll be a CA

s have disti

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ou’re bette

SH BUYE

inct advant

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er off usi

ER

tages over

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ing hard m

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n the next p

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portion of

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our real e

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estate

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ans, you ca

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cash. With

h a home s

ey is

hard

seller

15 

and offe

sellers d

away.

fer an all ca

don’t really

ash deal. T

care where

This gives y

e you get th

you a grea

he money,

t advantag

as long as

ge over oth

they get p

her investor

paid in full

rs as

right

Since yo

as a seri

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have the

auctions

ou are a cas

ous buyer.

he property

e necessary

s, wherein b

sh buyer, yo

When pur

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y funds to

banks prefe

ou have mo

chasing a b

efer doing b

close the d

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ore chance

bank owned

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deal. The s

s who are a

s of closing

d home, fo

with you sin

same is als

all cash buy

g deals as y

or example,

nce they’d b

o true dur

yers.

you’ll be tre

the lender

believe that

ring foreclo

eated

r that

t you

osure

You cann Close Faast

 

applicati

to two w

ion faster.

weeks.

In generall, hard mon

Another

money i

fast. Yo

as little a

take bet

loan app

the oth

ney loan ap

r importan

is that it al

ou can secu

as 24 hours

tween 30 a

plication. H

her hand,

pplications

nt advant

llows you

ure a hard

s! Most trad

and 45 day

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money loa

ditional len

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loan

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16 

And sin

deal and

flip the

rehabbe

in the pr

nce hard mo

d move on

house to

er, you can

rocess.

oney loans

to your ne

o an end-b

immediate

will make

ext project.

buyer and

ly work on

you a cash

So if you’

concentra

n the prope

h buyer, yo

re wholesa

te on you

rty, thus sa

u can imm

aling, you c

ur next de

aving you ti

mediately clo

an immedi

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ime and mo

ose a

iately

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oney

Rememb

common

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want to

investor

to close

ber that ho

n knowledg

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sell their p

rs who are

the deal. T

ome sellers

ge in the r

Homeown

properties a

cash buyer

They know

prefer inv

eal estate in

ners whose

as soon as

rs compared

that deals

vestors who

ndustry tha

e houses a

possible a

d to those

could fall t

o can close

at nearly al

are under

and they are

who rely o

through dur

the deal fa

ll sellers wa

foreclosure

e more like

on financing

ring long c

ast. In fact,

ant to close

e, for exam

ely to deal

g from a le

losing peri

, it is

e the

mple,

with

ender

ods.

Your Crredit doessn’t have too be Perfect

A h

you

me

cre

Ad

the

hard mone

ur credit h

an that yo

dit score

mittedly, ti

e housing b

ey lender w

history, bu

u need to

e to ob

imes have

bubble burs

will often re

ut that do

have a pe

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changed s

st. Nowada

eview

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erfect

loan.

since

ays, a

17  

lot of lenders (but not all) will check your credit history. So if you have bankruptcies,

liens, or collections, you need to provide the necessary documents for those items if

the lender requires you to do so.

The important thing to remember is that hard money lenders do not solely base their

decision on your credit history. So even if you have a “challenging” credit score, there

is still a very good chance that you will get a loan. In fact, your credit report does not

matter if you’re in the business of wholesaling houses. Your credit history will not be

reviewed since you’re only buying the assignment contract, and not the property itself.

Lenders evaluate the end-buyer’s credit report and not the wholesaler.

Of course it does help if you have a good credit score. While hard money lenders do

not exclusively rely on your credit report to approve your loan, having a good credit

history would tell them that you are likely to repay the loan, thus increasing your

chances of securing the loan.

Lenders Look at the Value of the Property, not your Income

The primary reason why your credit history is not decisive when borrowing hard

money loans is because lenders base their decisions on whether to approve the loan

on the value of your property or your deal. Simply put, if the lender believes that it

will profit from your deal, it will lend you the money. Lenders look at the ARV of the

property, not your income, to qualify a loan.

18  

A comm

incomes

The mo

profitab

even ne

would b

loan, the

mon miscon

s in order t

ost importa

ble deals on

ed to have

bring profit

e lender wi

nception am

to secure lo

ant thing

n the table.

a job to se

ts to both

ill provide y

mong real

oans from

when borr

You don’t

ecure a har

you and th

you the mo

estate inve

hard mone

rowing loa

need to ha

rd money lo

he lender. A

oney to clos

estors is tha

ey lenders.

ans from l

ave a large i

oan. All yo

As long as

se the deal.

at they nee

This is abs

lenders is

income. In

u need is a

the house

.

ed to have l

solutely un

to bring g

n fact, you d

a great deal

e qualifies f

large

ntrue.

great,

don’t

l that

for a

You can

 

conditio

$100,00

the amo

Hard m

the ARV

occasion

n Borrow

on,” or the

0 in good

ount needed

money lende

V. As stat

nally, some

the Purch

ARV. For

condition.

d to purcha

ers, on the

ted earlier,

e lenders co

ase, Repa

r example,

Traditiona

ase the pro

other hand

lenders ge

ould lend yo

ir, and Cloosing Costts from Leenders

Ano

lend

purc

state

the

price

a property

al lenders su

other big a

ders is tha

chase, repa

ed earlier,

amount t

e of the

y that is pe

uch as ban

advantage o

t they can

air, and clo

hard mone

they will r

e propert

erfect for r

nks will pro

of hard mo

n lend you

osing costs

ey lenders

release on

ty “in g

rehabbing c

obably lend

oney

u the

s. As

base

the

good

costs

d you

perty.

d, can lend

enerally wi

ou up to 70

you up to

ill loan 65%

0% of the A

$65,000, w

% of the

ARV.

which is 65%

ARV altho

% of

ough

19 

So if you

for closi

your har

u bought th

ing costs, y

rd money l

he house f

you basicall

oan covere

for $40,000

ly did not s

ed the purc

, spent $20

spend a sing

hase, repai

0,000 for re

gle dime ou

r, and closi

epairs, and

ut of your

ing costs.

another $5

pocket bec

5,000

cause

You cann “Negotiiate” with Hard Monney Lendeers

A major

because

such, th

Since th

to tradit

handle r

r reason w

of the latt

hey can also

hey are mor

tional lende

real estate l

why real es

ter’s flexib

o change o

re flexible,

ers such as

loans.

tate invest

ility. Hard

or bend the

negotiatin

banks, wh

tors prefer

money len

em, depend

ng with har

hich often h

dealing wi

nders creat

ding on the

d money le

have panels

ith hard m

te their ow

e deal they

enders is ea

s or proces

money lend

wn rules, an

are examin

asier comp

sing teams

der is

nd as

ning.

pared

that

Banks fo

never ge

lenders.

loans in

follow certa

et that loan

There is a

this type o

ain procedu

n. On the o

also less red

of financing

ures and if

other hand,

d tape whe

g are proce

you don’t

, you can n

en dealing w

ssed faster

meet all th

negotiate or

with hard m

and easier

heir require

r haggle wi

money len

.

ments, you

ith hard mo

ders that’s

u will

oney

why

You cann have muultiple hardd money loans

 

Rea

loan

diff

al estate inv

ns because

ferent sets

vestors pref

e they can

of lender

fer hard mo

n borrow f

rs at the s

oney

from

same

20 

time. H

investor

ratio is n

Hard mone

rs can have

never affec

ey lenders

e multiple l

cted.

do not r

loans with

report to c

different le

credit agen

enders beca

ncies, whic

ause their d

ch means

debt-to-inc

that

come

This asp

look for

up to tw

you’re o

that you

pect of har

r deals with

wo mortgag

overextende

u can no lon

rd money le

hout having

ges from co

ed, you wil

nger do mo

ending is v

g to worry

onventiona

ll not be ab

ore deals.

very benefic

about finan

al lenders b

ble to secu

cial to inve

ncing. Mos

before they

ure convent

estors as it

st people w

get overex

tional loans

allows them

will probably

xtended. An

s, which m

m to

y get

nd if

means

As men

loans. T

ntioned earl

This means

lier, your d

that you ca

debt-to-inco

an have as m

ome ratio w

many deals

will not be

s as you wa

e affected b

ant using th

by hard m

his type of l

oney

loan.

Hard MMoney LLoan Tipss

Tip #1:: Don’t Woorry aboutt the Intereest Rate

P

m

in

le

18

th

Perhaps the

money loan

nterest rate

nders cha

8% interes

hese rates

e main dra

ns is their

e. Normally

arge betwe

st rates. A

seem absu

awback of

perceived

y, hard mo

een 10%

At first gla

urdly high.

hard

high

oney

and

ance,

But

21  

when taken into context, you’d realize that these rates are not really that high

considering the risks that lenders take. Remember that these lenders provide loans

even to investors who don’t have jobs. They are taking huge risks and a 12% or 16%

interest rate sounds fair to all parties concerned.

You should also consider that these rates are yearly rates. So at 12%, you’re basically

paying just 1% per month. Just think of hard money as quick and easy access to

capital that would allow you to profit from a real estate project. Hard money loans

also allow you to focus on the most important aspect of real estate investing, which is

finding great deals. Just think about it, how many offers could or would you make if

you never had to worry about the money?

Tip #2: Get Pre-qualified

Getting pre-qualified is one of the best ways to make fast cash when investing in real

estate. Getting pre-qualified simply means meeting with lenders and knowing what

they are looking for. Determine what they are looking for and go find it for them. It

would be way easier for you to close deals if you’re pre-qualified as you can offer all

cash to home sellers.

Getting pre-qualified is the best thing that you can do if you don’t have a prospective

deal. Instead of bringing a good deal to an investor, you’ll do the reverse: find out

what properties they lend to and go find it for them.

22  

So befo

get pre-

you can

re you star

qualified. Y

show to se

rt making o

You can ev

ellers that y

offers on h

ven ask for

you have th

houses, mee

a proof of

he cash to b

et your loca

f funds lette

buy their pr

al hard mo

er from the

roperties.

oney lender

e lender so

r and

that

Tip #3:: Build Sollid Relatioonships wiith Local HHard Monney Lenderrs

It is imp

in your

deals. In

you’ve g

much tim

local len

portant tha

local mark

n fact, mo

got a good

me to proc

nders.

at you build

ket can pro

st local len

d or bad d

cess a loan

d a good ra

ovide you w

nders could

deal in you

and they h

apport with

with valuab

d just driv

ur hands. L

have less kn

h local hard

ble inform

ve by a hou

Larger nati

nowledge o

d money le

ation and

use and te

ional comp

on your are

enders. Len

advice on

ell you whe

panies take

ea compare

nders

your

ether

e too

ed to

You sho

with sev

lenders

network

benefit a

ould also n

veral local

runs out o

kers as they

a lot from t

ever limit y

lenders, yo

of funds to

y are active

these lende

yourself to

ou will hav

finance yo

e players in

ers if you b

just one le

ve more op

our project

n your loca

uild long-te

ender. By c

ptions for

t. Hard mo

al real estat

erm relatio

creating soli

loans in c

oney lender

te commun

onships with

id relations

case one of

rs are also g

nity, so you

h them.

ships

f the

great

u can

 

Tip

Pen

Wh

ask

p #4: Dete

nalty

hen borrow

the lende

ermine the

wing hard

er what th

e Pre-paym

money, alw

he pre-paym

ment

ways

ment

23 

penalty

a lender

penalty

the pre-

is, if there

r states tha

is usually e

payment o

is any. A p

at you hav

expressed a

r a certain

pre-paymen

e to pay a

as a percen

number of

nt penalty is

penalty if

ntage of the

f months w

s a provisio

f you pay o

e outstandi

worth of int

on in the co

off the loa

ing balance

terest.

ontract whe

an entirely.

e at the tim

erein

The

me of

 

For exa

sell the

all hard

that hav

mple, if yo

house in th

money len

ve this prov

ou borrowe

hree month

nders requir

vision.

ed a six-mo

hs, you’re s

re a pre-pa

onth loan d

still require

ayment pen

deal but yo

ed to pay th

nalty but yo

ou manage

hree month

ou should a

d to rehab

hs interest.

avoid loan d

b and

Not

deals

Tip #5:

What m

much in

directly.

: Ask Que

makes a dea

nformation

stions

al attractive

as you can

e? How do

n. You will

D

M

yo

If

ch

I make ou

only get ho

Do not be a

Most hard

ou as much

f you wa

hances, ask

ur deal mor

onest answ

afraid to a

money len

h as you w

ant to m

k your le

re enticing

wers if you a

sk your len

nders will

want to bor

maximize

ender outr

to you? G

ask your le

nder.

lend

rrow.

your

right.

Get as

ender

24 

Tip #6:: Get to Knnow your LLender

Every h

wasting

make a

get to kn

business

commer

hard money

your time

short list. F

now them

ses? What

rcial proper

y lender ha

with a lend

First, collec

better. Wh

kind of d

rties or is it

as his own

der that ma

ct the nam

here do the

deals appe

t the other

n “sweet sp

ay not be a

es of lende

ey live? In w

eal to them

way aroun

pot.” If you

able to prov

ers that app

what locatio

m? Do the

nd?

u do not w

vide you fa

peal most t

ons do the

ey favor r

want to end

avorable res

to you. Sec

y conduct

residential

d up

sults,

cond,

their

over

Tip #7:: Do not MMisrepreseent your Prroperty Vaalue

 

As we a

will let

Lenders

property

Tip #8:

all know, h

you borro

s will do

y.

: Your Cre

hard money

ow financin

everything

edit Repor

y loans are

ng based o

in their p

rt Tells a S

collateral-

on conserv

power to

Story

It

co

fo

re

re

-based lend

vative value

determine

ding. Hard

es. This en

the true

money len

nsures secu

value of

nders

urity.

your

t’s not a se

ommon rea

or hard loan

eport. How

ealize that

cret that o

asons why

ns is due to

wever, bor

lenders

ne of the m

individuals

o a weak c

rrowers sh

will use

most

s opt

credit

hould

your

25 

credit sc

story ab

core to und

bout your in

derstand yo

ndividual d

our charact

disposition.

er and you

. Have you

ur repaymen

u been divo

nt capabilit

orced? Hav

ty. It also te

ve you lost

ells a

your

job?

Tip #9:

Studies

strategie

environm

wish to

: Buy and

have prov

es most inv

ment, getti

buy, hold,

Sell; don’t

ven that sin

vestors use

ing refinan

, and refin

t Hold

nce last yea

is a quick r

ncing on an

nance for y

ar, among t

rehab of a p

n investmen

our exit st

the most s

property. G

nt property

trategy, len

successful a

Given the p

y may be d

ders may v

and easiest

present ban

difficult. If

view

t exit

nking

f you

this mmove

with gr

 

e

Tip #10

If you in

that the

neighbo

hold on

about th

eat skepticis

0: Ensure

ntend to re

e outcome

orhood. An

n to your h

he neighbor

sm unless y

that your P

ehab your p

will have

n uncompe

house, the

rhood befo

you have go

Property i

property, y

the “same

etitive prop

more mon

ore taking a

ood credit and strongg financials..

is Competi

you need to

e standard

perty may

ney you w

itive

o make it c

ds” as the

be difficul

waste. Con

competitive

other prop

t to sell. T

e in such a

perties in

The longer

a way

your

you

any action.

T

J

g

d

Tip #11: Bu

Just like w

good re

duct a thorough reseearch

uild a Net

with any o

elationships

twork

other busin

s are

ness,

very

26 

important in real estate investing. The secret to building a reliable network and

generating huge profits is by acquiring long-term relationships. This does not only

apply with hard money lenders but also with contractors, agents, fellow investors, etc.

If you make a credible reputation in the business and if you have successful people in

your team, hard money lenders will find you.

Tip #12: Know your Market

This is important because knowing your market will increase your chances of earning

profits that you can use to repay your loans. Let’s say you used hard money to finance

your rehabbing project. If you rely solely on the money that you make after selling the

property, you have to ensure that your house sells fast. This can only be possible if

your familiar with your market. Start with a thorough research or survey. You may

drive around the neighborhood and ask residents about the type of properties that

appeal to them. Find out about their spending capability. How much are they willing

to spend? What is their source for financing? You may also ask help from your fellow

property investors. Ask them about the average time it takes before properties are

closed. Determine what house features appeal to buyers.

Tip #13: Get Started

A lot of people are interested in real estate investing but they never got started

because they think that they need tons of money to launch a career in this business.

27  

28  

They couldn’t be more wrong. You now know that you don’t need money to get

started in investing in real estate, and the best way to do that is to find local hard

money lenders, find out what kind of properties they lend to, and go find that

properties for them. Always remember that with the help of hard money lenders, you

don’t need money to buy a house.

 

Conclusion

Hard money loans can do wonders for your real estate investing career. In fact, a lot

of real estate investors credit part of their success to hard money lenders. If you know

how to effectively use hard money loans, you can not only jumpstart your career, but

be successful as well. By following the steps, tips, and other information provided in

this handbook, you can have the confidence to approach hard money lenders and

bring them good deals.

At a time when hard money seems to be the “king” of the real estate market,

developing solid relationships with lenders could be the fastest and easiest way for you

to earn tons of cash investing in real estate. Remember, you don’t need to have a job,

you don’t need to have a good credit report, and you don’t need to have capital to do

business with hard money lenders. So find a lender in your area today and invest your

way to success using hard money loans.