Profile picture for sahmof2boys

define hard money lenders? where can I find them? is it worth doing business with them?

  • August 04 2011 - US
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Answers (6)

You can find them on the internet by doing a search for "Hard Money Lenders".  You can also ask a realtor for a referral.
  • August 05 2011
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Profile picture for Mevin Barnes
If you haven't already, scroll down and read wetdawgs post.  If you are still interested, one of the best places to find hard money lenders are real estate investment clubs.  Locate one in your area or even speak with your local mortgage broker to see if they may have contacts.  After you locate a lender go back and read wetdawgs post once more so you know what you are getting into.

Hard Money Lenders have their place but you need to know when and how to use them.

Good Luck

Melvin
  • August 04 2011
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http://www.reiclub.com/hard-money-lenders.php
  • August 04 2011
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Profile picture for SoCal Engr
Hard money lender experience (thankfully, second-hand)...

We bought into a small builder effort (6 houses total in an established neighborhood). All six lots were prepped, graded, utilities run, etc. However, only the first 3 houses were built, with the second 3 being marketed/built in a second phase of building.

The builder ran into delays, and went to a hard-money lender to bridge the effort to the second phase. When we went to close, there was a problem in escrow. Seems the hard-money lender, who was in second position, wasn't happy with the prospect of waiting for the last 3 houses to be built before getting their money back - even though those houses were already under contract and ready to build.

Short version...The hard-money lender threatened to stop all closings on the first three houses. The resolution was that the builder ended up having to give up the last three lots. The lender then went to the people who had already opened escrow on the new houses, and told them that the prices were being bumped (about 10%-15%). When the buyers balked, the lender essentially said, "No problem, hold onto your current contracts. Nothing says we have to build - especially since we don't owe anyone any money on the lots." End game, the buyers had to fork over the extra cash before the lender (and, apparently, builder) would finish the construction.

Lesson learned...There's a reason they are call "hard" money lenders.
  • August 04 2011
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Profile picture for wetdawgs
Hard money lenders tend to charge a substantially higher interest rate to absorb the risk of people who wish to invest with very little down payment and/or bad credit history.    If you are considering such an approach for investment properties, you will need to do careful running of the numbers to see if it makes sense.

  • August 04 2011
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Profile picture for sunnyview
Hard money lenders are lenders that demand higher rates for higher returns and often make loans that traditional lending sources won't. Generally, hard money loan cost a lot more over traditional sources, offer shorter term loans and in my opinion are not a good option due to their increased cost.

I think that it is better to deal with any issues that are problematic for traditional lender to give you more loan options at a lower cost. Things like credit, down payment and employment history can be worked on over a year or two Taking time to do that gives the buyer more access to traditional lending options and more financial stability before they buy.
  • August 04 2011
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