Roger Morph 
If you’re looking for a quick, flexible financing solution for real estate investing, a hard money loan is well worth considering.
Hard money lenders give investors fast access to financing, which you’ll find particularly beneficial if you’re looking to beat out your competitors and secure a great deal on a property. But if you’ve never applied for a hard money loan before, you might be wondering what the process looks like.
This guide breaks down all the steps involved in getting a hard money loan, so you know what to expect before you get started.
Step 1: Find The Right Lender
The first step to a smooth lending experience is to find the right lender. Hard money lenders are private individuals or companies, so there’s no set structure or rule that all lenders follow when it comes to their terms, rates, and loan-to-value (LTV) ratios.
With that in mind, you’ll want to spend plenty of time comparing your options before you settle on a lender. It’s also worth looking for lenders that specialize in the type of hard money loan you need, like a fix-and-flip loan or bridging loan.
Step 2: Prepare A Solid Investment Plan
The best hard money lenders will only work with you if they see that your deal makes financial sense. So before you choose a lender, you’ll need to be ready to explain how much you’re borrowing, what the property is worth, and how you plan to repay the loan.
If you’re flipping a house, you’ll need to be able to show your estimated renovation costs and projected sale price. If you’re buying a rental, your lender will be more interested in seeing your expected rental income and exit strategy.
Step 3: Gather The Required Documents
Hard money lenders don’t only want to see proof of your expected spend and profits—there’s some other paperwork that you’ll need to prepare before you can take out a loan.
This typically includes proof of property ownership (or a purchase contract) and your most recent bank statements. Some lenders will also ask you to share your tax returns, but most are more interested in the deal itself rather than your personal finances.
Step 4: Close The Deal And Receive Funds
Once you’ve settled on a lender, your next job is to review the loan terms (including the interest rate, fees, loan duration, and penalties for prepayment) and check that you’re clear on what’s required before you commit.
Once you accept the terms, the lender will finalize the agreement and fund the loan. You’ll usually get the funds wired to a designated account of your choice.
Step 5: Execute Your Investment Plan
As soon as you’ve secured the loan, you can follow through on your investment strategy. You’ll want to start your project immediately to avoid having to pay unnecessary interest costs down the line.
Takeaway
Hard money loans are a quick and flexible way to fund your real estate project, but you’ll need to have a clear plan of action. After reading this guide, you should now know all the steps involved to help you secure funding with no hassle.
