It is often preferable, among real estate investors, to get hard money loans simply because of the turnaround time that is so fast. However, it should be stated that hard money lenders in Houston are really not all the same. You need to avoid getting talked into what could become a very bad deal, so check out these tips on what you should do to find the very best hard money lender.
CHOOSE A COMPANY THAT WILL SPECIALIZE IN HARD MONEY LENDING
It really doesn’t take a lot of common sense, but in some cases, people will confuse a private investment lender with someone that is a hard money lender. It is much more difficult to get hard money loans because of the expertise involved, plus you must ensure that the origination, servicing, and any other loan requirement is properly done. On the surface, you may believe that getting these loans is easy, but it’s quite complex and must be done in a way to facilitate the lending process smoothly.
Also read: Beware of These Common Mortgage Mistakes
CHOOSE THE BEST LOCAL INVESTMENT PROPERTY LENDER
As you may imagine, working with hard money lenders is all about the equity in the property simply because this is what will protect the loan if it goes into default. Most hard money lenders will need to look at the property that is being used for collateral. If you choose a local lender, this will make this entire process very simple.
TRANSPARENCY IS THE KEY
Never sign any paperwork blind, and additionally, always read the contract before you do. There are many businesses that will not abide by common practices. Coercion is quite common in this industry and many bad deals have been made. It is so important to have everything absolutely transparent so that you can make sure that the exact terms of the deal are adhered to throughout this process.
KNOW-HOW MUCH YOU NEED BEFORE YOU ASK
Real estate investors come in many different sizes and shapes. You must ask yourself what type you are. If your goal is to flip houses so that you can purchase them at a low price, fix them, and then sell them later. Perhaps you are looking to get several of these homes to flip them quickly. Maybe your goal is to get homes that you can rent. You may not be interested in any type of property except those that are residential, or you could have an affinity toward commercial properties instead. It’s important to know what type of investor you are working with and how to get the cheapest rates. Hard money lenders are only going to provide you with money for residential homes, or as other lenders may provide you with money for various other investment opportunities.
GIVING A LOAN
BROKER VERSUS LENDER
Not all lenders that will provide you money for investments are similar, and this is especially true with hard money lending. You do want to work with a local lender if possible. This will allow you to receive personalized service and you will always understand who has originated the loan. In some cases, these hard money lenders are not providing you with the money, but are simply the brokers in between that are trying to connect lenders and those that need the money. There’s nothing wrong with this, as not every investor really wants to work with a broker. You simply need to decide what type of investor you want to be and this will help you choose the right lender every time.
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