If you're looking for a direct hard money lender to help you out, you might be wondering how you can find good and reputable residential hard money lenders. While there are certainly many lenders available, not all of them will take your best interests to heart.
For that reason, you should take the time to do some research so you can choose the best hard money lender for you. But where should you start? What should you look for when choosing a private money lender, California?
Keep reading and learn more about what you should consider when finding the best direct hard money lender.
Do Some Research and Understand the Goal
Finding good hard money lenders for commercial real estate (or residential real estate) will take some time and effort. The last thing you should do is pick the first hard money lender that you find on the internet. More often than not, you will have to do quite a bit of research before you can find a hard money lender that's right for you.
However, before you even start looking for a hard money lender, you should first understand what hard money lenders do. A hard money lender is someone who will give you a hard money loan for a piece of real estate. How does a hard money loan differ from any other kind of real estate loan, you might ask?
What makes a hard money loan unique is that it utilizes money that does not come from a bank. Most loans except for these loans come from banks and use a bank's money. A hard money loan is different in the fact that it instead uses an individual's money (or sometimes a company's money).
Another difference is that a hard money loan is a loan that must be paid back in full in a short period of time. Some more traditional loans may give you several years to pay back the money you owe, but with hard money loans, you'll have to pay the money back much faster. Also, hard money loans have higher rates of interest, making it especially important to pay them off on time.
The Details
In some cases, both the borrower and the loan lender can negotiate the terms of the loan so that the loan is effective for both parties. In general, hard money loans can be very helpful if you need money fast, but just keep in mind that you will need to deal with them much quicker compared to other types of loans. By understanding how these loans and hard money lenders work, you will already be on the right track.
The last thing you want is to be confused when it's time to talk to hard money lenders and see what they have to offer. But once you're educated on the subject, it should be much easier to understand the goal and find the right hard money lender for you. Also, by knowing more about how hard money lending works, you be able to understand when a lender might be trying to scam you or trick you.
This, of course, is very important, otherwise, you might end up in big financial trouble. This is the last thing you want when you're just trying to finance your goals.
Check for Referrals and Online Reviews
If you really want to make sure that you're choosing a good and professional hard money lender, you shouldn't hesitate to look for referrals and online reviews. You can ask for referrals by asking people you know such as your friends or family members if they have ever worked with a hard money lender in the past. If so, then you can ask them some important questions about the lender they worked with.
If they tell you that the lender they worked with was very unhelpful or unprofessional, then you'll have a better idea of where to look when choosing your own lender. If people you know tell you that a particular lender had bad communication skills, for example, this is a sign that you should avoid the lender.
Communication is an essential skill that all direct hard money lenders should have. If a lender doesn't know how to communicate, it will be impossible to get your point across. More than that, dealing with such a lender will be frustrating and unhelpful.
The lender might even end up making mistakes which will only make your life much more complicated. On the other hand, if people you know tell you that a particular lender is a very good listener, kind, and straightforward, these are all good signs that the lender is a good choice.
What You Need to Know If you don't know anyone who has worked with a hard money lender in the past, then you should turn to the internet. More often than not, most hard money lenders will have at least a small handful of reviews from people who have previously borrowed from those lenders. You'd be surprised at how much these reviews can tell you about the quality of a given lender.
If you find a hard money lender with mostly bad reviews, this is a bad sign. It is important to read the individual reviews so you know exactly what makes a particular lender good or bad. For example, some reviews might complain that the lender was hard to work with, that it was difficult to negotiate the terms of a hard money loan, that the lender was unfriendly, and so on.
On the other hand, if you find a hard money lender with many positive reviews, you may be in luck. The positive reviews may talk about how helpful the lender was or how easy the lender was to work with and so on. You should always opt for a lender that has more positive than negative reviews.
This is because lenders with positive reviews obviously care about satisfying their borrowers. On the other hand, lenders that have many negative reviews don't care about their borrowers at all and they certainly don't care if they end up unhappy with the services provided. So, as long as you do some research and read through some of the online reviews for various hard money lenders, you should be able to narrow down your choices without any trouble.
Stay Away From Scams Unfortunately, there are many scams on the internet that can easily catch people who don't do enough research when choosing hard money lenders. Some scammers are very realistic and can make it seem that they are real hard money lenders even when they're not. If you've never worked with a hard money lender or even gotten a loan from a lender before, you may be more vulnerable to falling prey to some of these scams.
However, as long as you do enough research beforehand and you always double-check the lender that you're dealing with, you should be fine. There are certain signs that are giveaways that a lender is not a real lender. For example, if you find that a lender is offering a loan at unusually low rates, this is a bad sign.
Many people fall for this trap because they are looking to get a deal when getting a loan. However, if a loan has rates that are far too low for the current market, the lender is likely trying to scam you. Another sign to look out for is if the lender asks for money upfront.
A professional hard money lender will never do this as it isn't the way things go. You should also be wary if the lender refuses to disclose his location. The majority of scammers want to remain as anonymous as possible so they can disappear whenever they're on the verge of getting caught.
So, as long as a lender doesn't have any of these signs, the chances are that you're dealing with a real lender.
Finding the Best Direct Hard Money Lender
Finding the best direct hard money lender can be difficult, but it certainly isn't impossible as long as you know what to look for. For example, looking through online reviews and asking for referrals is a good place to start. You should also be careful to stay away from scams.
To learn more about hard money lending, get started on your application here.