Preparing to Meet with a Hard Money Lender

The below questions are the key points to get you ready before you go into the meeting with an HML:

  • What are your typical up-front costs?
  • What is their interest rate?
  • How long are the terms?
  • Do you need to make monthly interest only payments? (IC Tip: Always make sure that if payments are due that you make the payments by check and pay them from your personal account. Banks want to see that you’re making the payments. If they find out someone else is making the payments beside you, you may not be able to get the refinance loan approved and you will be stuck in hard money financing. Never make your payments with cash, it’s a deal killer!)
  • Do they fund the fix up money as well as the purchase money?
  • How do they disperse the money?
  • Can you do the work yourself or do you have to hire it out?
  • Will they do multiple loans for you at once?
  • Do they have a total dollar amount limit?
  • Can you offer other collateral to reduce cost, or increase the loan amount to make a deal work?
  • Do they have a minimum reserve that you need to have in order to lend to you?
  • Do they offer one time renewals if you pass your maturity date on the loan?
  • How much money do they have to lend?
  • Do they lend on multi-families as well?
  • Do they have maximum and minimum amounts per deal that they lend?

Asking these questions does two things…first, it makes sure that you are well prepared to add the HML to your real estate business. Second, it automatically lets the HML know that you are not an amateur, and that increases your chances of getting their available funds, because you are seen as a deal maker for asking all of the right questions. Stand out from the passive money seeker!

Remember, if you bring a deal to a HML and they will lend you money on it… you have a good deal. Also, HML’s are VERY well versed in the Real Estate Market and, in most cases, are willing to help or add value to your project to make it a successful one. They can be a wealth of information, so use it to your advantage! 

Also, some people can’t wrap their minds around HML charging as much as they do… to them I say: Why would you pass on a deal that you could put $10-15k in your pocket?  If you have the opportunity to make that profit or more by giving up $4-6k in money costs, do it. I would pay $4-6k to make $15k any day of the week, especially if it is the difference between making $15k and nothing.

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