Hard money lending today is a blanket phrase for many different types of loans. With sub-prime loans a thing of the past, and the conventional lenders tightening their lending standards, hard money is still an option for many borrowers, regardless of credit type.
Hard money lenders are loan to value driven. Credit scores, the ability to repay and the overall picture do play a part in the decision to lend or not to lend on a particular transaction, but the largest consideration is given to the property value and the percentage of debt against it. With hard money lenders, this loan to value ratio typically needs to be a maximum of 60%, 65% in a best case scenario, depending on the location and type of property. For example, commercial properties located in San Francisco we may be able to lend as high as 65% on, whereas rural properties we may be capped at even 50-55% of the value (this is as of late 2011, and has changed substantially over the past 12-24 months).
Hard money lenders offer flexibility that is needed in today’s market. Cross collateralization of multiple properties is one way that a hard money lender can overcome higher loan to value ratios. Additionally, hard money lenders will work with borrowers on a personal level. You have the opportunity to speak with the individual making the funding decision. With no minimum credit score required, hard money lenders will give you the opportunity to present your individual situation and will then make a decision based on a “make sense” type of scenario. If the loan makes sense for both the borrower and the hard money lender, the deal will typically fund. A good hard money loan is one where there is a solid exit strategy and a clear benefit to the borrower.
Working with a hard money specialist is extremely important when trying to obtain private financing. Structuring these deals is different than putting together a conventional loan package. In addition to properly structuring your transaction, it is equally important that your hard money specialist has the resources available to get your transaction funded.
My name is Chris Goulart, and I am a hard money specialist. I have access to a number of resources should your particular file not fit our basic guidelines. Please feel free to read more about what we can offer in the way of hard money, or contact me today to talk about your loan scenario. I can be reached at 877 462 3422. This is my direct line. Additionally, you can email me at email@example.com.