For those who are just getting involved with real estate financing you may have heard a lot of promising information that has turned out to be overly optimistic. For many, this is frustrating, but by following some simple tips for real estate investors using hard money you can help to position yourself better by knowing what to expect.

Many investors are using a combination of gap financing and hard money lending to purchase a property. This is a great way to leverage, but for those with no cash to work with it can provide some problems. One such problem is the question of earnest money.

Typically when you put something under contract, the seller wants to see an earnest money deposit with the transaction. This can be as little as $1,000, or as much as 10% of the purchase price if you are dealing with a Freddie Mac or Fannie Mae property.

In addition, there will be other expenses to take into consideration, including appraisals, site visit fees and any inspections that may be needed. For our rehab loans, we do not require appraisals, but you still are going to need some funds to work with. Site visit fees typically run from $150-$850, depending on the location of the property.

Having some money available is going to really help your cause. There are instances where we have been able to secure a gap financer who is willing to put up the earnest money, but that really hinges on the deal strength. Your best bet is to have at least enough money for an earnest money deposit and site visit.

In addition to having some upfront money to work with, you are going to also want to have a pre-qualification letter to go with your offer. Visit our hard money loans home page for contact information. Usually a brief conversation will allow us to write you a pre-qualification letter that you can use to make offers with.

Finally, having an experienced realtor working for you is going to be extremely valuable. Someone with contacts who specializes in the area you are working in is best. Also, someone who specializes in distressed sales is best. Relationships make a world of difference, and having someone working for you who knows the players is going to help you get the most profitable properties under contract.