How to Get a Hard Money Loan

1. How to Get a Hard Money Loan What's the price of a private money loan? Well, that depends on which type of lender they are. Let s think about these two types of lenders: your uncle likes you and wishes you would lend him money to augment the house payments and improvements. He also notes that he made the down payment when you first bought the house and the rest of the payments are coming up in due time. Unfortunately, your uncle can't get any more money from investors and will soon be out of a job. A hard money lender on the other hand likes to take a chance on future returns, so it's in his best interest to charge higher interest rates. If you have good credit, you can get away with a lower interest rate and if you have bad credit, you'll probably have to pay a higher interest rate because the lender has to compensate for that risk by taking a bit more of a risk on your behalf. This can work to your advantage because if you can pay the loan back quickly, you'll be able to pay the entire lump sum off fairly easily. If you run into some financial difficulties or have an unexpected bill, your hard money lender may be willing to work with you. But be prepared to have a lot of negotiation power with this type of lender. How can you make investing in real estate with small money easy? First, you need to have the contacts to work with. Since private money loans are unsecured, you won't be making any security by securing the loan with your home. Therefore, you will need to have some real estate contacts (preferably not local property owners) that are willing to sell you a property at a price that you can afford and will be willing to pay you a decent amount of interest to secure the loan. You can use real estate financing from your personal savings to help you with this, but it isn't always a good idea unless you have some capital to work with (and a lot of bargaining power). Second, you'll need a place to store the money for the long term. Private loans generally set up an account where you can deposit money each month. It's a good idea to have a savings account, because it helps to cushion your risk as well as build up your credit history. However, this isn't always feasible for everyone, especially for people who are employed full time and cannot rely on their regular income to save their money. Fortunately, there are other means of getting money to invest like with real estate investing where you don't need to have a bank account to access funds. Finally, you will want to have collateral to offer the lender in case of default or in case you decide to pay off the loan early. If the loan is secured, then the borrower has something that he or she can sell in case they fall behind. The most common items given to borrowers are their house or cars, but private money loans can also be offered to people who own planes, boats, ranches, businesses and bonds. If you are a hard money lender, you may even be able to get money from the borrower's collateral, which is another great benefit. Hard money lenders are able to get the money from banks, financial institutions and even the owner of the property themselves without much of a hassle. They will just need proof of the borrowers credit history and income level. With the proliferation of these loans available, it is possible for investors to take advantage of any opportunity that comes their

2. way. Whether you are an individual or an investor business, you are likely to find private loans from hard money lenders quite beneficial. Because of this, hard money loans are becoming increasingly popular among entrepreneurs and other types of borrowers.