Real Estate Agents and Hard Money Lenders
Many of the hard money loans that we finance at TaliMar Financial are referred to us by residential and commercial real estate agents. Often, these agents are involved in a transaction in which their client is having trouble obtaining traditional bank financing. Either the client has poor or little credit, the real estate that they are purchasing is in poor condition, or the transaction needs to close quickly. In these cases, conventional financing is often not an option which is why real estate agents turn to a private lender to assist their client.
Credit Challenged Borrower
The credit challenged borrower is the most commonly referred client to a hard money lender. This doesn’t always mean they have a low credit score, rather in many cases, these individuals maybe self-employed, are real estate investors, don’t show consistent income, show high levels of outstanding credit, or simply don’t show credit.
Another reason why a borrower may not be able to obtain financing is because they are purchasing the property in a trust, Limited Liability Company (LLC), Corporation (Inc), or Limited Partnership (LP).
As a hard money lender, TaliMar Financial focuses primarily on the real estate the borrower is using as collateral vs. their credit. If the borrower is willing to fund 30% to 35% of the purchase price, we feel confident that the risk associated with the borrower’s credit is mitigated and we can move forward with funding the loan.
Real Estate is in Poor Condition
Another often referred client is the borrower purchasing a property that is in poor condition. In most of these scenarios, the borrower is purchasing the property to rehab and sell it or hold it as a long-term rental. Because of the condition of the property, a conventional bank will most likely not fund the loan.
The condition of the property is typically not a major concern to a hard money lender like TaliMar Financial. Because we underwrite to completion value, we consider the repairs that are required for the property and value the property based upon the completed renovations. Our underwriting guidelines allow us to fund up to 70% of the completion value with funds being held back for up to 100% of the renovation costs.
Another common reason a real estate agent may refer a client to a hard money lender is because the transaction needs to close quickly. The average closing timeline for a loan funded by TaliMar Financial is 5 to 7 business days.
Example of Recent Transaction
An excellent example of a recent transaction that somewhat met all three of these hurdles was a loan funded by TaliMar Financial in Encinitas, CA. In this scenario, a real estate agent was referred to TaliMar Financial after their client was denied for conventional financing through their mortgage broker. The Borrower had 7 days to close, their credit wasn’t poor, but they were self-employed, and the property was in poor condition.
TaliMar Financial was able to assist the client with financing once the borrower agreed to fund 25% of the purchase price. The loan was written for 12 months allowing the Borrower to show a strong payment history and obtain longer term conventional financing.
Real estate agents are an excellent referral source for hard money lenders. Because they are the primary driver of a transaction, they often assist their clients with any hurdle that may arise, such as financing. By referring their client to a hard money lender, they can usually overcome a client that may have poor or no credit, purchasing a property in poor condition, or a transaction that needs to close quickly.
About TaliMar Financial
TaliMar Financial is a California hard money lender that specializes in funding residential and commercial real estate private money loans. We fund fix and flip, construction, and bridge loans ranging from 12 to 60 months. Contact us today at (858) 613-0111 or visit talimarfinancial.com to learn more about our hard money lending programs.