What You Should Know Before Selecting a Hard Money Lender

Hard Money exists to provide real estate investors with an alternative source of financing when conventional lenders are not an option. Many Borrowers who have no credit, lack consistent income, or own a distressed or tough to value real estate asset depend on the private lending industry for their financing. Hard money is typically institutional or funded by a group of organized individuals under the capacity of a licensed party. TaliMar Financial has filled this niche by offering a secure source of capital for residential and commercial real estate investors. Established hard money lenders strive to reach almost every facet of real estate worth investing.

Market Focus

Some hard money lenders focus on commercial assets while others target residential properties. Commercial assets include just about everything from industrial properties to shopping centers. Other hard money lenders may be better equipped to invest in land that is purposed for massive development.  The market focus of the hard money lender classifies their suitability to meet the Borrower’s needs. Hard money lender’s that focus on land development or commercial financing are less likely to accommodate the needs of a single family residential fix & flipper. While the focus or target market may vary from single and multi-family residences, to land and commercial properties, hard money lenders generally tend to keep away from any owner-occupied loans due to the strict regulations enforced by governing organizations.

Terms of Lending

Since hard money lenders focus most of their efforts on underwriting the asset as opposed to the borrower’s personal circumstances, there are few requirements. Common terms of lending include business purpose affidavits, borrower equity, and experience. Some hard money lenders will only offer construction financing to seasoned developers while others are more welcoming when presented with an opportunity to provide a first-timer with the financing and feedback necessary to kickstart their business endeavors in real estate investing. Lending criteria will vary by hard money lender but at the end of the day, the lender will need to feel comfortable enough with the Borrower’s experience and or capabilities.

Cost of the Money

Because hard money lenders are not difficult to come by, pricing remains competitive. There are other financing costs associated with hard money loans aside from the interest. The most common out-of-pocket costs charged to a Borrower to be paid to the Lender include upfront points, underwriting and processing fees, credit check and loan document fees as well as, the annual interest charged on the original principal balance of the loan. Other financing costs associated with hard money loans can include broker or referral fees, document preparation fees and prepayment penalties.  Additional fees may be applied to construction loans. Such fees would cover the cost of construction holdbacks and fund control.

Client Relations

Some consider working with hard money lenders on construction or development projects because the expertise and hands-on approach of hard money lenders can prove to be of great value to the Borrower. The confidence and funding that hard money lenders provide real estate investors is often times integral to their continued success as a real estate investor. Shopping local and building relationships close to home is key. A hard money lender in California is likely going to question a Borrower in Florida that has approached them with a hard money loan request. Often times Borrowers that are in the business of flipping or developing homes will select a hard money lender and form a working relationship. This working relationship provides the borrower with a peace of mind and the security required to find future projects and hopefully provides the hard money lender with sound investments.

States We Lend In

Hard money lenders are subjected to not only the regulations of the state in which they conduct business but we also must observe the regulations of the state in which they are lending. Many hard money lenders will only lend in the state which they conduct business. Other hard money lenders focus on originating loans in a few states while very few hard money lenders are nationwide.

Conclusion

TaliMar Financial prides itself as being an alternative lending option for residential and commercial real estate loans.  As a private lender, we have the flexibility to structure a loan that meets the needs of real estate investors throughout California. When shopping for a hard money loan it is imperative that you understand the nature of the hard money lenders business of which you seek financing. Some hard money lenders only lend on commercial properties while others focus on residential single and multifamily properties. Nevertheless, hard money lenders generally underwrite to the asset as opposed to the borrower’s financial history.

About TaliMar Financial

TaliMar Financial is a California hard money lender located in San Diego, CA that specializes in funding residential and commercial Fix & Flip, Construction, and Bridge Loans in California.  As a direct lender, we can fund loans within 5 business days. We offer aggressive financing options and have the flexibility to structure our loans based upon need. For more information on our hard money lending programs, please contact TaliMar Financial today at (858) 613-0111 or visit us at talimarfinancial.com.