Hard money loans are much easier to get than having the conventional mortgage broker put on his rubber glove and tell you “you’ll experience some SLIGHT discomfort” in applying for his loan.

Either that or conventional lenders want your first born child. (Some of us with teenagers at times are thinking “they can have my first born.”)

Here is a quick check list of 5 things of what helps when applying for a hard money loan:

1. Buy the property right

If you buy the property under market, even if you don’t have enough down payment, if you really can show that the after repair value (ARV) is there, you’ll have a much better chance of getting the loan, either from the hard money lender directly or a relative or investor giving you enough down payment for the hard money loan.

Try not to getting in a multiple bid bidding war as it is sometimes going on right now.(in Southern California where I loan there are currently bidding wars ) If you avoid that battle, it increases the chance of you not overpaying.

2. Get an inspector or a contractor

If you show a detailed list of what the property needs and how much it is going to cost to get you to the after repair value, you’ll look like you have your act together, even if it’s your first fix and flip.

3. Know exactly what your exit strategy is.

I get people all the time when I ask them their exit strategy is that they say, “oh, I don’t know, I might rent it out or I might sell it.” WRONG ANSWER.

Get your act together and have a plan. If you are renting it out, know what the rental market is for that neighborhood. If selling, know what the after repair value is.

A hard money loan is usually a short term loan with a balloon payment within a couple of years or less. Balloons are for CLOWNS, however, they are many times a necessary evil for people who need hard money. If you are not prepared, the time in which the balloon is due will be the quickest time in your lifetime. You will swear they were turning the clocks ahead faster.

4. Know what your red flags are in advance and address them.

If you have a bankruptcy on your credit, tell the hard money lender in advance. If you don’t tell her, you may still get the hard money loan but it may take longer.

Hard money loans are equity based but the lender shelling out the money may want to know why you have judgements against you or why you didn’t pay your child support.

5. Your track record

If you have a history of getting hard money loans and actually paying them back, brag about them. Give a list of the properties you bought or the properties in your existing portfolio you purchased with hard money. If this is your first, just do some planning.

Good luck in getting your private hard money loan. Make something happen by taking action!

George Kengott
California Hard Money Lender and First Trust Deed Investments
www.cahardmoneynow.com