There is no doubt that when looking to make a real estate investment, choosing a hard money loan is a great option. However, many people do not get approved for the loan because they were caught off guard with the loan application requirements.
To ensure a better chance of having the loan approved, check out The Hard Money Loan Application Checklist.
The Hard Money Loan Application Checklist
It has taken some time, but you have found the right investment. However, the location may not be in the best of neighborhoods. This will quickly send a red flag to your lender. The collateral for the loan is intertwined with the investment property. The lender will only give you a loan if they feel that their investment is safe. You should have pictures of your property as well as the surrounding areas to give to your lender. This will allow them some visualization into what they are loaning their money to. Having a number of comps for the properties that surround yours will be helpful as well.
How are you going to repay the loan at the end of the term? Hard money loans are for a very short time period. You are going to need a plan on how you will be repaying the loan. Whether you hope to sell the property or refinance it, your lender is going to want to know your exit strategy.
Even though the hard money loan is all about the investment property, your lender may need other documentation. They may ask for income verification, what other assets you may have, and what your credit is like. Having all your documentation together and organized will make for an easier process.
Bring Your Game Plan
The Hard Money Lender or Private Money investor is going to want to know what your game plan is. If you are going to renovate the property, make sure you bring all quotes from any contractor that you have talked to. By specifically laying out your plan and the costs associated with the plan, your loan is more likely to be approved. If you have made investments in properties before, show your lender what you did with them. Your experience and track record will count.
Make sure that you are ready to step-up to the plate. If your lender calls, do not wait two days to return their call. A sense of urgency is important with these lenders and they need to be reassured again and again that you really want this loan. If more documentation is requested, try to get it to them within a 24 hour window. This is not the time to lay back and wait to see what happens. If you want the loan, it’s up to you to communicate in a timely manner.