Hard Money Lending Rules made Easy
by: Amy E. Jones
August 2002
Like terms, lending guidelines also vary from lender
to lender. Each has their own preferences with regard
to types of loans they will make and types of borrowers
to whom they will or will not lend. Some will check
your credit, some will not. Some will do their own
appraisals, some will not. Some will only lend in
certain areas while others will lend anywhere. Some
are more numbers-driven when it comes to decision-making
while others go more on their feelings about you and/or
the property.
With terms so favorable to the lender, most hard money
providers are concerned primarily with the value of
the property, placing less emphasis, if any, on the
credit of the payor. They just want to know that in
the event the payor defaults they will possess an
asset from which they can recover their original investment
and possibly more. This does not mean that lenders
desire to go through the hassle and expense of taking
back and reselling a property. It just says that because
of the terms of the loan, private lenders are secured,
and feel secure, whether a borrower pays or not.
Keep in mind that most hard money lenders are private
individuals. At Mentor Financial Group ("MFG"),
we work with private individuals, as well as, insurance
companies, pension funds and real estate funds. They
are not institutional investors or banks that have
a standard set of guidelines dictated by the Federal
Reserve. They can be flexible. They can be tough.
They are people just like you and me. You can talk
to them. They usually don't advertise that they lend
money, but instead are found through brokers like
MFG.
Hard money lenders are a great resource for real estate
investors, particularly a beginner with limited resources
(e.g. cash and credit). Having a hard money lender
on your team enables you to confidently make offers
on properties. It enables you to purchase properties
when your offers get accepted, and it provides you
with the funds necessary to do repairs, if needed.
In some cases, individuals have even been able to
borrow holding costs.
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At Mentor Financial Group (“MFG”), our business is
to fund investments secured by trust deeds on commercial
real estate, including income producing properties
(i.e. apartments, office buildings, etc.), land and
development projects (i.e. construction loans, rehabs,
condo conversions, etc.) and non-owner occupied residential
properties.
Don’t waste time! Call us today at (619) 987-9477
and ask about our referral fees.
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