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» What Do Hard Money Lenders Need to Know?
Posted on 4/12/2005
Hard money lenders want to know how you will make the monthly payments.
Since the payments are interest-only and the loan has a term of about
1-3 years, the lender also needs to know how you will pay the principal
back, called your exit strategy.
Tell the lender all the good news about your plans. Keeping info back leads to swift and early-stage rejections. Hard money and commercial bridge lenders field hundreds of loan requests per week. Almost all of them are not qualified to receive a loan. Many are submitted by potential borrowers who have not thought out their plan, business process, or how the real estate loan will fit into their plans.
Borrowers who have 20% cash to buy a property and know the cost of the 65% loan, as well as the costs of the subordinated second loans (usually, but not always, a seller carry back loan) have a far better chance of receiving funding.
Put your business plan on paper. Run numbers that show you and the lender how much you will gross each month, how much you will need to spend on expenses - including the loan - and how much you will have left over each month. This will demosntrate your business capabiltiies and your ability to pay the loan. Lenders don't want to lend to amateurs who are not willing to put in the time and effort to work at a business like a professional. Professionals run the numbers and keep track of their expenses. They know what they can afford, which loans make sense and which don't.
Posted in Miscellaneous
Tell the lender all the good news about your plans. Keeping info back leads to swift and early-stage rejections. Hard money and commercial bridge lenders field hundreds of loan requests per week. Almost all of them are not qualified to receive a loan. Many are submitted by potential borrowers who have not thought out their plan, business process, or how the real estate loan will fit into their plans.
Borrowers who have 20% cash to buy a property and know the cost of the 65% loan, as well as the costs of the subordinated second loans (usually, but not always, a seller carry back loan) have a far better chance of receiving funding.
Put your business plan on paper. Run numbers that show you and the lender how much you will gross each month, how much you will need to spend on expenses - including the loan - and how much you will have left over each month. This will demosntrate your business capabiltiies and your ability to pay the loan. Lenders don't want to lend to amateurs who are not willing to put in the time and effort to work at a business like a professional. Professionals run the numbers and keep track of their expenses. They know what they can afford, which loans make sense and which don't.
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