All About Hard Money
If you’re ready to search for hard money lenders, select a state from the drop-down menu above. If you want to learn more about hard money loans, continue reading to find a wealth of valuable information – typical guidelines, requirements, loan scenarios, average interest rates, and summaries of hard money loans funded by lenders on our platform. The content on this page was written by the Lender Link team. Artificial intelligence was not used to generate any of the content on this page. For the sake of many real estate investors who are familiar with hard money lending, we’ll start off with the typical guidelines before getting into the basics.
Typical Hard Money Lending Guidelines
Loan Amounts
Most hard money lenders have a minimum loan amount of $100,000, and a very small percentage offer loans less than $75,000. For residential investment properties, many hard money lenders offer loan amounts up to $3,000,000, and some can go up to $5,000,000. A small percentage of lenders consider luxury homes. Hard money lenders that focus more on commercial real estate tend to offer loan amount between $1,000,000 and $15,000,000.
Interest Rates
At this time, the interest rate for most hard money loans is between 10% and 12%. Some hard money lenders charge up to 15% for riskier loans. In California, the interest rates tend to be between 9% and 11% for 1st mortgages.
Points and Fees
Most hard money lenders charge 2 points as an origination fee, which is 2% of the loan amount. It’s rare to find lenders charging less than 2 points. Some lenders will charge 3 points. In addition to points, many hard money lenders charge a separate fee for underwriting and processing the loan. These additional charges are commonly known as “junk fees.” There are many ways for hard money lenders to structure their fees. Some lenders charge 3 points but no junk fees. Some charge 2 points plus junk fees. Some charge 1 point but then charge a higher interest rate. Some lenders charge 1 point when the loan funds and another point when the loan is paid off.
Down Payment for Purchase Bridge Loans
For hard money loans that do not include a rehab or construction budget, borrowers typically need a 30% minimum down payment while the lender funds 70% of the purchase price. Hard money lenders don’t care if you feel the purchase price is below market value. In hard money, the purchase price is the value, and the borrower needs to have real equity in the deal. Even if a hard money lender advertises a maximum loan-to-value of 70%, it doesn’t mean that all borrowers will get that maximum leverage. There are a number of factors that can cause a hard money lender to reduce their maximum leverage – property location, property condition, low credit score, unique property type, etc.
Leverage for Residential Rehab Loans
The majority of hard money lenders will fund up to 85% of the purchase price and 100% of the rehab budget, so long as the loan amount does not exceed 70% of the after-repair value. This structure can be stated by lenders as 85/100/70, and it requires borrowers to contribute 15% of their own cash to the purchase. Some lenders will fund 90% of the purchase price, but typically only for real estate investors with lots of experience and strong financials.
Leverage for Refinance Bridge Loans
For refinance hard money loans, most lenders max out at 65% loan-to-value. Some lenders are more conservative. Most hard money lenders require a formal appraisal, but there are some lenders that do their own in-house valuation, so long as there are enough comparable sales in the area.
What is a hard money loan?
A hard money loan is a short-term mortgage, secured by investment real estate, which bears higher costs and lower leverage than mortgages provided by banks and institutional lenders. The interest rates for hard money typically range from 10-12% annually, and most lenders charge at least 2 points as an origination fee. Although it is expensive, hard money exists primarily to solve a short-term need for real estate investors. Most hard money loans have a maximum term of 12 months. Some lenders offer a term up to 3 years, but this is rare, and most lenders expect their borrowers to have a solid exit strategy that will pay off a hard money loan in less than 1 year.
While traditional financing qualification focuses on a borrower’s financial strength, hard money loans qualify primarily based on equity in the subject property. The maximum loan-to-value (LTV) is typically 70% for most hard money loan. If your loan is for the purchase of a property, you’ll need a down payment of at least 30%. Many lenders are more conservative with a 65% maximum LTV, and a small percentage of lenders can go up to 75% LTV. If you’re lucky enough to find a hard money lender that considers vacant land as collateral, the maximum LTV is typically 50%. So if you’re purchasing land, you’ll need a 50% down payment.
The property securing the loan can be a commercial property (multifamily, retail, industrial, office, hotel, self-storage facility, etc.), but the majority of hard money loans in the United States are secured by residential investment properties – single family homes, condos, duplexes, triplexes, fourplexes. Residential and small multifamily properties are the most desirable assets that hard money lenders consider as collateral. A very small percentage of hard money lenders consider vacant land. Land is the least desirable collateral for lenders and bears the highest risk for them.
Investment Properties Only
One of the most important elements of hard money lending is that it is only for investment or business purposes. Hard money lenders do not consider a borrower’s primary residence (homestead) as collateral. The main reason for this is government regulations. Residential consumer-purpose mortgages are regulated by the federal government and come with many compliance requirements. There are a few exceptions in California and Arizona, but in most other states, it’s not possible for a borrower to use their primary residence (or 2nd home) as collateral for a hard money loan.
See a List of Direct Hard Money Lenders
Our website is a resource where real estate investors and brokers can find reputable direct hard money lenders. View lenders’ detailed profiles and contact them directly. Lenders pay us a monthly fee, so there is no cost to see the lender’ profiles and contact information. Select a state…
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Types of Hard Money Loans
Here are some common types of hard money loans and example scenarios…
Fix and Flip
By far, the most common loan type/scenario in hard money lending is for residential property rehab projects, commonly known as Fix & Flip. It includes funds to purchase a house and funds to rehab/renovate it, with the goal of increasing the value and selling the property for a profit within 12 months. With fix & flip hard money loans, the loan amount must be no more than 70% of the after-repair value. Many real estate investors visit our website looking for 100% financing for fix & flip projects, but it’s quite rare and not available in most states. Most hard money lenders require a 10-20% down payment for property rehab projects so that the borrower has some equity in the deal, commonly called “skin in the game.” Not all hard money lenders offer house flipping loans. Search for fix & flip lenders.
Purchase Bridge Loan
There are many hard money loans which have nothing to do with rehabbing or adding value to properties. Many real estate investors simply need quick financing to buy an investment property. A common scenario is for the purchase of a rental property where the seller requires the buyer to close the transactions in 2 weeks. The buyer would ideally get a loan from their bank, but it will take around 30 days to secure the financing. The buyer can use a hard money loan just to get the deal done within the 2-week period. The real estate investor will put down at least 30% cash to close the deal. The fees and interest rate will be high, but this is an opportunity cost, and the investor can refinance into a bank loan shortly after the closing. This scenario is commonly called a “bridge loan.”
Refinance Bridge Loan
Many hard money lenders provide short-term loans to refinance an investment property. The leverage for refinance hard money loans is typically 5-10% lower than the maximum leverage for purchase loans. A common scenario these days in a high interest rate environment is a commercial property’s loan is maturing, and the borrower is unable to qualify for another long-term loan, likely due to a low debt service coverage ratio (negative cashflow). So long as the loan-to-value is not more than 65%, a hard money lender can refinance the loan and give the borrower up to 2 years to secure a long-term loan which will pay off the hard money loan. This scenario is commonly called a “bridge loan.”
Equity Cash Out
Many hard money lenders provide equity cash out loans secured by investment real estate, so long as the loan-to-value is not more than 65%. Unlike with equity loans that homeowners get from a bank, hard money lenders only consider 1st mortgages (aka senior lien position). Hard money 2nd mortgages are almost impossible to obtain in most states. California and Arizona tend to be the only states where 2nd mortgages are offered by hard money lenders. A common scenario we see for equity cash out loans is when a residential real estate investor owns a rental property free-and-clear (no mortgages), and they want to cash out some of their equity to buy another rental property. A hard money lender can put a lien on the property and provide the cash out funds to the investor, typically within 10 business days. For commercial property owners, we typically see cases where the investor needs funds for a major repair of their property. Using hard money to tap some of their equity can be a quick and easy way to get the funds. One of the key qualifications for a hard money cash out loan is to have a solid exit strategy. Hard money lenders will want to know how their loan will be paid back within the 1-year or 2-year loan term.
Ground-Up Construction
Many home builders throughout the United States prefer to use hard money lending instead of banks to finance their construction projects. With hard money, builders can get higher leverage and receive draws faster, while avoiding a lot of red tape. Most hard money lenders do not offer loans for land acquisition and soft costs. The typical scenario for a hard construction loan is a home builder already owns the land, has completed the horizontal development, and is ready to go vertical. A hard money lender will typically fund up to 85% of the project costs, and the builder has to provide 15% equity to the project. Some lenders will consider the equity in the land instead of a cash contribution. Only a small percentage of hard money lenders consider ground-up construction since it bears a higher risk than rehab projects and requires additional expertise. The lenders who do provide construction loans almost always require the borrower to have experience with ground-up projects. Search for Residential Construction lenders.
Rehab-to-Rent
This is also known as a Buy & Hold strategy, or BRRRR (Buy, Rehab, Rent, Refinance, Repeat). It’s only for residential investment properties. A hard money lender can provide the funds to purchase a property and the funds to renovate the property. Instead of selling the property upon completion of the rehab project, the real estate investor would find a tenant and refinance into a long-term rental loan. Most lenders fund 80-90% of the purchase price and 100% of the rehab costs. The maximum loan-to-after-repair value is 70% for most lenders. Aside from the ARV, hard money lenders will want to make sure that the investor can qualify for the long-term refinance loan. Long-Term Rental, also known as DSCR loans, require a 680+ FICO score and a debt service coverage ratio over 1.2. The property must be cash-flow positive, meaning the rent collected must be more than the expenses – mortgage payment, property taxes, insurance, HOA dues, etc.
DSCR loans are not Hard Money Loans. Although many hard money lenders offer DSCR loans to their borrowers, all long-term rental loans are all sold to the institutional secondary market – insurance companies, hedge funds, etc. Most hard money lenders that offer DSCR loans do not use their own balance sheet to fund the loan. They typically partner with a wholesale lender that has the ability to sell many DSCR loans in bulk to the secondary market. With frequent movement in interest rates, it is extremely risky for a hard money lender to hold a 30-year rental loan on their balance sheet. Search for DSCR lenders.
Top 10 Hard Money Lenders in the United States
According to Forecasa™, here are the Top 10 Hard Money Lenders in the United States, ranked by the number of loans* originated from June 2023 to May 2024.
- Kiavi
- RCN Capital
- ROC Capital
- Lima One Capital
- Renovo Financial
- Constructive Loans
- Capital Fund I
- American Heritage Lending
- Velocity Commercial Capital
- Easy Street Capital
Five of the top 10 hard money lenders in the country are listed on our platform. Click the links above to view their profiles. We have relationships with the other five, but they are not subscribed for our service at this time.
Constructive Loans and Velocity Commercial Capital are wholesale hard money lenders, meaning they do not work with real estate investors directly. Roc Capital is also a wholesale lender, but they own/operate 2 retail hard money lending companies – Civic Financial Service and Finance of America Commercial.
* The number of loans used to rank the top 10 lenders includes long-term rental loans, which are not technically considered to be hard money loans. In the next few months, Forecasa™ will begin providing us with a list of top 10 lenders based on short-term loans (up to 2 years) versus 30-year rental loans. You’ll find their top lenders data for many states on our platform. Scroll to the top of the page to select a state.
Forecasa™ gives investors and lenders in the private real estate market powerful analytics and actionable insights. They help you skip the hassle of combing county records and focus on closing deals. With detailed market trends, investor and lender activities, and competitive benchmarking, you can make smart, strategic decisions. Some of their services include dynamic market reports, transaction-level details, customer analytics, borrower verification, and in-depth profiles of investors, lenders, and capital partners.
5 Ways Hard Money Lenders Get Capital
This topic of where hard money capital comes from may not be of interest to people who are not in the mortgage business. If you’re a real estate investor, you may not care how your lender gets their capital, and perhaps you shouldn’t care. Most hard money lending firms have multiple sources of capital which they can tap for various types of loan requests.
- Sell to Institutions
- Private Mortgage Fund
- High Net Worth Individual Investors
- Family Offices
- Other Hard Money Lenders
It can be a big effort to figure out a hard money lender’s capital source per each deal, and perhaps it’s a waste of time. As long as you’re getting good service, competitive pricing, and the lender can execute, it may not be worth thinking so much about where the money comes from or what happens to your interest payments after the loan funds.
Hard Money Interest Rates Data
Want to know the average interest rate for hard money loans in the United States? We have data from 2 companies that provide software to hard money lenders.
According to the hard money loan documents software company, Lightning Docs, the average interest rate for hard money loans in the 1st quarter of 2024 was 11.47%. The average loan amount was $392,628. These stats are the average of 3,886 short-term hard money loans (including bridge, rehab, and ground-up construction) funded for properties in 41 states between January 1, 2024 and March 31, 2024 by multiple hard money lenders that use Lightning Docs as their preferred software provider to prepare loan documents.
According to hard money data provider, Analytics Logics, the average interest rate for hard money loans in the 1st quarter of 2024 was 11.16%. Lenders charged an average of 2.5% points (origination fee). The average LTV (loan-to-value) for hard money loans in 47 states was 62.79%, and the average loan amount was $365,507. These stats are the average of all the hard money loans which were funded between January 1, 2024 and March 31, 2024 by the many lenders who use Liquid Logics’ loan origination software to manage their lending operations.
Pros and Cons of Hard Money Loans
Speed is the most common reason why you would get a hard money loan. While convention lenders take 3-6 weeks to fund a loan, hard money lenders typically fund in 1-2 weeks. There are not many requirements to qualify for a hard money loan. The main thing hard money lenders care about is equity in the deal and the exit strategy. Many hard money lenders do care about the borrower’s credit score but it’s not always the deciding factor.
For real estate investors who flip houses, there are not many good financing options for them other than hard money. Banks don’t like short-term loans and they don’t like to lend on properties in poor condition. Instead of borrowing from hard money lenders, some real estate investors borrower from wealthy individual lenders who are not operating a professional lending business.
The biggest downside to using hard money is the high cost. With interest, points and fees, the true cost of a hard money loan typically range from 12% to 16% annually. However, it’s not meant for long-term financing. Most hard money loans have a maximum term of 12 months. Another downside is the loan-to-value that hard money lenders require. For a property purchase bridge loan, borrowers need a minimum down payment of 30%, and sometimes up to 40% depending on the property type and location. To get a refinance bridge loan, hard money lenders don’t lend more than 65% of the property value.
10 Toughest States for Hard Money Lenders
There are several states around the country that many hard money lenders avoid, mainly due to state regulations and compliance requirements which make it difficult to do business in or difficult to foreclose in. If a borrower defaults on the loan, the lender’s recourse is to proceed with foreclosure. If the foreclosure process is too difficult, it adds a lot of risk for the hard money lender. When it’s difficult for a hard money lender to do business in a state, the result is less alternative financing options for real estate investors.
- Nevada
Out of all the 50 states, Nevada imposes the toughest regulations and compliance requirements for hard money lending and consumer mortgage lending. In order to lend on real estate in Nevada, a lender must have a state mortgage license plus a brick & mortar office in the state. The person originating the loans must be a Nevada resident. Additionally, Nevada typically performs an annual audit of all mortgage loan files to confirm the loans were made in compliance with the state and federal lending laws. Real estate investors seeking a hard money loan in Las Vegas or Reno will have a limited pool of lenders to choose from, and that’s why the interest rates and fees tend to be on the high side, compared to other states. On the bright side, Nevada is a non-judicial foreclosure state, so it doesn’t take too long for a hard money lender to complete a foreclosure if the borrower defaults on the loan. - New York
Hard money lenders avoid lending on real estate in New York because of the extremely long foreclosure process. If a property owner defaults on a mortgage in New York, it could take 2 to 4 years for a hard money lender to complete the foreclosure process. The main reason is New York’s court system is always backed up with more cases than their court system can handle. Lenders can incur huge losses with legal fees and not receiving interest payments. There is a strategy which many hard money lenders use to avoid the long judicial foreclosure process in New York. Click here to watch or read our interview with Tower Fund Capital, a direct hard money lender based in Manhattan. Even though it’s tough for lenders to foreclose in the state, we still have 17 hard money lenders listed in New York as of July 2024. - Tennessee
Some hard money lenders avoid doing business in Tennessee because of the state’s usury laws, which limits the amount of interest a borrower can be charged. The limit was 10% for several year but was increased to 12.50% in July 2024. If a hard money lender wants to charge more, perhaps can charge higher points and fees than they would in other states. The usury law is not a major detriment to hard money lenders, but some lenders just avoid all states which have unique lending laws that may affect their business. That said, we still have 17 hard money lenders listed in Tennessee as of July 2024. - Vermont
Vermont has licensing and compliance requirements for business-purpose lending. With such a small population and few opportunities, it’s not worth the effort and cost for hard money lenders to do business in Vermont. - North Dakota
There are a few reasons why virtually no hard money lender does business in North Dakota. A large percentage of the properties in North Dakota are on tribal lands and Indian reservations, which complicates title and foreclosure. The state’s small population of less than 800,000 is spread out over a vast area, so many properties are considered rural, which makes it tough for real estate valuation. Lastly, North Dakota requires licensing for business-purpose lending, which is a waste of time and effort for hard money lenders due to the small population. - South Dakota
Hard money lending in South Dakota is almost as non-existent in North Dakota, for many of the same reasons – excessive regulation, title issues with properties on reservations/tribal lands, and a small population of around 900,000 which is spread out over a vast area. - Utah
Mortgage licensing requirements in Utah make it tough for hard money lenders to do business in the state. Some lenders find it’s worth the effort due to the huge growth in the Salt Lake City market. As of July 2024, we have 11 hard money lenders listed in Utah. - Oregon
The state of Oregon has some unique regulations which make it a bit tough for lenders to do business in the state, but it’s really not as tough as some of the other states on this list. The hard money lenders that are based in Oregon have no problems dealing with the compliance requirements and are glad to have less competition. As of July 2024, we have 15 hard money lenders listed in Oregon, and 3 of them are local lenders. - Idaho
Idaho requires hard money lenders to have a license for lending on residential real estate (1-4 units) but not for commercial real estate. Since most hard money lenders focus on residential investment properties, many of them avoid lending in Idaho. As of July 2024, we have 9 hard money lenders listed in Idaho. - Alaska
Alaska doesn’t have many regulations or compliance requirements for hard money lending, but foreclosing on a property in the state could be a logistical nightmare since it’s so far away from the mainland and has a small population. Outside of Anchorage, properties in Alaska are mostly considered rural and don’t have enough sales comps. In case of a loan default and foreclosure, hard money lenders don’t want to end up owning a property in Alaska.
Hard Money Loans Funded in the United States
Hard Money Loan for Luxury Home Rehab in Woodside, California
$2,700,000
Cityscape Finance, a direct private lending firm, funded a $2,700,000 1st lien position hard money loan for a large single-family home in Woodside, CA. The Borrower is an experienced investor, leveraging their expertise to maximize the property’s value post-renovation. He needed some funds to renovate the home before putting it on the market for sale. The advance at closing was $1,500,000 with a renovation budget of $1,000,000. It was built in 1934 and spans 8,470 square feet. Woodside is one of the wealthiest and highest-priced cities in Silicon Valley, with many large homes on large lots. The after-repair value was estimated at $23,000,000, so our loan is only 10.87% loan-to-value based on the ARV. The loan carries an interest rate of 11.25%. The loan term was set at 12 months. This hard money loan was funded in June 2024.
Myers Capital Hawaii, a mortgage banking company and direct private lender, funded a $186,000 1st lien position equity cash-out loan secured by free-and-clear land in Waikoloa, on Hawaii Island. The property value was estimated at $315,000 so our loan-to-value was 59%. The Borrower, a developer and builder, plans to use the funds for working capital to build a spec home on the property, which will later be sold for a profit. To exit the loan, they intend to use the proceeds from the sale of the spec home to pay off our short-term loan. The Borrower had average credit, which was acceptable to us. The loan term was set at 12 months. This equity cash-out hard money loan was funded in May 2024.
Hard Money Refinance Loan for Medical Office Building in Walnut Creek, California
$5,500,000
Rubicon Mortgage Fund, a direct private money lender, funded a $5,500,000 1st lien position equity cash-out hard money loan secured by a Class-A medical office building in Walnut Creek, CA. The loan-to-value was under 50%. The use of funds was for tenant improvement dollars to build out over 30,000 square feet of medical space. The building has credit tenants who have signed long-term leases. Originally the property was acquired in cash for $15,700,000 in July 2020. It comprises over 108,000 square feet of office space, and the lot size is 5.9 acres with 477 parking stalls. The loan includes a two-year interest reserve. The ownership group includes Harrison Street & Pinnacle Capital. The loan term was set at 3 years. This hard money refinance loan was funded in March 2024.
Hard Money Refinance & Rehab for SFR in New Orleans, Louisiana
$629,300
Park Place Finance, a direct private real estate lender, funded a $629,300 1st lien position rate & term plus rehab loan secured by a gorgeous Center Hall single-family home in New Orleans, LA. We funded 70% of the $899,000 current value and 100% of the $150,000 renovation budget, while the Borrower came to the closing table with no cash. The after-repair value was estimated at $1,175,000, so our loan-to-after-repair value was 66.32%. We paid off a previous loan balance of $606,000. The Borrower will be restoring the historic building to its former beauty using the rehab budget provided without making any structural changes and keeping all original architecture intact. The subject property is approximately 3,700 square feet set in a 4,959-square-foot lot. The Borrower is an experienced investor who runs their own construction company out of New Orleans. The exit strategy is to either flip and sell the property once restored or to hold it as an STR (short-term rental). The interest was 11.99% and we charged 1.75% origination. The loan terms were our standard 12-month term loan with interest-only payments and no prepayment. This SFR hard money loan was funded in October 2023.
Hard Money Loan for Newly Built Condo Purchase in Clearwater, Florida
$1,075,000
Capital Funding Financial, a direct lender, funded a $1,075,000 1st lien position hard money loan for the acquisition of a brand new condominium in Clearwater, Florida. We funded 74% of the $1,449,876 purchase price, while the Borrower contributed 26% cash at closing. The Borrower was in need of fast & flexible financing to maximize the loan-to-cost. She needed to close the loan in just 5 days from receipt of notice by the Developer’s receipt of the Certificate of Occupancy which we were able to accomplish for her. The property was vacant at closing. The Borrower is an experienced real estate investor who plans on selling the unit in the near future or utilizing it for short-term rental to maximize the cash flow. They had good credit. The interest rate was 10.75%. There was an experienced broker involved with whom we have funded 10+ loans. The loan term was set at 12 months. This hard money loan was funded in September 2023.
Hard Money Loan for Vacant Land Purchase in Columbia Falls, Montana
$1,110,000
Commercial Capital BIDCO, a direct lender, funded a $1,110,000 1st lien position hard money loan for the acquisition of a beautiful and easily accessible vacant land parcel in Columbia Falls, Montana. We funded 58% of the $1,925,000 purchase price, while the Borrower contributed 42% cash at closing. The land will be used as a commercial development property in the area with the Borrower being able to obtain a construction loan after the bridge purchase loan is complete. The property size is approximately 80 acres, and it’s located in a rural area. We took an interest reserve for 5 months, so the Borrower didn’t have to make any monthly payments until the 6th month of the loan term. The Borrower had excellent credit. The interest rate was 12.5%. We charged 6% origination points and the broker earned a $22,200 commission. The loan term was set at 6 months. This hard money land loan was funded in May 2023.
Residential Hard Money Loan for 2-Unit Rental Property in Pearl River, New York
$345,355
RCN Capital, a national direct private lender, funded a $345,355 1st lien position hard money loan for a 2-unit residential property in Pearl River, Rockland County, NY. We funded 75% of the $410,000 purchase price and 100% of the $45,355 renovation budget, while the Borrower contributed 25% cash to the purchase at closing. The subject property was appraised for $400,000 As-Is and an after-repair value of $550,000 evidenced a good ROI for the Borrower of over 17.61%. Initial advance was 73.20% LTC & 75.00% LTV. The total loan amount was 62.80% of the after-repair value (ARV). The subject property was approximately 1,312 square feet set in an 8,712-square-foot lot. The Sponsor had a mid score of 718 and bank statements that reflected sufficient assets. The Borrower plans to lease the property upon completion of the light rehab and eventually refinance as an exit strategy. The interest rate was 12.74%. We charged 3% origination points. The loan term was set at 12 months. This residential hard money loan was funded in February 2023.
Hard Money Purchase Loan for Commercial Warehouse in North Bend, Oregon
$220,000
Blue-inc Capital, a private lender based in Oregon, funded a $220,000 purchase bridge loan in 1st lien position for the acquisition of a commercial warehouse in rural North Bend, OR. The Borrowers were looking to close quickly like cash on a competitive purchase. We were able to use the equity in another piece of property they owned free and outright to fund this purchase at almost 100% financing. We funded 97% of the $226,000 purchase price, while the Borrower contributed 3% cash. We put a lien on both properties which put our loan-to-value at around 53%. The subject property was in good condition and vacant at closing. The building was approximately $5,000 square feet. The Borrower had good credit. They plan to continue leasing the property and pay off the loan over the 24-month term. This CRE hard money loan was funded in February 2023.
Hard Money Loan for 6-Unit Mixed-Use Property in San Fernando, California
$650,000
Diversified Mortgage Company, one of California’s oldest and lowest-priced hard money lenders, funded a $650,000 loan in 1st lien position secured by a 6-unit mixed-use property in San Fernando, CA. The property value was estimated to be $1,350,000 so our loan-to-value was 48%. The property had 1 retail unit and 5 apartments. It had a structural issue, an unreinforced tuck under the parking spaces, but that did not prevent us from funding the loan. The subject property was in fair condition and partially occupied at closing. The building was approximately 4,265 square feet set in a 7,492-square-foot lot. The Borrower plans to lease the property upon completion of rehab, and eventually sell it as an exit strategy. The interest rate was 7.75% with amortized payments. We charged 3% origination points. The loan term was set at 60 months. This hard money loan was funded in December 2022.
Refinance Bridge Loan for Short-Term Rental Home in Denver, Colorado
$555,000
Center Street Lending, a direct private lending firm funded a $550,000 bridge loan for the purchase of a single-family residence in Denver, CO. The purchase price was approximately $733,000 so our 1st mortgage was a 75% loan-to-value and the Borrower put down 25% cash. They plan to operate a short-term rental with nightly or weekly guests. Conventional lenders don’t currently lend on these types of rentals, and even most private/hard money lenders won’t consider them either. Center Street is comfortable with short-term rental in select metro areas, and the projected income is likely to be greater than a standard long-term tenant. The loan term was set at 36 months. The Borrower plans to eventually refinance into a permanent loan once a rental track record has been established for at least one or two years. This SFR bridge loan was funded in September 2021.
i Fund Cities, an alternative lending platform built for investors, funded a $700K hard money refinance for a single-family rehab project in a vacation area of Sarasota, Florida. This client found our great reviews online and gave us a call! The investor had received previous loans on this project through other lenders. Unfortunately, he ran into some issues and needed to refinance to gain additional funds. First, due to a mistake, his original lender made on the property insurance post-closing, the investor could not get a draw completed and had to come out of pocket roughly $100K before refinancing. Then, on the refi, that lender told him right before closing that the numbers had changed, and they were not sure they could close the loan. That’s when he came to us.
We quickly put him into a bridge loan to increase his holdback amount since his budget had increased. We also gave him an initial draw for all of the money he had already put into the deal. So the client received a new loan with an increased budget, along with reimbursement for all of the funds he already had invested into the project. He received all of this quickly and efficiently while having the confidence to work with a lender he knew would actually be able to close. The loan term was set at 12 months. The plan is to complete the renovations, secure a tenant and then refinance into a long-term loan. This hard money loan was funded in August 2022.
Gelt Financial, a direct hard money lender, funded a $225,000 equity cash-out refinance loan secured by a residential rental property in Wildwood, NJ. The Borrower had a unique financial situation. She and her husband owned a total of 4 properties, but they went through a divorce, and the judge allocated 2 properties to each spouse. The husband was ordered to remove the Borrower from his 2 properties within a certain time frame but failed to do so, and both went into default. This ruined the Borrower’s credit, so she was unable to get a conventional loan. Eventually, the judge ordered those 2 properties to be allocated to our Borrower, but they came with a lot of past-due taxes and penalties. The subject property for our hard money loan was one she owned free and clear. It’s a townhouse/condo very close to the Shore and is always rented out seasonally with short-term leases, so there wasn’t enough verifiable income on it for her to get a conventional loan. We estimated the value to be over $550,000 which put our 1st mortgage at around 50% loan-to-value. We did not require an appraisal. The Borrower plans to sell one of her other properties in order to pay us off within the 2-year loan term. This hard money loan was funded in June 2021.
Hard Money Loan for Double-Close SFR Transaction in Los Angeles, California
$430,000
ARCH Loans, a private lender, funded a $430,000 1st lien position bridge loan for the purchase of a single-family home in the Atwater Village neighborhood of Los Angeles, California. A real estate investor approached us with a fantastic deal that required transactional funding for a double-close wholesale transaction. It was an opportunity that needed action taken immediately before the deal was lost. This was a no-brainer for us because the investor already had an end-buyer lined up, and it was easy to see the value in the property. In just two days, we provided 100% financing on the purchase of $430,000. Our unique transactional funding product has an added bonus – if the Borrower pays off our loan within 30 days, we will refund the 1 point (origination fee) and a portion of the loan processing fees. The cherry on top for our new Borrower client was the speed of the loan and the refund on top of that. This hard money loan was funded in May 2019.
Hard Money Loan for Commercial Strip Center in Millsboro, Delaware
$1,000,000
Equity Lending, Inc., a direct lender for the DMV region, funded a $1,000,000 1st lien position hard money loan for the acquisition of a commercial strip center and 2 pad sites in Millsboro, Delaware. The retail center is located in front of a larger Harris Teeter anchored shopping center which provided a significant amount of traffic and interest to the location. It was partially leased and produced about $9,500/mo in gross rents with potential for significantly more. In addition to a first deed of trust on the small strip center, the Borrower also included a 1-acre commercial lot that was owned free and clear, as additional collateral. Our underwriting showed the loan-to-value to be about 60%. During the term of the loan, the Borrower was able to complete the lease-up, lower operating expenses to further improve cash flow, and obtain traditional bank financing based on the new and improved financials. The interest rate was 12% and we charged 4% origination points. The loan term was set at 12 months. This CRE hard money loan was funded in June 2016.