|Part II- Finding Hard Money Lenders
Finding hard money lenders isn't really a mystery. At least it isn't a hard mystery to solve.
You just need to get out there and take the right steps toward uncovering them.
There are many different ways their investors, attorneys, accountants, insurance agents, etc., who are
generally to locate hard money lenders or private lenders. When talking with other professionals, I
tend to refer to my lenders as "private lenders" simply because not everyone is familiar with
the term "hard money lender." I have found most of my lenders by asking for referrals from o
willing to help me because I do what I can to help them. Some of my favorite people to ask are
settlement/closing attorneys. They usually prepare the loan documents for hard money lenders and most
attorneys will be able to give you at least one name. In fact, on a number of occasions the attorney
whom I asked for a referral was a hard money lender themselves.
Accountants are also a good source for hard money lenders since they have clients who are
sitting on a lot of cash and need to do something with it. In some cases, they even have clients who
already hold paper. Such people are great to approach about lending money since they already understand
the business of lending. They have either taken back paper upon selling a property or they have lent
their own funds to someone. Real estate paper is a very secure investment, and people who understand
the business of lending don't mind doing real estate loans, especially when the LTV is low and the
interest rate is high. If someone trusts their accountant enough to let them handle their finances,
then a referral from an accountant should carry a lot of clout.
Another method of finding hard money lenders is to write down the addresses of homes undergoing
renovation. With few exceptions, if I go to the courthouse with ten addresses to uncover the lender
involved in each of these renovation projects, you will find that a private lender is funding at
least one of them. Contact the lenders that you discover and get to know them, especially if they have
already lent money on a home in an area where you want to invest.
Insurance agents who sell hazard insurance policies (particularly those that specialize with
investment properties) have to put a "loss payee" on all of the policies where a lender is
involved. The loss payee is the lender, so the insurance agent can tell who are private lenders and
which ones are not. An active agent could probably go through their records and come up with dozens
of names of people who have lent money privately on policies they have written.
Mortgage brokers can also be a good source for locating hard money lenders, particularly those
that work with investors on a routine basis. I personally feel that any mortgage broker that deals
with investors should have a hard money lender in their bag. If they don't, I wouldn't consider them
a good mortgage broker. You may have to pay the mortgage broker a fee for the referral, but it is
worth it if it means getting a deal done.
Increasing your chances of finding a hard money lender has to do with the circles that you run
in, the people whom you ask, and the number of people you ask. Chances are if you are asking the
cashier at your local convenience store if they know of any hard money lenders, the answer you get is
going to be, "Huh?". If you ask an attorney or title company who works with a number of
investors in your area, it is much more likely that you will find someone who will be able to provide
you with the names of several lenders. If you don't get anywhere the first time, don't stop asking
people until you find one.
Since 1998 Steve Cook has flipped many hundreds of houses as an active Baltimore-area real estate investor. Steve’s
unique specialty is the “flipping homes 1-2 punch”, a proven system of real estate investing that powerfully combines
wholesaling and rehabbing houses. Also the founder of www.FlippingHomes.com, Steve is dedicated to helping others
in this thriving online community succeed through understanding and aggressively applying his time-tested,
step-by-step approach to flipping real estate. Get FREE weekly tips from Steve Cook and other house flipping
experts at www.flippinghomes.com
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