Hard Money Lender

[John Santiago]

Hi guys,

For everyone in the Minneapolis-Saint Paul area, what are some of your favorite Hard Money lenders to use? What experiences have you had working with a hard money loan? and what is your best advice when it comes to using a Hard Money Loan for rehabbing purposes? Thanks a lot for all your help!

[Andrew Postell]

@John Santiago if you know what you need but just need it in your area try some local real estate meetup groups. Whether it's a plumber, electrician, title company, HML, etc. ask other local investors who they use. Now, I understand that's what you are doing here but Bigger Pockets is more of a national site. It's good for broad educational stuff, but for local stuff - go local. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you.

Now, what should you be looking for in a Hard Money Lender (HML)...we can answer that generally speaking.

Usually, you want a local reference (like we spoke about above) and usually a local lender tends to work out better.  It's not foolproof of course, but using local people referred to us by local investors helps reduce some of the risk for us.  

I would also say to work with someone that you like.  Maybe you need things explained well.  Maybe you want someone who is an investor themselves.  Maybe you have other things you want.  So, trust your instincts on this stuff.

I personally want as little out of my pocket on the acquisition as possible. This is because I don't have unlimited funds. So, the less out of pocket the better. I try to find lenders that will give me 75% of the ARV if on a Buy-and-Hold and 70% of ARV on a flip. None of this 90% Purchase price + 100% rehab stuff...that's not as little out of pocket as I can get. You can work with whomever you want to of course, but that's what I strive for because of my limitations of money.

Yes, funding is important.  Yes, draws are important.  Yes, rates are important.  But so are some other things too.  I would encourage you to know 3-4 lenders when you are starting out.  As you grow, your list will grow too.  So keep networking.

Hope all of that makes sense.  Thanks!