Comparing Direct Lenders to Loan-Broker Hard Money Lenders

[Jeff Stevenson]

Greetings BP! I'm just getting started on my first fix+flip project, and had a rookie question to pose to the community: what are thoughts on Hard Money lenders who broker out their loans to third parties? I've been interviewing different lenders and have found several who do this, especially for first time investors like myself. Felt like a bit of a red flag to have the actual funds coming from an entity different than the folks who make the deal, offer the terms, interface with the client. But maybe this is somewhat standard practice?

Appreciate any thoughts/wisdom. Also certainly interested in connecting with flip-friendly HM lenders in New Mexico/Georgia/Tennessee if anyone has recos :)

Thank you!

Jeff

[Brian Cauldwell]

Hi @Jeff Stevenson!

Maybe slightly biased since I broker loans, but these are the key differences that I see. 

Direct lenders, less in fees in terms of origination. 

Brokers, more options. 

If you go direct, find out what they can and can't do. That will save you time in the long run and find deals that will fit their mold. If you find a property that doesn't fit their box, then you will need to find someone else who can give you the best terms. 

Each lender sets out to win certain deals. Ideally, it would be great if one lender did everything the best, but that is not how the lending world works. Some will give better terms and leverage depending on credit score, experience, types of rehab, location, etc. Or a mix of all of them.  

Or, pay more to work with a broker that you trust who is going to give you the best option for whatever project you put in front of them.