How To Get More Money From Your Lender
Let's dig into a few ideas on how to get local hard money lenders to act more aggressive in giving you money. Hard money is more subjective than bank underwriting. This is good for most people and there are several ways to make sure you are getting the most from each deal. Hard money lenders usually use the ARV (After Repaired Value) or LTV when determining how much they will lend on a property. You will tend to see on average a 65% of the ARV for most projects as the maximum loan amount. How do you make sure you are in that 65% range or possibly more? You have to make your lender feel confident in you. If you are asking the lender to take on the most risk they are comfortable with, you want to make sure you have them feeling confident that you can execute on your project and return the funds.
There are a different major bullet points that should be considered when speaking with your lender. If you don't have experience in the business it is not a deal killer. It certainly helps to have a few projects under your belt but if you are accurate with your anticipated ARV, it can compensate for not having experience. It shows your lender that you did the proper due diligence to evaluate the resale. If this number is wrong, your lender will feel as if you didn't take the time to research the property so the result is you don't know your market and won't be careful with the money being loaned. If you don't have a good credit score, your lender will still be able to do the deal, but they might take a lower LTV in order to offset their risk with cash at closing. To combat this, you can line up a solid credit partner and join together in an LLC. You also want to make sure you respond quickly, professionally and efficiently as needed.
Ian Walsh
215.839.3271
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