Who are the best hard money lenders? Need money for commercial real estate or house flipping fast, but you’ve got a bad personal credit score?
A hard money loan might be the best bet for an investor like you because they are based on the value of the real estate, not personal credit.
Best Hard Money Lenders
As with more traditional loans, the main difference makers are going to be in the areas of terms, interest rates, and how much you can borrow. For hard money lending, there is a fourth area to consider: how much do you have to put up of your own money?
RCN Capital
RCN Capital finances fix & flip hard money loans, rental loans, and bridge loans.
Get up to $2 million in a new construction loan amount, for a term of 12 – 24 months, paying interest of 10.25% and up.
A fix & flip loan can go to $7.5 million, with 12 months to pay (extended terms available). Get up to 85% of purchase price + 100% of renovation costs. Rates start at 9.49%.
A multifamily fix & flip hard money loan goes up to $10 million, with up to 7% LTC (loan to capital). Interest rates start at 10.00%.
Note: they do not lend in Alaska, Minnesota, Nevada, North Dakota, South Dakota, or Vermont.
Lima One Capital
Get fix & flip new construction loans, or a rental property loan from Lima One Capital. For fix & flip, get up to 90% LTC, and 70% LTV (loan to value). Loans go up to $5 million. There are 13, 19, and 24-month term options.
Or get fixed to rent, or bridge plus loans, also to fix up properties.
For multifamily properties, you can get up to $20 million in a value-added bridge loan, or up to $10 million in long-term hold financing.
If you have a 700 FICO score or better, and twelve or more months of short time income verification, you can get a short-term rental loan.
Kiavi
Get a bridge loan with up to 90% LTC. Pay interest rates as low as 6.95% with a loan amount of up to $1.5 million. Get up to 75% of after-repair value, with 12, 18 & 24 mo terms with interest-only options. They will not do income or asset verification.
Kiavi also offers long-term financing for rental properties. These are adjustable-rate or thirty-year fixed mortgages. Their rates are as low as 7.125%. You can cash out up to $500,000 in four months.
Since they also work with private lender brokers, you could potentially work with a private money lender who is in turn working with Kiavi to fund their private money loans.
Amza Capital
With this lender, you must have a personal credit score of 650 or better. In addition, the minimum purchase price before rehab is $75,000. Get up to $2.5 million in two weeks.
Pay it back in twelve months, at interest rates of 7 – 12%. Pay $995 in closing costs. These money loans are available for first-time flippers working with a mentor and a licensed contractor, or experienced people with at least 5 flips in their history.
Or get a fix and flip credit line for up to $50 million, with loans for up to 80% of the cost.
Lending One
With this lender, you can get up to 90% of purchases and repairs, with up to 24 months of interest-only terms. There is no prepayment penalty. Get funded in as little as a week.
They will only lend to LLCs, corporations, limited partnerships, or general partnerships (we highly recommend incorporating). You must be an American or Canadian citizen or a permanent resident alien.
This lender will only loan for non-owner occupied properties. You must provide a list of all your rental properties (an REO Schedule).
LendingOne provides money loans in all states and the District of Columbia except Alaska, Nevada, North Dakota, South Dakota, and Utah.
Do Hard Money
This lender will provide 100% hard money financing. They do not demand any down payment money from you. Do Hard Money has no minimum credit score requirement and they do not require that you have any previous flipping experience.
Their 100% financing is based on your being able to secure a property for up to 75% of its after-repair value (ARV).
Interest rates start at 12%. The origination fees are as low as 3.5%. Loans go up to $350,000. There are no prepayment penalties and no payments for 5 months.
This hard money lender also provides information on other forms of financing to supplement their own loans.
New Silver
New Silver offers to fix and flip hard money loans for up to 10.5% in interest. Their origination fee runs from 1.875% and up. The loan-to-project cost (LTP) goes up to 90%. You can get construction financing of up to 100%.
Get Loan To ARV of up to 75% for up to $5 million, for twelve months with extensions.
You will need a FICO score of at least 650, with previous experience of two or more flips. There is no hard credit pull. New Silver offers discounts for repeat borrowers.
Or get a rental loan, although your FICO score must be at least 680.
Hard Money Funding: Positives
Since it’s based on the real estate value (before or after repair), a borrower with a poor credit report can get these loans. A hard money loan is fast, sometimes even within 24 hours of application.
There is no need for background checks or credit scores. Some lenders even offer a hard money loan based on the after-repair value of a building. Hard money lenders make finance house flipping possible with these asset-based loans.
Accessibility and the ability of many to get a hard money loan means these money loans can help more people become small business owners. These are people who never would have been able to start a business before.
With a more level playing field, minority, female, immigrant, refugee, and LGBTQ+ entrepreneurs may find it easier to join the ranks of small business ownership.
Hard Money Funding: Negatives
Many (although not all) hard money lenders can be new to these kinds of money loans. A borrower would do well to check out any unfamiliar mortgage lender on the Better Business Bureau website.
Entrepreneurs with bad personal credit may want to try for an FHA loan (instead of a private loan), where they can get a 15 or 30-year loan term—although there are buyers who prefer you have a more traditional mortgage or conventional loan.
One of the bigger disadvantages of private money lending is the higher interest rate versus a traditional loan. The borrower may find they are stuck with an origination fee.
Interest rates can be very high, three times that of banks. Terms can be very short, as in 6 – 18 months, versus a standard 30-year mortgage.
Plus the best hard money lender wants you to have some skin in the game, typically at least 10% of your own money. That way the hard money lender knows their interests are protected, because they don’t want to lose your money.
A hard money loan will also tend to not be subject to consumer lending regulations. So, caveat emptor.
How is Hard Money Funding Used?
If you go ahead with hard money funding, its use is virtually always for real estate projects. These are either house flipping or real estate investments.
Fix and Flip Loans
House flipping consists of buying a property, repairing it, and selling it for a profit. Fix and Flip loans are one of the most common types of hard money loans.
For house flippers, having fast funds for their flips is a necessity. These hard money loans are made for house flippers looking to flip a property by making some upgrades and selling it for a profit.
A fix and flip loan is a short-term loan option (6 – 12 months) covering almost all the house flipping costs. Hard money funding is not only used to cover the property value of the building. It also pays for a portion of the repairs needed to flip.
For example, some hard money lenders even offer to base the loan on the after-repair value of the flip. This gives the house flipper more funds to flip with from fix-and-flip hard money lenders.
Long Term Rentals
House flippers don’t always sell the buildings they repair. Many make passive income by renting their properties. For those looking to acquire and upgrade large rentals, hard money funding is essential.
This type of flipper financing lends to the underlying asset of the property.
To make the most of long-term rentals, upgrading and repairing the property is necessary. Here, hard money loans are based on the after-repair value of the property.
House flipper funding for large one-time repairs to a property helps improve the property for higher rents. It also helps to offset the cost of the repairs.
Vacation Rental Flips
With alternative rental sites like Airbnb becoming more and more popular, house flippers are looking into flipping vacation rentals with hard money loan lenders.
Vacation rentals can turn over large profits but many will require large repairs to get more bookings. These repairs and modern upgrades are necessary to ensure solid bookings throughout the year.
Using hard money funding to make upgrades is faster than using a traditional lender. Like all flipper financing, the loan is based on property value and not the applicant’s credit history.
Home Rehabs
Paying cash for a property is a great way to lower costs for a property. But it leaves gaps for funding repairs. Home rehabs are ideal for one-time large repairs. This can be for a flip that they bought in cash, a rental, or anything in between.
Often when looking to charge more in rent, house flippers will add amenities and upgrades to their properties. Home rehabs can also be for an investor looking to sell off property and maximize their return by adding a few upgrades.
By only using flipper financing for the repairs, the house flipper can save money on down payments. This means a larger profit margin via hard money lending. Hard money funding can be a way to make sure projects finish on time.
Hard Money and Bridge Loans
Sometimes house flippers need to refinance properties to prevent foreclosures, get better rates, or get more cash to finish their flip.
Bridge loans, a special type of flipper funding, can help flippers complete their projects to save them from foreclosure. Bridge loans work to ‘bridge’ cash gaps for a property.
This cash is used to finish the flip, sell the property, or prevent foreclosure.
Hard Money, Bridge Loans, and Foreclosures
Sometimes, house flippers will use a hard money loan to buy foreclosed properties. This makes them a great option for someone looking to pounce on a great deal in the fast-moving real estate market.
Sometimes bridge loans fund short-sale loans or even the acquisition of off-market properties. They can help you get a hard money loan for the auction property.
Hard Money and Refinancing
Reasons for refinancing include preventing foreclosure, filling in cash flow, or making sure a project is done on time. Hard money funding can help with all of these issues.
This type of funding works for house flippers who need a one-time influx of capital.
Hard Money Funding: Beyond the Flip
Hard money funding can be used for more than flips. It can also be used for commercial real estate financing. This is for commercial properties such as retail stores. Note: hard money loan rates will vary.
Options Beyond Hard Money Lenders and Funding
Flippers and commercial real estate investors have choices beyond a hard money loan. They can try a home equity loan for flipping, or an investment property line of credit for a real estate investment. Another option is a business line of credit.
Yet another option is a cash-out refinance loan or a permanent bank loan/online mortgage. Rates and terms will vary. But for great rates, have you checked out what Credit Suite has to offer?
Check Out Commercial Real Estate Financing from Credit Suite and Connect to Hard Money Lenders
The loan amount will range from $100,000 – $20,000,000. This financing can be used for refinancing a property, even if you are doing a cash-out refinance. Maximum LTV 70%.
Loan-to-values range from 55 – 65%, depending on the purpose of the loan. Plus your clients can also get SBA loans. Renovations get a loan to a value of up to 60%.
Credit Suite has funding programs available including conventional property financing, money for investment properties and hard money loans, bridge loans, and loans for the purchase of the commercial real estate.
Commercial Real Estate Financing for All Types of Buildings
Credit Suite offers to finance for many different, even unique property types. Get funding for industrial offices (general or medical/dental), light manufacturing buildings, self-storage facilities, and more.
Details on Credit Suite’s Commercial Real Estate Financing Program
Approval amounts go up to $20,000,000. Bad credit is accepted. Use real estate as collateral. You will need to provide bank statements. House reseller financing or a commercial real estate loan can be a big step, let’s take it together.
The Best Hard Money Lenders? The Jury is Still Out on Whether This Form of Funding is the Best Idea
Hard money funding can be a good choice for house flippers and any commercial real estate investor who has bad credit or wants/needs to get money fast. But interest rates can be high, and terms can be short. Plus there is little regulation.
Credit Suite can help you get funding for commercial real estate or house flipping, with better rates and terms than you would expect.
