Real Estate Financing

Finding Hard Money Lendors

Written by Harry

Buying and flipping houses has become increasingly popular in recent years due to the numerous shows on television showing that it can be a lucrative investment to make. Unfortunately, the shows neglect to tell you how the flippers fund their projects. Many turn to hard money lenders to get the money they need quickly and easily. Unlike traditional loans from banks, you often don’t need to wait weeks for approval for the loan or have a great credit score. The loan is often based off of some sort of collateral, which can be the property you are buying. Finding hard money lenders doesn’t have to be hard to do though. The following guide walks you through a few things to look for when you start your search for a hard money lender.

Search for Local Lenders

It’s important to look locally for a lender. There are many times when lenders want to look at a property before they invest in it. It allows them to make sure that there is a potential for a flip to be a lucrative investment and that you aren’t asking for money than is really needed.

Search for Lenders with a Proven Track Record

Many people are trying to get into hard money lending because it is proving to be very lucrative. It’s a good idea to find lenders who have been in the business for an extended period of time so that you can talk to others who have worked with them before or at least read reviews about the lenders. You need to be sure that they don’t change the interest rates over time or overcharge the clients.

Search for Lenders that Allow Access to Loan Information

A professional hard money lender will be completely transparent. They will allow you to see all of the information on your account at all times. This allows you to track when payments are due, how much you have paid toward the loan and when payments need to be made. This allows you to be sure that every payment is tracked properly.

Search for Lenders with Reasonable Interest Rates

It’s important to know that hard money loans often have higher interest rates than traditional loans. You still need to make sure that the interest rate is reasonable for your loan. The average interest rate for a hard money loan should be between 10% -15%. The reason the interest rates are so high is because the loan is designed to be quickly repaid and is a huge risk for the lenders. The lenders are using the property as collateral for the loan, if you default, they will have to put in a lot of effort to get their money back, thus the need for the high-interest rates.

Search for Licensed Lenders

There are scams in the real estate investing market, so you need to take the time to look for lenders who are licensed. These lenders will have taken the time and put in the effort to prove that they are a reliable lending source. You can contact your local attorney general’s office to find out if a lender is licensed and registered in your state before doing business with them. Doing your due diligence could save you a lot of money in the long run.

Search for Lenders Who Meet in Person

Some lenders claim that you can get approved over the phone in just minutes. According to the Federal Trade Commission, “It is illegal for companies doing business by phone in the U.S. to promise you a loan or credit card and ask you to pay for it before they deliver.” It may be tempting to work with a lender that allows you to apply and get approval for a loan without having to go through the hassle of meeting people, but it’s an illegal practice that you need to avoid at all costs.

Take the time to do thorough research about any lender before applying for a loan. You want to be sure that you have read reviews from other borrowers, determined if they are licensed and registered and have the contract looked over by a lawyer before agreeing to any terms within it. This protects you from having to pay more than you should for the loan or getting taken advantage of all together.


Federal Trade Commission (August 2012). Advance Fee Loans. Retrieved from:

Hensel, Don. Hard Money 101: Everything You Need to Know About Getting Started with Hard Money Loans. Retrieved from:


About the author



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