Hard money brokers are simply middlemen that work with borrowers and their lenders. Instead of borrowers going directly to a lender and vice versa, they contact a broker. But before we discuss further the roles of these types of brokers, let’s learn a bit of information on hard money in general to understand what these brokers are dealing with. Read on for more information on hard money and hard money brokers below.
A hard money loan is an asset-based loan usually used by real estate investors. If you plan to start a real estate business like purchasing properties, remodeling and then selling them, then you have a choice to get hard money financing as compared to a traditional loan you can get from a bank. Since hard money lending is based on assets, it’s not like a bank loan where you can be approved based on your credit score. With this kind of loan, you are approved based on the asset or property involved. A lender will base his or her decision on the property. Is it a good investment? Will it bring in a favorable profit? These lenders are also called private lenders because they handle their business discreetly. They also don’t have the typical 30-day loan processing time. Instead, they give out the finances needed to the borrower as soon as they approve of the loan. And of course, to approve that loan, they usually ask to look at the property and see for themselves if it is a good investment. So you’re probably wondering where do the hard money brokers come in?
Some lenders don’t communicate directly with the borrowers. There are those lenders offering hard money in large sums and some of them will require a broker to act as a middle man between them and the borrowers. These private lenders are filthy rich. They have a lot of extra cash to fund various investments. Thus, it’s only safe for them to interact only with the brokers. Most of them keep a low profile and manage their business discreetly. That’s why brokers are needed in these large transactions.
Hard money brokers facilitate the larger hard money loans. Sometimes, some of these brokers also have a small funding capacity. And so when a borrower approaches them with a small business venture, they themselves are able to offer the loan. However, when big transactions come in the way, that’s when these brokers find a lender that can accommodate the loan. Of course, they receive fees for rendering their services and those fees are dependent on the amount of the loan.