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Judy came up to me one evening after I gave a small talk at a local real estate investing club. She said that while helping her daughter shop for a house in Avondale, she’d noticed quite a few “ugly” homes there and in nearby Roscoe Village. This got Judy thinking. She was sure there must be an opportunity to invest in some of Chicago’s up and coming neighborhoods by buying and renovating distressed homes. But, as a novice investor, she didn’t know how to fund such an undertaking. Some of the other folks at the meeting told her that many investors use hard money and that there were plenty of hard money lenders in Chicago to choose from. I told her they were right.

In fact, the advantages of using hard money loans for buying and renovating a property are why a lot of established real estate investors like them. But, it can be tough to know how to put your best foot forward when approaching lenders if you’ve never invested in real estate before. So, I stuck around a little longer to give her, and a few of the other novices, a quick rundown on hard money. Then I suggested an easier approach for finding the funds you need. Here’s what I said.

How to Approach Hard Money Lenders in Chicago

Approaching Chicago’s Hard Money Lenders

The use of hard money, as opposed to conventional funds borrowed from a bank or credit union, allows real estate investors to buy and rehab projects quickly without having to deal with a lot of red tape. Hard money lenders, often investors themselves, can provide an approval within days of receiving an application and will even consider financing homes for sale that other lenders won’t go near. As long as the subject property looks like a good investment, and the lender can make money on its sale should you default on the loan, getting funds approved for your project isn’t typically hard.

That said, as a new real estate investor, you might encounter more scrutiny from hard money lenders than experienced investors do. But, there are a few ways you can prepare yourself when approaching them that might increase the odds of getting your loan approved.

Create a Real Estate Investor Credibility Kit

Lenders don’t always require a real estate investor credibility kit, but if you’ve got one, or can make the time to develop one, it can serve to break the ice with a lender you’ve never worked with before. These private money packages are designed to showcase the details of your investing background, including how many properties you’ve bought and sold, in an effort to secure a loan based, at least in part, on your experience.

Credibility kits often include a business statement, your credit profile, escrow closing documents, and sometimes before-and-after pictures. The south of Chicago lender, FBC Funding, for instance, likes to see that you’ve closed on at least three to four deals in the last two years if you’ve never borrowed with them before. Of course, generally speaking, the value of the property ultimately matters more to most hard money lenders, even if you can prove investing experience. However, having a credibility kit can still help.

Have Excellent Credentials

Though tax records, employment history, credit rating, and FICO score are not always considered by lenders when reviewing an application, it’s not a bad idea to have these particular ducks in a row when you’re seeking hard money for the first time. Some lenders, like Secure Investor Capital, Inc., in Elmhurst, even require them. In fact, an excellent credit rating and FICO score could put you at an advantage where limited investing experience or the lack of a credibility kit might otherwise hurt you. If you’ve also got substantial liquid assets to use as collateral, and have found a great investment property, your chances of getting a loan are that much better because you’ll seem like less of a risk to the lender.

Partner With Another Investor

Sometimes, however, a hard money lender will still ask for more experience than you might have before even considering your loan application. Yes, it’s helpful to have excellent credentials and a fixer-upper home that shows great potential for producing good returns. But, it can be just as important to some lenders that you’re able to prove that you know what you’re doing. Unfortunately, having only one or two rehabbed houses under your belt doesn’t always qualify as proof. Chicago’s Armitage Street, for example, may request a personal guarantee if you don’t have enough investing experience. You certainly won’t get the most competitive rates. Therefore, if you can partner with an established investor on your first several properties, you’ll be able to get the experience you need, build up your credibility, and fund your future investments with money from lenders who are eager to work with you.

Whether or not you’re having trouble getting Chicago hard money lenders to loan to you as a new investor, leaning on your professional network for referrals can make the process easier. Word-of-mouth is still one of the best ways to find the most reliable resources, especially when starting something new. And when you’ve got a network whose word you can trust, you’ll find you can accomplish just about anything—including investing in your first piece of Chicago real estate.

A Reliable Approach to Finding the Resources You Need

Back when I became an independently owned and operated HomeVestors® franchisee, I immediately gained access to a large investor network that provided the resources I needed to help find funding for my first projects. And, even though I’ve been successfully buying, renovating, and selling properties throughout Chicago for many years now, I have my Homevestors® network to thank for making it easier to get started.

When Judy learned that getting the financing she needed for her first qualifying investment property and its repairs didn’t have to be hard, she took the opportunity to become a HomeVestors® franchisee too. If you’re wondering whether broadening your network could be the advantage you need in growing your real estate investing business, contact the HomeVestors team today.


Each franchise office is independently owned and operated.

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