I was recently sitting down with the son of an old acquaintance. He wanted to start investing in rental properties in New York like I’ve spent a career doing, and was showing me his business plan. It was pretty detailed. He knew what neighborhoods he wanted to target, his price range, and everything else. He even had a bullet point for “Raise Capital.”
Of course, when I asked him how he intends to raise capital, that bullet point turned into a question mark.
That’s pretty normal. Most people, when they are starting a real estate investment business in New York, have a vague notion that they can get money from banks. But when the rubber hits the road, banks aren’t always the best option. For real estate, hard money lending is usually the safer bet.
Hard money lenders are designed for real estate. This asset-based financing is secured by the value of the property being bought. Hard money loans are provided by private lenders or companies who are often investors themselves. Knowing how to find the best hard money lenders for NY investment property funding is how you turn your business plan into a reality.
The Importance of Hard Money Lending For New York Real Estate Investors
If you’ve made the decision to obtain investment property in New York, you’ve probably done some research. You’ve discovered that investing in New York real estate doesn’t have to be risky, even during a pandemic. You’ve studied the ins and outs, and there’s probably something that might have already caught your eye.
Real estate in New York moves fast. Real fast. A good property is going to be circled by a bunch of other investors.
In order to succeed, you have to be able to move quickly on a property that meets your criteria and that you can rent out at a rate that matches or exceeds your plan. The problem is you might not have the liquidity to move as fast, but you need to raise capital… fast.
That doesn’t always happen with banks or other old-fashioned lending institutions. They move slowly. They have a lot of layers of approval. And really, they don’t understand the business. That’s where hard money lenders are different.
What makes a hard money lender right for you?
- They move quickly. Hard money lenders know that you need fast cash so that you can offer fast cash. They don’t have to get nine layers of middle management to approve a loan. They’re ready to move if the deal is right.
- They understand the real estate business. Banks look at a spreadsheet and see a dilapidated house. Hard money lenders—the best ones anyway—see something that a skilled investor can turn into steady rent. They work at the same level you do.
- They can offer better rates. Most hard money lenders offer rates and terms that are commensurate with your experience, history of success, and ability to turn something around. But many offer excellent rates even if you are starting off. And even if you’ve had some problems.
- They know this is a credit-heavy business. Even as successful as I’ve been, I’ve had times when I was short on capital and credit was stretched thin. It’s funny: my credit is usually maxed out when I’m doing my best because I’m fixing up multiple properties. Banks don’t like that. Hard money lenders understand. Your rates and terms might be different, but being cash-shy and over-stretched isn’t always a precluding condition.
Obviously, not every hard-money lender in the tri-state area is going to give you the terms of your dreams. That’s why you need to find the right hard money lender for your NY investment property funding. Here are a few that I have worked with and trust.
Hard Money Lenders to Get NY Investment Property Funding
Here are some hard money lenders in New York to consider when you need capital to make your deal.
I really like RCN Capital because they have such a wide range of loans. While loans go up to $2.5 million, they can start as low as $50,000. Not every lender is like that, which can be frustrating when you are starting out in this business. You aren’t eligible for huge loans, but most places don’t offer small ones. That’s why RCN’s low starting rate is ideal for newcomers.
Their 12-month lending period includes 90% of the purchase price and 100% of the remodel costs. Luckily, for a lot of rental properties, remodeling costs are less than if you were to flip it, so you can take out that loan without breaking the bank.
These guys are an interesting source. On one hand, they are a big capital group, which doesn’t always sit well with a lot of investors I know. But, on the other hand, you actually talk to a person who knows real estate. They want to learn about your deal and approve things based on what the deal looks like.
This isn’t always great for beginners, since what you are offering them is your expertise. But if you have some success under your belt, you’ll be able to get much better terms. I know I like betting on myself more than on anyone else.
These might be the fastest lenders in the business. You can get your capital in as little as five days. Whether you are just starting out or have decades in the industry, this is really crucial when a property hangs in the balance. They also lend as much as $1 million, which can be vital in New York.
Rehab Financial Group
If you have good credit, this is one of the best places to go for NY investment property funding. With decent credit, you can receive funding up to 100% of all costs—purchase and rehab. That said, the loan won’t go above 65% of the ARV, so be sure you have an eye on what your expected rehab costs will be.
Don’t think “good credit” only means established professionals. If you are just getting into this, and haven’t bought a bunch of properties, you still might have sparkling credit. Rehab cares more about the state of your credit than your history in the business, so inexperience isn’t a problem if you come in with decent scores.
There are a lot more than these four hard money lenders, of course. Finding them, and finding the best rate fast, can be frustrating. But there’s a way to make it easier. There’s a way to make them come to you.
The Best Way to Find NY Hard Money Lenders
I’m sure you’ve received a bunch of advice on how to raise capital. Maybe you’ve even seen a New York real estate guru who told you that one big trick. Well, as an independently owned and operated HomeVestors® franchisee, I can tell you there’s no trick to raising capital. What there is, though, is a tool.
HomeVestors franchisees have access to a proprietary hard money portal. All you do is plug into the portal the details of your deals and all of the eligible lenders and their offer rates, terms, and conditions populate. You get to choose what funding works best for you.
That’s huge! And, it’s a fast way to raise capital at rates that work best for your plans. Turn your business plan into a reality. If you’re interested in a better way to raise capital, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.