Though Kenny and I live worlds apart—I call the Pacific Northwest my home, whereas he’s staked his claim down south in Florida—our lives, in many ways, couldn’t be more similar. We’ve both been married for a couple of decades, have two teenage girls, drive American-made pickups, and love living in the ‘burbs. We each also spent a little too long in corporate jobs after spending way too much on college degrees from the same fancy business school. Where we mostly differ, aside from geography, is in our pursuit of real estate investment opportunities. I started buying and selling houses as a business years ago. Kenny, on the other hand, has only dipped his toe in the water once or twice. But, his luck thus far and my success overall has got my old college buddy thinking about making the switch to full-time investor—as well as how he’s going to finance it. You do that, I told him, by utilizing the best hard money lenders nationwide to fund your deals. And, one way to find those lenders is by hitting up real estate investors like me.
The Best Hard Money Lenders Nationwide
Any business plan for flipping houses, holding rentals, or building an investment portfolio that combines both strategies should include how you intend to fund your deals. For most investors, that means leaning on the expertise, and into the deep pockets, of hard money lenders from time-to-time. Unlike traditional banks and credit unions, the lenders who offer hard money loans to real estate investors aren’t afraid of fixer-uppers. So, whether you need cash to buy an investment property, make repairs, or both, hard money lenders can get it to you—and, fast. They can also provide the kind of terms that appeal to those of us who buy and rehab houses for a living, like interest-only payments on a six or nine-month loan. When you need to get in and out of a project quickly to take advantage of current market conditions, it’s competitive loan terms like these that help you meet that goal. And, meeting these goals over and over is the only way to successfully build your real estate investment business.
Luckily, no matter where you buy residential investment property, there are probably several vendors with varying qualification requirements that service your area. For the most part, however, it’s the asset—or, the property—that gets the highest consideration in the eyes of most hard money lenders. So, even with a low credit score or a foreclosure on your record, funding your project may just be a matter of finding a lender that provides the kind of terms you can live with. And, the benefit of working with a lender that has a significant national presence is that their terms are often more competitive, and their requirements less stringent, than what local lenders can offer—especially to new or less-experienced investors, like Kenny.
Finding reputable lenders that offer excellent terms can be a little tricky, though, regardless of your experience level, if the process of getting a hard money loan isn’t yet in your wheelhouse. So, to help get you started, here are several of the options I reviewed with Kenny when we last spoke:
Lima One Capital
Lima One Capital lends hard money to investors in 41 states and Washington D.C., so the odds are in your favor that they loan where you have a business flipping houses. Term lengths for their loans are currently 13 months and you can borrow 90% of your purchase and rehab costs, up to 75% of the property’s After Repair Value (ARV). And, to help you close the gap on what they don’t cover, Lima One will use any property you own outright as collateral rather than position you to pay a hefty down payment. This can be a great perk if you have a good property. Your loan’s interest rate and the origination fee will vary depending on how many projects you’ve completed, but the numbers never creep higher than 11.5% and three points respectively. It won’t take long to find out what you qualify for either; you’ll usually know something in about a day.
Something to keep in mind, however, is that until you’ve bought multiple investment properties—preferable more than 24—you won’t be able to take advantage of the best rates. Not that an 11.5% interest rate is exactly a kick in the wallet. It’s a good rate. But, old dogs like me who’ve been at this for years get preferential treatment. And, until you’ve proven yourself, that’s how it should be. Of course, if you can, and are willing to, cross collateralize, have at it. Sometimes every tool in your kit has got to be used to build the career you want. But, I think Lima works best for folks who’ve been around the block a few times and who want to get a few more laps in before calling it a day.
Residential Capital Partners
Residential Capital Partners (ResCap) helps real estate investors in several markets across the U.S. fund their deals. And, ResCap can fund 100% of your hard money loan up to 70% of the house’s ARV to a maximum of $1.5 million. That means if you have a real estate investment valuation tool on hand to ensure you buy and rehab property at the right price, it’s possible that your out-of-pocket costs will land somewhere next to nothing. Additionally, they currently only charge an interest rate of 10%, which helps to keep your interest-only payments low, and you can roll the origination fee of three points right into your loan. Approval takes about two days and closing about two weeks. But, if you’ve got good credit and a decent financial statement—or, you’ve worked with ResCap on deals before—you can apply for pre-approval to potentially speed up future funding.
What’s really great about ResCap, however, is that they also have direct experience buying houses to renovate and sell. So, they know what it takes to turn a property around and understand that, sometimes, you hit a rehab snag. As such, they allow for extensions on their nine-month loan terms and don’t penalize you if you pay in full early. They also remember what it was like to be an inexperienced investor. So, just because you don’t yet have a robust portfolio or sizeable cash reserves doesn’t mean you won’t qualify for financing. Of course, the more experience you have, the better your terms will be. But, ResCap is willing to work with you so that, as you get more properties under your belt, you’ll want to continue getting your hard money loans from them.
RCN Capital has a presence in almost every state in the country, with an eye toward expanding into the remaining six states soon. That means that wherever you are, RCN is probably there, too, and eager to loan money to help build your investment property portfolio. They offer as little as $50,000 and as much as $2.5 million for a typical fix-and-flip loan on a residential property. But, they also give you the option for borrowing more if you’re buying a multi-family with more than four units. Terms are for 12 months, with a six-month extension available, at an interest rate as low as 7.99%. And, interest is only charged on your outstanding balance. There’s no penalty for early payoff, either. So, if you can rehab and resell your property fast, you can potentially save some serious cash by repaying an already reasonable loan faster. Since RCN currently gives you up to 90% of your purchase price and 100% of the renovation costs (maxed at 75% of the property’s ARV), getting what you need to get your work done quickly should be possible.
It’s also possible to get a decent rate with RCN Capital even if you’re new to investing. They offer three loan programs, depending on your level of experience, and clearly spell out the differences between each online. As an investor with less than three flips or two rentals, your terms won’t be as competitive as an investor who’s owned 20+ properties. But, an interest rate that’s as low as 10.99% isn’t bad at all. And, to help you get better terms and build a bigger portfolio RCN offers free advice on their blog. My favorite entry—partnering with another, more successful real estate investor—is one I used to get ahead and get good rates back in the day.
Sherman Bridge Lending
Sherman Bridge Lending currently loans hard money for investing in single-family homes in more than 15 states. So, whether you only need $50,000 to flip a house in Kentucky or one million dollars to purchase a property in California, they can help you get it done—in as few as seven days. Funding is currently available for up to 85% of a home’s purchase price and 70% of its ARV, too. So, even a major fixer in a minor market can be bought, rehabbed, and resold for a profit with help from Sherman Bridge. Loan terms vary, as do interest rates and lender fees, and are based on your level of experience, credit, and cash reserves. But, you can find out what you qualify for in less than 30 seconds by following a few user-friendly prompts on their website. It’s one of the simplest and fastest pre-application processes I’ve ever seen, which comes in handy when you’re pressed for time and cash.
If you’re a new investor, you’ll likely want things to be as easy and to run as smoothly as possible. For that reason, your first big investment decision may already be to buy and rehab a single-family home. And, since SFRs are Sherman Bridge’s sole lending focus, the match could be one made in heaven. But, they do something else that might make the process of borrowing from them even more painless—no matter how long you’ve been investing. They offer a 30-year loan option that carries no prepayment penalty and requires zero requests for extensions. You simply pay it off when you can, which can be a big relief when even a small project doesn’t go as planned.
Bay Mountain Capital
Bay Mountain Capital provides hard money loans in several states throughout the continental U.S. and at pretty competitive rates, too. They can potentially lend up to 100% of your cost to buy an investment property and fix it up, with interest rates that start as low as 10.9%. Qualifying for a loan is primarily based on the asset, but limited personal financial information may be required. So, it’s a good idea to have your paperwork in order. Loans terms currently are between six and 12 months and loan minimums range from $50,000 to $75,000. So, you’ve got options. And, if you like the option they offer, the world of investing in SFRs, multifamily, townhomes, and condos is your oyster.
Now, since Bay Mountain gives the best rates to investors with the highest credit scores, I typically recommend this lender to my colleagues with an established, and impressive, real estate investor credibility kit. But, if you’re organized and ambitious—and, working on building your credit-worthiness in addition to your portfolio—Bay Mountain can help you do it by closing on properties in one business day.
Finance of America
Finance of America loans cash to investors nationwide, with only a handful of exceptions. Their fix-and-flip loans are currently available at 75% of a property’s ARV in amounts ranging from $50,000 to $2.5 million dollars with repayment terms of up to 12 months or more. Of course, if you pay it off early, there is no prepayment penalty. Once approved, you also get your money pretty fast. Plus, interest rates start at an impressive 6.99% and you’re welcome to apply whether you’re buying your first investment property ever or your first one this month.
In fact, for the more experienced investor, they’ll even provide a line of credit of up to ten million dollars so that multiple properties can be purchased, renovated, or both. This ‘Fix & Flip Exposure Limit’ helps those of us who left our corporate jobs years ago to start investing in property put our expertise at work quickly and throughout the year. And, I think it provides more than enough motivation for less-experienced investors, like Kenny, to work hard at growing their portfolios so that they can qualify for more hard money to grow their portfolios.
To determine which of these lenders best suits your hard money needs, you may have to do a little more digging. Some of them, like the options above, make it easy by telling you everything you need to know right on their website. But, when you’re feeling the pressure to find funding fast, even the easiest of excavations can still make you sweat. There is one workaround, however, that actually encourages some of the best hard money lenders in the nation to compete for your business—and, at the touch of a button. And, it was another longtime buddy of mine, Jonathan Lawrence, who had a hand in developing this solution.
Get More for Your Money When You Join a Team
As the National Vendor Relations Manager with HomeVestors®, Jonathan set out to select hard money lenders for HomeVestors’ new proprietary software portal for connecting with hard money lenders. Since this was to be no ordinary program, the lenders had to be pretty extraordinary, too. Only top-tier hard money lenders with both a strong national presence and an established reputation for operating with integrity, like those listed above, were invited to participate in the new portal. This allows independently owned and operated HomeVestors® franchisees, like me, to input information about a property, push a button, and get loan options quickly from competing lenders. That’s right, no paperwork needed.
But, even before this portal was introduced, I always had plenty of options for funding my projects as a HomeVestors® franchisee. My network of fellow franchisees, for example, give critical feedback whenever I ask for it, including advice about which hard money lenders I could trust when I was just starting out. So, I’ve always been “in the know,” even when I was too green for my own good. And, since HomeVestors also provides in-house financing for qualified purchases and repairs, getting the money I need to buy, renovate, and sell properties has never been a problem for me, anyway. With a portal now in place, searching for the best available terms from the top lenders is seamless. I can’t imagine working with any other team—especially when it includes the support of regional franchisees and the support of people like Jonathan who help to make sure I have some of the best investing tools and resources at my fingertips. Instead of spinning my tires trying to put deals together, I can concentrate on buying that next property and, occasionally, convincing friends like Kenny that, with the right team, he can do the same.
To get faster access to more lenders for your investment needs, think about joining a better team. Contact HomeVestors to request more information about becoming a franchisee today!
Each franchise office is independently owned and operated.