How to Find a Hard Money Lender in Real Estate

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Written By Justin McGill

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

When I was first starting in real estate, I had no idea how to find a hard money lender for my project. I was lucky enough to have a friend who was in the business and he introduced me to his lender. But if you’re not as fortunate, don’t worry – there are plenty of ways to find a hard money lender that suits your needs.

First, ask around. If you know anyone in the real estate business, they may be able to introduce you to a good hard money lender. Otherwise, try asking your agent or broker for recommendations.

Once you’ve got some names of potential lenders, take some time to research them online and see what others have said about their experience with them. Make sure they are licensed in your state.

The final step in how to find a hard money lender is to compare rates and terms. Not all lenders are created equal so it’s important to see them side by side before making any decisions.

How to Find a Hard Money Lender

A hard money lender is a person or company that loans money, usually with a higher interest rate than a traditional lender, in exchange for the borrower using an asset as collateral.

Hard money lenders are typically used by people who cannot get a loan from a traditional lender.

A private investor is an individual that provides funding for real estate investments, such as apartment buildings, in exchange for a return on their investment. These investors are not associated with a bank or other financial institution but instead work directly for the borrower.

If you’re an investor looking for an alternative financing option, private money can be a good option. These loans often come with less stringent requirements and can be funded faster than traditional bank loans.

Where to Find a Hard Money Lender

If you’re new to borrowing money from a hard money loan provider, it may feel overwhelming. But once you know where to find them, the whole process can be a lot easier.

Some real estate investors return to the same hard-money lenders over and over again. They may develop a relationship with them over time.

The first place to start is the internet, where you can simply type in “hard money loans” on Google to find a list of potential hard money loan providers.

Another great place to look is with real estate investment clubs – either online or in your local community.

Finally, ask any real estate agent or broker you know if they have any recommendations.

Best Private Lending Companies

When you work with a private lending company, you can expect the same great benefits that come from working directly with a private lender. The application and approval process may look different, but you’ll still enjoy all the advantages of private lending.

There are a variety of personal loans and peer-to-peer lenders that an investor can consider. Among the best lenders for private money out there are:

  • LightStream
  • Upstart
  • LendingClub
  • Citizens Bank
  • Best Egg

The interest rates that private money lenders will charge will vary from 4% to 12%. This amount will be determined by factors such as your investing experience, the number of deals you’re working on, and the length of the loan.

One of the great things about private lenders is that they are often willing to negotiate on interest rates. This means that, as you practice your pitch, you should keep in mind not only securing financing but also getting the best loan terms possible.

How to Choose a Hard Money Lender

Once you’ve found a few potential lenders, how can you figure out which of them are reputable?

Start by reading reviews. Hard money lenders typically have reviews online from former or existing clients. These can let you know if the lender is a good fit for you. 

You can also ask investors, real estate agents, and other trusted contacts for recommendations.

When choosing a hard money lender, make sure you understand the repayment schedule and that it is feasible for you. 

While traditional banks only consider your property’s current market value, private mortgage lenders have more leeway when it comes to approving loans.

If you’re looking for a hard money lender, it’s important to find one that specializes in offering loans to people with the same goals. For example, if you’re planning on flipping homes, you might want to look for a lender that specifically markets its services to home flippers. This way, you can be sure they have the experience and knowledge necessary to help you succeed.

Lastly, it’s important to find lenders that can get your money to you in the time frame that you need it.

When you need money quickly, the last thing you want is a lengthy and complicated approval process. Do your research and look for lenders with simpler processes so you can get the money you need without any delays.

Checking online reviews can be a helpful way to learn about a lender’s reputation before you commit to working with them.

Pros and Cons of Private Money Loans

Private money loans offer a number of advantages for investors looking to purchase and quickly fix up a distressed or damaged investment property.

The main advantages of private money loans include quick preapproval and fast funding times.

However, there are some disadvantages to consider as well, such as higher interest rates and shorter loan terms.

Real estate investors can benefit greatly from private lending, and one of the best parts about it is that it can fulfill just about any need you might have.

Each company will have different financing needs, so it’s important to be aware of the different options.

Two ways that real estate investors can use private money are buying a new property and refinancing an existing property.

Let’s say you’re purchasing a property but want to renegotiate your terms.

Working with private capital allows you to replace your current loan with a new, more affordable one.

While private money is an attractive option, sometimes it’s even more enticing for investors because they get to share in profits rather than repayment.

For instance, when looking to refinance a rental property, you could increase your monthly income by borrowing against the equity of the property.

As a whole, private lending is a more flexible way to refinance than more traditional financing options.

Using private lenders can help you finance your real estate investments, such as purchasing residential properties, commercial properties, and multi-unit dwellings.

The key to securing a business loan is running the numbers and crafting the perfect sales pitch.

While experienced real estate investors may find it useful to mention their past successes, first-time buyers should focus on the potential profitability of the deal.

Most real estate investors would agree that it’s wise to build relationships with as many different possible private investors as you can so that they’ll be ready when the right deal comes their way.

One of the benefits of using a private lender for funding is that you’re able to close a deal much faster than traditional financing.

Hard Money Loans vs. Traditional Loans

If you are new to fixing and flipping, you may not know about all of the types of loans available. While a traditional loan may work for well-maintained homes, it’s not ideal for foreclosure or distressed homes.

The loan process itself can take 60 to 90 days with banks or with traditional mortgage companies, which slows down the rehab process and prevents you from moving into your new home.

If you need funding for a real estate project quickly, a hard money loan from a qualified lender may be the best option. Hard money loans are short-term loans that can be approved and funded in just a few days.

While they are not designed to last for decades like conventional mortgages, they can provide the funding you need right when you need it.

As investors, we often buy homes at below-market prices because we can move quickly.

Private lenders and hard-money loans are great options for funding our real estate business.

The qualification process for a hard money loan is much different than a traditional bank loan.

A hard money lender focuses on your plans for the property, the economics of your project, and your experience as an investor more than your personal credit score and liabilities.

The loan is calculated based on two factors:

  1. Loan to Cost Ratio (LTC): The total cost of a project, including the purchase and renovation costs, is taken into consideration when determining the amount of financing that will be granted. This amount is usually between 70% and 100% of the total project.
  2. Loan-To-Value Ratio (LTV): The loan is based on the after-repair value of the property or the market value after it’s been fully restored. Most private and hard-money loans have an LTV ratio of about 75%.

You’ll have to come up with a difference between the amount of money you’re borrowing and the total cost of the project, also known as the downpayment. Some real estate investors will put up their own funds, but smart ones will borrow Other People’s Money (OPM) from a private lender.

With a hard-money lender, you’ll typically be charged a higher rate of interest than with a traditional bank.

Is Hard Money Lending a Good Idea?

Hard money lending can be a good option for borrowers who are unable to obtain traditional financing and need to quickly access capital. Hard money loans typically have higher interest rates than traditional loans, so borrowers should be prepared to make higher monthly payments.

Additionally, hard money lenders may require borrowers to put up collateral, such as real estate or personal property, to secure the loan.

How Do I Prepare for a Hard Money Lender?

To prepare for a hard money loan, you will need to have a clear understanding of your investment goals and how the loan will help you achieve them. You will also need to have a detailed business plan that includes a budget for the property purchase and renovation costs.

Additionally, you will need to provide the lender with documentation of your income and assets, as well as your credit history.

How Do You Connect with a Private Lender?

There are a few key things you can do to attract a private lender. First, you need to have a strong business plan and track record. Private lenders want to see that you have a solid plan for how you will use their money and that you have a history of success in your business.

Second, you need to offer a competitive interest rate. Private lenders are looking for a good return on their investment, so offering a higher interest rate will make your loan more attractive to them.

Finally, you need to be able to provide collateral for the loan. This could be in the form of property or other assets that the lender can use to recoup their investment if you default on the loan.

What Questions Should I Ask a Hard Money Lender?

  • What are the terms of the loan?
  • What is the interest rate?
  • What are the fees?
  • When is the loan due?
  • What are the repayment terms?


If you need funding quickly, learn how to find a hard money lender that suits your needs. Ask around, do your research, and make sure they’re licensed in your state. Once you’ve got a few names, compare rates and terms before making any decisions. With these tips in mind, finding the right hard money lender should be a breeze!

Justin McGill