The simple answer is “yes”, but in the real world, hard money lenders are more complicated.

  • At first thought, it would sound simple to get a hard money loan and buy a property.
  • However, the investor borrower must find a hard money lender who is willing to work with the investor based on his credit, funds available, the project itself, and a myriad of other issues.
  • It’s not uncommon for an investor to tell the seller that he’s a cash buyer believing his hard money lender will be bringing cash to the closing.
  • Cash to closing is accurate, but only if the hard money lender agrees to fund the transaction.
  • If you’re the seller, I suggest you ask your buyer for proof of funds so you can confirm he has the cash to close or he’s going to get hard money.
  • This is important because at least one third of all investor transactions using hard money lenders to close, don’t close at all!
  • Some of the reasons are:
    • Borrower doesn’t qualify and it’s too late to find another buyer,
    • The lender changes the percentage the borrower must bring to closing,
    • Lender scammed the borrower to collect fees and never intended to fund the loan,
    • Lender gets a better offer to fund another investor for more money or a partnership in the deal,
    • Appraisal or inspection is not what the lender expected.
    • Finally, the lender simply changes his mind for no reason that he admits to.
  • Just recently, the Fed raising interest rates has shaken the lending market for conventional homebuyers as well as hard money lenders.
  • Hard money lenders are thinking the general real estate market will only sink slowly from where it is and sales for rehab properties will take a tumble.
  • These hard money lenders are cutting back on the number of loans they’re doing as well as the percentage they’re willing to loan.
  • The final decision to fund an investor loan for the average or new investor is made within a week of the closing which can kill a deal at the last minute.

 

If you have any additional questions, contact me directly at DaveDinkelQuestions@gmail.com.

If you need hard money instead of transactional funding, contact me for referrals to private hard money lenders.

Be sure to check out BestTransactionalFunding.com for all your same-day double closing needs, including a list of Investor-Friendly Closing Agents in various states.

We have more five-star Google ratings than all the other transactional funders combined.

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