5 Hard Money Lending Tips To Secure Funding Faster

Imagine you could secure funding for your next real estate investment in days instead of weeks—that’s the power of hard money lending. With its flexible loan terms and streamlined approval process, you can get the financing you need to seize deals quickly.

At ABL, we’ve issued hard money loans across 7,000 projects nationwide for over 15 years so we know a thing or two about hard money lending and its benefits. Just ask one of our many past or returning borrowers, or read on for some of our top hard money lending tips.

What Is Hard Money Lending?

In real estate, hard money lending is financing secured by a property. Unlike a traditional mortgage, however, loan approval is based primarily on the property’s value rather than your personal income or creditworthiness. 

Since hard money loans involve fewer borrowing criteria, you can typically qualify and close quickly. For example, you can pre-qualify for an ABL hard money loan within 24 hours and close in as few as 10 days. 

Keep in mind that hard money loans are also short-term. For example, ABL hard money loans have terms of 12-24 months—just enough time to renovate and flip a property or buy one while you secure long-term financing.

When to Consider Hard Money Lending

Here’s when a hard money loan can come in handy:

Fix-and-Flips

Fix-and-flip projects have relatively quick turnarounds. You may need to finance the property purchase, rehab, and holding costs. However, once the property is renovated and sold, you can use the sale proceeds to pay off the loan. This is what hard money fix-and-flip loans are for. 

New Construction

If you’re building an investment property from the ground up, you have similar funding needs. You need to finance the land purchase and building costs (including labor, materials, and holding costs). A hard money new construction loan is perfect for this situation.

Fast Acquisitions

Sometimes you need quick funding to buy a property so your competition doesn’t beat you to it, and a hard money bridge loan lets you do just that. This gives you more time to secure long-term financing, into which you can refinance the bridge loan.

5 Hard Money Lending Tips to Secure Funding Faster

That said, there are things you can do to secure hard money financing even faster:

Have Documents Ready

Hard money lenders like ABL will want to review details about you and your project before agreeing to finance it. By having the required documents ready to share, you can avoid potential delays. Think personal ID, property purchase contract, renovation budget, etc.

Develop a Clear Exit Strategy

Hard money lenders also want to know how you plan to repay the loan. Whether you plan to resell the property for a profit or refinance into a long-term loan, you should write out a detailed exit strategy so the lender can review and assess it.

Run the Numbers

Instead of waiting for loan underwriting results, see if the deal pencils yourself. This can involve calculating the property’s value based on comparable properties nearby (aka “comps”), estimating renovation and holding costs, and forecasting the property’s after-repair value (ARV).

Need help? Contact your local ABL team for expert guidance on evaluating a potential deal.

Highlight Your Experience

Hard money lenders take a risk on you when issuing a loan. By demonstrating your real estate investing experience, you can reassure them that you’ll pull off the deal and repay the loan, streamlining the underwriting process. 

That said, there are hard money loan programs for beginners, too. For example, ABL offers hard money loans for investors of all experience levels. 

Build Relationships With Hard Money Lenders Before You Need Funding

Even if you’re not ready for a hard money loan, start connecting with local hard money lenders. That way, when you’re ready to pull the trigger, you’ll already have lenders you can go to instead of having to waste time looking for options in your area.

ABL offers hard money loans in 40+ states and counting. See if we’re active in your state here.

Common Mistakes to Avoid

To accelerate hard money funding, it also helps to avoid these common pitfalls:

Underestimating Renovation and Holding Costs

When running the numbers on a property deal, be conservative in your renovation and holding cost estimates. If you underestimate, it could not only skew your projected returns but also require more back-and-forth between you and your lender.

Choosing a Lender Based on Interest Rate Only

While securing a low interest rate is important, it’s not the only factor to consider when choosing a hard money loan. For example, the lender offering the lowest interest rate may have higher fees, less experience, or a worse reputation. So judge lenders on their overall quality. 

Withholding Important Information

Be transparent with your lender about your experience, cash reserves, and other financial details. Withholding important information like this can lead to inaccurate lending assumptions, which could ruin a deal and hurt your long-term borrowing reputation. 

Secure Your Next Hard Money Loan With ABL

Ready to get your next real estate investment off the ground? ABL offers hard money loans for fix-and-flips, new construction, and quick acquisitions. Leave the financing to us, so you can focus on what you do best: executing profitable real estate projects. 

Whether you’re a beginner or a seasoned pro, we have hard money loan programs to suit your experience level. Pre-qualify today by sharing some basic details about you and your project. We look forward to learning more about it!