Hard money loans are often the avenue for getting into an investment property quickly and having the funds to rehab a property or literally buy time to structure more traditional financing. Everyone has heard of hard money loans but not everyone knows how to find a hard money lender in PA.
How to Find a Hard Money Lender In PA
Finding a Hard Money Lender
With the internet as swift as it is, you can simply Google “hard money lender PA” to get a list of lenders close by. You will cross through a stream of ads and then the top listings for your area.
The problem with this method is it can feel like walking down a dark alley and asking Guido to see The Boss. You just don’t know who you are dealing with; savvy salesman can make a website look slick and amazing and because since this is considered private money, it is less regulated.
So while you could find one pretty quickly, finding one you can trust to not foreclose on your property based on some loophole is imperative.
Verifying Hard Money Lender Credibility
This is where you need to be smarter than the average Joe and willing to do your own due diligence. Attend or join local real estate investment clubs. Talk to the members about their experiences with lenders. Not only will you get honest feedback on the hard money lenders on your list, most likely, there will be either a member or referral list in the club for the best lenders nearby.
This is important because you want a lender that is not just trustworthy but who also understands the local market. This helps expedite the process of the loan. It can also give you valuable feedback and insights you weren’t considering. Because the lender is in the local market, he is looking at deals there daily.
He understands the nuance and potential problems in the area and might be able to give you feedback to adjust your plan for success.
Other Resources for Hard Money Lenders in PA
If you don’t have a real estate investment club near you, talk to local real estate brokers and agents. Many have a list of investors, financing companies and other resources that can help. Remember that real estate brokers and agents work on commission, to develop a relationship with them that adds to their pocket as well.
Keep in mind that hard money loans are expensive. If you are able to get financing through personal family and friend resources, it might be a less expensive venture. When working with family and friends, make sure they understand the risks involved as this is an investment and business venture. While you want the funding, you don’t want to burn through your personal relationships leaving you lonely on holidays.
What to Ask a Hard Money Lender
In shopping for a hard money lender, make sure you interview them. This is a two-way street and even though they hold the money you need to know who you are jumping into a relationship with. Find out all the terms and conditions of financing before you get the contract, and then have the contract reviewed in detail by your attorney.
Of course, you will want to know the rate and how that rate is determined along with the length of the loan. Understand your exit clauses and how to refinance or pay the loan off early; are there penalties? Many hard money deals are necessary for quick funding so you don’t want to waste your time with someone slow to make a decision. Find out about their history and experience to determine if they can deliver the financing as needed without problems.