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Finding hard money lenders isn't really a mystery. At
least it isn't a hard mystery to solve. You just need to get out there and
take the right steps toward uncovering them. There are many different ways
their investors, attorneys, accountants, insurance agents, etc., who are
generally to locate hard money lenders or private lenders. When talking with
other professionals, I tend to refer to my lenders as "private lenders"
simply because not everyone is familiar with the term "hard money lender." I
have found most of my lenders by asking for referrals from others willing to
help me because I do what I can to help them.
Some of my favorite people to ask are settlement/closing attorneys. They
usually prepare the loan documents for hard money lenders and most attorneys
will be able to give you at least one name. In fact, on a number of
occasions the attorney whom I asked for a referral was a hard money lender
themselves.
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Accountants are also a good source for hard money
lenders since they have clients who are sitting on a lot of cash and need to
do something with it. In some cases, they even have clients who already hold
paper. Such people are great to approach about lending money since they
already understand the business of lending. They have either taken back
paper upon selling a property or they have lent their own funds to someone.
Real estate paper is a very secure investment, and people who understand the
business of lending don't mind doing real estate loans, especially when the
LTV is low and the interest rate is high. If someone trusts their accountant
enough to let them handle their finances, then a referral from an accountant
should carry a lot of clout. Another method of finding hard money lenders is
to write down the addresses of homes undergoing renovation.
With few exceptions, if I go to the courthouse with ten addresses to uncover
the lender involved in each of these renovation projects, you will find that
a private lender is funding at least one of them. Contact the lenders that
you discover and get to know them, especially if they have already lent
money on a home in an area where you want to invest.
Insurance agents who sell hazard insurance policies (particularly those that
specialize with investment properties) have to put a "loss payee" on all of
the policies where a lender is involved. The loss payee is the lender, so
the insurance agent can tell who are private lenders and which ones are not.
An active agent could probably go through their records and come up with
dozens of names of people who have lent money privately on policies they
have written.
Mortgage brokers can also be a good source for locating hard money lenders,
particularly those that work with investors on a routine basis. I personally
feel that any mortgage broker that deals with investors should have a hard
money lender in their bag. If they don't, I wouldn't consider them a good
mortgage broker. You may have to pay the mortgage broker a fee for the
referral, but it is worth it if it means getting a deal done. Increasing
your chances of finding a hard money lender has to do with the circles that
you run in, the people whom you ask, and the number of people you ask.
Chances are if you are asking the cashier at your local convenience store if
they know of any hard money lenders, the answer you get is going to be,
"Huh?". If you ask an attorney or title company who works with a number of
investors in your area, it is much more likely that you will find someone
who will be able to provide you with the names of several lenders. If you
don't get anywhere the first time, don't stop asking people until you find
one.
