Tips to ensure your hard money loan is approved


You have located a property that is the proverbial “diamond in the rough”. The purchase price is incredibly reasonable and with the right updates and improvements the property could be flipped for a substantial profit. This all sounds great, but suddenly you realize – how can I afford to buy the property and fix it?

Enter a hard money loan. This is a fantastic option if you need quick funds to complete a major property purchase.

It is in your best interest to take a moment and think about how you plan to present your project to a hard money lender in Los Angeles, as there are certain steps that must be followed when applying for a hard money loan hard.

Tip #1 – Submit a detailed personal financial statement

Private lenders in Los Angeles and elsewhere in California are generally not as concerned about your debt-to-equity ratio as a traditional bank lender. Nevertheless, it is always worth demonstrating to the lender that you are fully capable of repaying the borrowed funds. When creating your personal financial statement, be sure to check your credit score and credit report to note any issues or red flags. For example, if you have a history of bankruptcy, foreclosure, or other bad debt, be sure to include a summary of what happened, lessons learned, etc.

Tip #2 – Create a prospectus that describes your experience in real estate and/or other business ventures

Hard money lenders are more likely to approve a loan application from someone with actual experience in real estate investing, home repairs and flips, etc. However, if you don’t have any experience in this area, don’t worry. Take the time to explain your professional background and your experience with other companies and projects.

Tip #3 – Be transparent and honest

Transparency is absolutely essential when applying for a private loan. Be sure to submit all requested documents to the lender and be honest about any potential issues with the property that is going to be purchased with the loan funds. Transparency is critically important as you will be working directly with the decision maker rather than an intermediary at your local bank. This is why the development of trust is so important in these types of transactions.

Tip #4 – Establish a cohesive narrative as to why your loan application should be approved

Make sure your application is coherent and understandable. This is especially true for the part of the loan application where it asks for financial projections. If a hard money lender can’t understand your accounting logic and there doesn’t seem to be a realistic path to profitability, your Los Angeles hard money loan could be turned down.

If you’ve identified an investment property with huge growth potential, consider contacting the expert Lender in Los Angeles to help turn your investment dreams into reality.

Source by George N Anderson

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