Skip to content

Tag Archives: hard money lending

How to Capitalize on a Hot Housing Market

How to Capitalize on a Hot Housing Market

The housing market isn’t just hot, it’s on fire. As the nation continues to make progress on its recovery from the pandemic, both demand for homes and a supply shortage have pushed median sale prices soaring, according to the National Association of Realtors. Median sale prices were up 16.2 percent year-over-year during the first quarter of 2021.

To navigate a market like this, investors and developers need to understand what buyers are looking for, how to capitalize on stable or growing asset classes such as build-to-rent homes, single-family rentals and multifamily properties, and how to obtain flexible real estate financing. Here are a few tips to help make the most of today’s housing market.

single-family rentals

What will homebuyers be looking for in a home post-pandemic?

People have begun to view their homes differently since the onset of the pandemic. Homebuyers now seek a home with features that accommodate new hobbies and daily functions that previously were not performed as often within the home. Long-lasting lifestyle changes due to the survival mechanisms put in place by extended periods of lockdown will likely mean that people will be searching for spacious safe havens and remote work or education environments.

Here are three features that homebuyers and renters are now more likely to want in their future homes:

  1. Dedicated spaces

After spending a lot of time at home, people naturally start to crave larger spaces; but residents aren’t just looking for more square footage. While an open floor plan is great for entertaining and making a space feel larger, homebuyers have recently found that having multiple separate rooms can be both comfortable and functional. This can include a home office, closed-off living room, media room, etc.

Separate rooms still provide options for family time and entertaining, but also allow everyone to do their own thing. This is important for those who have family members working or doing schoolwork from home.

  1. Energy efficiency

Energy-efficient features have been upgraded to the “must-have” list. Not only are we spending more time at home, but we are using our utilities more, which can get expensive. Energy efficiency is a win for homeowners’ wallets and for the environment. Improvements like tankless water heaters, LED lighting, double-paned windows, and energy-efficient appliances are a few options for builders to include in newly constructed homes.

  1. Storage

For many, it can be difficult to find storage space for emergency supplies or essential products. Plus, more time spent at home helps people realize how important it is to keep things organized and clutter-free. Extra pantry and closet space will likely be more “must-haves” for the rest of 2021 and beyond.

How investors are capitalizing on for-sale homes, single-family rentals, and multifamily properties in today’s market

single-family rental home

For-sale homes, single-family rental communities, and multifamily properties have all displayed strong performance compared to other asset classes throughout the pandemic. This has allowed investors to capitalize on increased demand for these property types by putting their capital to work in high-growth secondary markets across the U.S. These include cities such as Coeur d’Alene, Idaho; Tampa, Florida; and Salt Lake City, Utah, to name a few. Many of these markets were already seeing a high amount of in-migration prior to the pandemic and have seen even more because of the public health crisis.

Each of these asset classes possess unique qualities that have made them strategic investments throughout the pandemic. Since people will always need a place to live, they are likely to remain viable investments for the foreseeable future. Reasons for this include the following:

  • For-Sale Homes

Mortgage rates have reached record lows, thereby causing demand to skyrocket and drive up median home prices. As the pandemic sped up the flight from large, coastal cities, markets with already tight housing supply were constrained even further. This has led to a surge in construction and an accentuated need for high-quality, for-sale homes.

  • Single-Family Rentals

Single-family rental communities have emerged as an increasingly popular option for those who want the amenities of a multifamily building with the breathing room afforded by a single-family home. Single-family rent growth more than doubled in April 2021, with prices increasing by more than 5 percent year-over-year.

  • Multifamily Properties

The multifamily market has enjoyed a strong 2021 thus far. The asset class remains an attractive option for those looking for best-in-class amenities without the hassle of owning a home.

How to obtain construction financing for your project

With the housing market surging, there have been more commercial real estate construction lenders entering the market, creating more competition. Therefore, to win business, some commercial real estate lenders may not be enforcing the same rigorous underwriting standards as their peers, which could result in riskier loans. Be sure to do your due diligence when you’re looking to obtain financing for your real estate project. You want to find a hard money lender that you can rely on.

We recommend a private lender that has a good reputation, is willing to communicate and is flexible. Hard money loans are known to be more flexible than traditional lending options; therefore, if they are not willing to communicate and negotiate your terms, you might want to keep looking.

Broadmark Realty Capital Inc. (NYSE: BRMK) is an internally managed real estate investment trust (“REIT”) offering short-term, first deed of trust loans secured by real estate to fund the acquisition, renovation, rehabilitation, or development of residential or commercial properties. The company has originated over $2.8 billion in loans since its formation through a rigorous and responsive underwriting process. Have questions? Contact one of our lending experts today.


4 Ways to Ensure Your Hard Money Loan Closes Quickly

4 Ways to Ensure Your Hard Money Loan Closes Quickly

A hard money loan can be a good option for a variety of reasons. For example, if you’re having trouble getting a loan from a bank with the terms you need, you need quick approvals and/or funding, you’re looking for tailored loan solutions, and/or you don’t want to bring in an equity partner.

Now, let’s talk about what you should know before looking for a hard money loan, and ways you can ensure a quick and easy loan process.

Quick loan application for construction funding

Know which loan type is right for you.

You can get a hard money loan on most property types, including single-family homes, multi-family, commercial, land, and industrial.

Some lenders specialize in just one or two loan categories; therefore, we recommend asking lenders upfront about what property types they are willing and able to fund. Most hard money lenders will not lend on owner-occupied properties, for instance, because of extra rules and regulations. This means lenders may not fulfill your loan request if you plan to reside in the property.

It’s also important to understand which loan type is best for your project. If you’re looking for a loan to assist with the purchase of development-ready raw land or for improvements to existing buildings or infrastructure, an acquisition and development (A&D) loan would be best. For raw land that needs to be made construction-ready, or for soft costs and entitlements, you should seek a land development loan. Construction loans are best when you’re looking to cover the cost of building various real estate projects. The recommended loan for major renovations to your property is a redevelopment/heavy rehab loan.

Understand hard money loan interest rates and points.

Most lenders charge both interest and upfront or exit points on the loan. You can expect bank loan points to range from 2 to 10 percent of the total loan amount; the exact cost depends on your specific situation as the borrower as well as the lender’s guidelines.

Compared to a bank, hard money lenders take on more financial risk with the loans they originate. Due to this increased risk, private money interest rates are often higher. This means that hard money lenders may be more expensive than banks; interest rates for hard money loans range from 9 to 18 percent. These rates will vary depending on the lender and region in which you’re operating.

It’s important to remember, however, that while hard money loans may be more expensive than a bank, they are less expensive than bringing in a new equity partner. In many situations, an equity partner can take upwards of 50 percent of the profit, which is well above a lender’s interest rate.

Calculate your Loan-to-Value (LTV) ratio

calculating loan to value ratio

A loan-to-value (LTV) ratio is what lenders use to determine the risk they’re taking on. You can calculate your LTV by dividing the loan amount by the value of the asset, and then multiplying by 100.

LTV = (Amount owed on the loan ÷ Appraised value of asset) × 100

Most hard money lenders will lend up to around 65% LTV or property value. There are some lenders, however, that will lend on after repair value (ARV) which is the estimated value of the property after it has been improved. This could increase your interest rate and/or points because it also increases the lender’s risk on the loan.

Be prepared with the necessary documentation.

Most hard money lenders are more concerned with the amount of equity you have in the property, versus, let’s say, your credit score. Lenders focus on the equity and property value as a whole.

Hard money lenders are also concerned with how you ultimately intend to pay off the loan. Be prepared to provide lenders with your exit strategy.  We recommend having a few backup plans that could be easily implemented if needed.

Banks typically want a large amount of documentation and paperwork. Hard money lenders, on the other hand, usually require much lighter documentation.

So, what types of documents are needed? Documents include, but are not limited to:

  • Loan application
  • Purchase contract
    • As with any type of loan, a Purchase and Sale Agreement is required. If the property is being refinanced, a payoff statement showing the outstanding loan balance can be required.
  • Preliminary title report
    • To show a clear title to the property.
  • Credit report
    • Impacts whether you’re approved and the rates and terms you will receive.
  • Most recent tax returns
    • Proof of funds to ensure your debt-to-income ratio remains below a certain level.
  • Proof of insurance
    • For any property being purchased or refinanced.

For construction/development loans, lenders would also need:

  • Itemized budget
  • Building permits
  • Building plans, specs, and architectural renderings
  • Name of the licensed contractor
  • Contractor agreement inclusive of a completion guarantee

Hopefully, this article has prepared you with the knowledge and confidence needed to consider a hard money loan to fund your next project quickly and efficiently. Higher interest rates may seem overwhelming at first, but the benefits of flexible loan structures, higher LTVs, and getting a loan funded quickly can far outweigh the extra cost.


Broadmark Realty Capital Inc. (NYSE: BRMK) is an internally managed real estate investment trust (“REIT”) offering short-term, first deed of trust loans secured by real estate to fund the acquisition, renovation, rehabilitation, or development of residential or commercial properties. The company has originated over $2.2 billion in loans since its formation through a rigorous and responsive underwriting process. Have questions? Contact one of our lending experts today.

Broadmark Realty Capital lends in Denver, Florida, Georgia, Idaho, Maryland, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Washington D.C., and Wyoming.

Hard Money Lending vs Traditional Lending

Let’s compare private lending with traditional to determine what may work for your situation.

The needs of a commercial real estate investor are not always met with traditional lending options. This is where hard money lending comes in. Also called private money lending, the loan is judged by the real estate collateral and the borrower’s credit profile is generally not a factor.

A hard money loan is issued by an investor (or investment group) who makes loans secured by real estate. While these loans typically charge higher rates than banks, the advantages are numerous. In fact, even investors and developers with access to bank credit and have strong financial statements often opt to use hard money loans (i.e., private money loans) for a variety of reasons.

1: Speed

The ability of the lender to fund the loan quickly can be the difference between winning and losing a deal, especially if you’re trying to secure a property against other competing bids. A quick close with a hard money loan can entice sellers and set your offer apart from other buyers with slower, more conventional funding.

This is where hard money really shines. In most situations, these deals can be completed and funded within a week. Compare that to 45 days it takes to get a loan from a bank or credit union—and its really no contest. Not to mention, private lenders can even process an application in 1-2 days, and sometimes it can be completed the very same day.

2: Structure

Private lenders can structure hard money loan repayment and collateral release terms in ways that are mutually beneficial to both lenders and borrower. Banks and credit unions aren’t as flexible and typically take a multipurpose (one-size-fits-all) approach to all loan requests. Hard money lenders will often structure loans based on a percentage off the purchase price or LTC (loan-to-cost) as well as the LTV (loan-to-value) with value being based on the quick-sale value of the collateral property. The maximum loan to value ratios are typically the lower of a 70% – 80% LTC or 60% – 70% LTV.

 3: Approval

If you’ve been turned down for a conventional loan due to past credit trouble, foreclosures, or a short sale, you know how frustrating it can be. Not to mention, there’s numerous reasons for denial banks can offer—even if your financial history is spotless (e.g., self-employment, new job and lack of income history, incomplete records). Hard money lenders are able to look past these issues as long the loan be repaid and the borrower has enough equity invested in the property.

Contact us today or check out our loan programs to get your project started and on the way to profitability.

Are Hard Money Lenders Legal, Regulated and Safe

Hard money loans are a type of asset-based loan financing which is usually applied for through private lenders. Typically, lenders are more interested in your credit score than anything when examining your ability to repay a loan. If you have a good credit history and you can show that you’re a responsible candidate, then you’ll likely have a better chance at getting approved.

However, it’s a slow process even if you have a good credit rating. It can also be troublesome if you’re trying to build up your credit rating because the checks involved are slow and painful, making traditional loans a poor choice for anyone who wants to take swift action.

The Difference With Hard Money Lenders

Hard money lenders use collateral instead of your credit rating. Meaning, they’re not as concerned about your ability to repay because they can get their money back with your collateral. The value of the collateral is more important than your history with money. This might sound scary at first, but there are many fantastic advantages to hard money loans and many different applications. In addition, hard money lending is regulated and safe much like any other loan with a bank. As long as you can pay back the loan, you won’t lose your collateral.

Why Use Hard Money?

Hard money is generally seen as a scary choice when borrowing money because of the fear of losing your collateral and also due to higher interest rates. However, there are many uses for hard money loans and many advantages over typical credit rating-based lenders.

  • Hard money is faster to approve. Hard money loans are much faster to approve because they don’t require credit rating checks. As long as the lender is happy with the collateral you are offering and they can value it quickly, then your loan will be quickly approved.
  • Hard money arrives in your account faster than it would with a typical loan. There aren’t any complicated processes nor waiting for your credit rating to be checked. This means that once you gain familiarity with a lender, you can make future loans much more quickly as well.
  • Hard money agreements are more flexible. Hard money agreements are far more flexible than typical loans. There is often some room for negotiation for things like repayment schedules and collateral value. Most of the time, private lenders are willing to talk and treat you like a valued client, not another random customer.
  • Hard money loans are convenient. Because of the speed, quick approval and relationship that you can build with the private lender, hard money loans are much more convenient than regular loans.
  • Hard money opens up more opportunities; therefore, creating funding for projects that usually wouldn’t be possible with regular loans. Hard money loans can be short-term and you can take on risky projects that banks are usually too afraid of taking on.

We are hard money lenders that specialize in construction loans designed for real estate investors and developers who require quick closings, outside-the-box thinking, a high loan-to-value, and the utmost professional service. Meet our lending experts.