Best Hard Money Lenders

Benzinga readers love Groundfloor as the best hard money lender for real estate investments.

Short-term real estate investments, such as flipping houses, can be a great way to earn quick returns. However, they typically require a hefty initial investment that may not be feasible for every investor. Hard money lenders can provide quick funding in the form of a short-term loan that can cover your down payment, renovation costs or other expenses for your new real estate investment.

5 Best Hard Money Lenders

When choosing a lender, you want to ensure you’re getting the best rate, deal and service possible. Here are five of the best hard money lenders to provide funding for your future real estate project.

• Best for Lowest Interest Rates: Groundfloor
• Best for Lowest Fees: Kiavi
• Best for First-Time Investors: Flip-Funding
• Best for Large Loans: RCN Capital
• Best for Low Credit Score: Corevest

1. Best for Lowest Interest Rates: Groundfloor

Groundfloor isn’t your typical lender. It uses crowdfunding to fund loans, meaning it can provide some of the best interest rates on the market. Interest rates start at 10.5%, meaning you may be able to save a lot of money on your loan. And with a minimum credit score requirement of 640, loans are accessible to many investors. Its loans can cover 80 to 100% of the loan-to-cost ratio (LTC), with loans up to $1 million.

2. Best for Lowest Fees: Kiavi

Many hard money lenders require borrowers to pay a myriad of fees and down payments, such as an evaluation fee, origination fee and doc preparation fee. The only fees Kiavi charges are 1.5 to 2% of the loan, which is lower than many other lenders. And with competitive interest rates and a variety of options, many lenders can find fast and affordable funding from Kiavi.

3. Best for First-Time Investors: Flip-Funding

Getting into the real estate and property flipping business can be difficult, but Flip-Funding helps investors get their foot in the door. It may have slightly higher rates but doesn’t require any house-flipping experience to get started. Borrowers need to have a credit score higher than 650 to get started.

4. Best for Large Loans: RCN Capital

Some investments require large loans to cover upfront costs, but many hard money lenders cap their loan amounts at $1 to $2 million. Not RCN Capital. It can provide up to $7.5 million for single-family, townhomes and condos. This large maximum offers freedom for investors to pursue larger assets.

5. Best for Low Credit Scores: Corevest

Many hard money lenders don’t require high credit scores but do have a minimum in the 640-660 range. Corevest, however, has no minimum required credit scores. For investors working to improve their score, Corevest may be able to approve them for funding. However, it does prefer borrowers to have some flipping experience, so it’s not necessarily an option for new investors. 

What Are Hard Money Lenders?

Hard money lenders are a little bit different than a typical lender. Standard banks and financial institutions often don’t offer hard money loans. Instead, hard money lenders are typically private companies or individuals who lend their money as an investment. They're backed by the assets they are used to buying, such as a property. So if the borrower defaults on their loan, the lender assumes ownership of the asset the loan was used to buy.

These loans are popular among investors who need quick, short-term funding. This makes them popular among property owners who like flip houses. They can take out a short-term loan, flip the property, then pay the loan off and pocket the profits. 

Factors to Consider when Choosing a Hard Money Lender

The process for choosing a hard money lender and applying for a loan differs from standard loans. Investors need to ensure they are partnering with someone they trust and are getting a good deal. Here are some factors to consider while looking for a hard money loan.

Reputation and Experience

Investors need to be careful when borrowing money from a private company or individual. By conducting some research into the reputation of the lender, its track record and customer reviews, you can get a better sense of their legitimacy and how easy the borrowing experience is. You’ll want to find a lender with extensive experience in the industry and positive customer feedback.

Interest Rates and Fees

The higher the interest rate on your loan, the less you’ll make in profit from your investment. Investors should compare the interest rates among different lenders to find the best loan for their needs. Hard money lenders may charge various fees, such as origination, evaluation and document preparation fees. Ensure you choose a lender with reasonable fees so you can get the best return on investment possible.

Loan Terms and Flexibility

You need a loan that works for you, so ensure you’re working with a lender that can tailor a loan to your specific needs. Borrowers have different needs, and working with a flexible lender can help you achieve greater financial success. Some lenders may have strict terms, and trying to fit your investment into those requirements may cause a lot of stress. Find a lender that’s willing to negotiate terms and conditions and adapt to your needs for a more seamless and profitable investment.

Customer Support

For a successful investment, you need a lender you can trust. Ensure your lender has a solid customer support team and process with accessible communication channels such as chat, email, phones and in-person offices. That way, you know that any questions or concerns you have will be resolved in a reasonable amount of time. 

Transparent Lending Process

To avoid hidden fees and stipulations, partner with a lender who is transparent. Before agreeing to anything, you’ll want to have a clear understanding of the loan terms and conditions, such as the length, interest rate, necessary fees and the plan to pay it off. Trust and communication will make obtaining and paying off the loan much easier for you and the lender.

Additional Services Provided by Hard Money Lenders

Certain lenders may go above and beyond providing funding. By exploring and understanding all the services your lender offers, you’ll be able to potentially optimize efficiency and reduce costs. Here are just a few services hard money lenders may offer.

Pre-Approval and Quick Funding

Some lenders may be able to offer pre-approval. This benefit will provide you with an idea of the loan amount and terms so that you can safely compare rates before allowing them to do a hard credit check. Some lenders, like Groundfloor, may be able to approve you quickly and provide funding within 10 days.

Value-Added Services

In addition to funding an investment, some lenders may offer services such as property appraisal, renovation financing and refinancing options. By partnering with a lender that offers more services, you can get a holistic borrowing experience that covers all your financial needs. Instead of partnering with multiple agencies, choose one that does it all.

Fund Your Investment with Fast, Affordable Loans

Hard money loans can be a great way to fund your real estate investment. However, not every hard money lender is the same, and it’s crucial to find a lender that you trust and offers competitive rates. By partnering with one of the best hard money lenders, you can be confident in your borrowing and spend more time and money on growing your investments.

Frequently Asked Questions