What Is a Hard Money Broker?

The world of finance is full of options and opportunities. When you need a loan, you’ll likely dive deeper into personal finances and may be surprised by the different ways you can get money. If all you’ve taken is a mandatory personal finance or a home economics course in high school or college, you may not know all the options available to you. One way to get a loan is a hard money loan, which may be handled by a hard money broker. Here are a few things to keep in mind about what a hard money broker can do for you.

What makes something “hard money?”

Put simply, hard money refers to a specific type of short-term loan that is secured by the value of your real estate. That real-estate isn’t limited to a specific category; it could be a single-family home, commercial property, multi-family home, or even land. Unlike some loans, which come from banks or credit unions, private lenders are responsible for hard money loans. Generally, these types of loans only last about 12 months, although sometimes you can extend your loan to be longer than a year. 

Unlike a traditional loan, which is calculated using your credit score, the value of the property you’re offering as collateral is far more important when you’re applying for a hard money loan. This is because many times the value of your property is the main factor that an investor will consider when determining how much they want to loan you. The more equity you have in the property you’re leveraging for your loan, the more likely you are to get a larger loan.

The benefits of hard money

The biggest reason you would probably want to pursue a hard money loan is because you need your loan funded quickly. While some loans take upwards of 30 or 40 days to get funded, a hard money loan can be processed quite quickly. This makes hard money loans an ideal option for people looking to flip houses or perform some construction as part of a renovation. Hard money loans are frequently used by real estate investors looking to expand their footprint of investment properties. They’re also useful when you don’t have the best credit, but do have valuable property to leverage.

What does a hard money broker do?

Hard money brokers protect you and ensure that your hard money loan comes from a reputable company that you can trust. In some online platforms, your private real estate investor may be less reliable or even predatory. Searching for local hard money brokers in Texas or wherever you may live is a great way to gain the peace of mind that comes from choosing a lender which is transparent and has decades of experience in the field. A broker like Bay Mountain Capital can also give you guidance as you work to make your real-estate investment, providing value beyond the loans they can issue to you. Hard money brokers are capable of servicing residential borrowers, servicing commercial borrowers, and can even help broker your mortgage.

When dealing with hard money loans, it’s a good idea to work with a broker to get the best deal. A hard money broker can protect you from taking out a hard money loan from a lender with a poor reputation. Additionally, since hard money loans are typically used when flipping homes or making real estate investments, you don’t want to get burned with a bad deal in a field where profit margins can be razor thin. Finding a hard money broker in your area is as easy as performing a simple Google search to start making a list of potential investors. From there, make sure to do your due diligence and research your options, so that you make an informed decision and are able to get a reliable deal.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.