Hard Money Lending and Wholesaling
Q: When should you use a hard money loan on a wholesale real estate deal?
A: Whenever it could help you make more money!
Best Times to Get a Hard Money Loan
We know you don’t need to use a hard money lender for every deal. We understand the goal of most of St. Louis area wholesale real estate investors is to double-close or sign the contract. That makes sense in most situations.
However, there are some exceptions where a hard money loan actually helps the wholesaler make more money. Let’s get into it!
Exception #1: The Hoarder House
You dread that overwhelmed look on the potential rehabber’s face. (OMG, how do people live like this?!) When you see the jaw drop, you know the offer will drop, too.
In a hoarder house, there’s no way a prospective buyer can get a good visual on what’s actually there to work with. Everything is completely hidden, floor to ceiling, behind piles of stuff.
The rehabber will hyper-inflate repair numbers because they can’t see. And there goes a big bite out of the deal for you, the wholesaler.
This is an ideal case where a hard money loan will get you more money in the end. You buy the property, hire a crew to move those mountains of junk, and then shop it out!
Exception #2: The Difficult Seller
Ever work with a difficult seller who makes showing the house almost impossible?
Maybe this seller has a health issue, or they’re skeptical about the deal, or they’re out of town, or there’s a nosy neighbor who reports to the seller every time someone goes through the house.
A hard money loan is the perfect solution here. You close on the house, and you’re free to shop it immediately to a greater number of potential buyers.
Exception #3: The Clean-and-List
Let’s say you’ve found a nearly spotless property that requires minimal work. It needs some cleaning, maybe a little paint, and it’s ready to list on the MLS.
For this house, a hard money loan is a perfect option. You buy it, clean it, and go directly to market to the end user–a great way to make more money!
The Best Ways to Work with a Hard Money Lender
Now that you know the best times to use a hard money loan to increase your profit, what are the best ways for a St. Louis area wholesaler to work with a local hard-money lender?
- Find the right lender. Not every lender in St. Louis wants to work with wholesalers, and not every lender is right for Missouri wholesalers. At FasterFunds Lending, we have a long history of lending to wholesale real estate investors, and we understand their niche.
FasterFunds Lending has no prepayment penalty. It’s important for wholesalers to know that if you only keep the house for two weeks, you’ll only pay interest for two weeks. We want our borrowers to make the most money possible.
2. Ask what the total fees are. If they’re charging $8000 in fees, go elsewhere! We keep our fees reasonable to help maximize your profits.
3. Find out how the lender is going to walk the property. Some lenders use an appraiser, which may actually scare the seller into backing out. At FasterFunds Lending, we walk the house ourselves, disturbing the seller as little as possible.
4. Ask what their approval process looks like. At FasterFunds Lending, once you’re pre-approved for a full year, you’re golden! Any time you get a house under contract, you just fill out a simple, online property information form, and then Bryan, Emily, or Suzanne will do a quick walk through– and you’re good to go! You’re all set up for funding, and you know we’re not going to back out or change the terms the day before closing.
Our team at FasterFunds Lending works with Missouri wholesalers in the St. Louis area all the time. Give us a call at 636-223-4262 and let us help you make more on your deals.