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 sold for a substantial profit. This all sounds great, but suddenly you realize: how can I afford to buy the property and fix it up?
Enter a hard money loan. This is a fantastic option if you need to quickly secure funds to close on a major real estate purchase.
It is in your best interest to take a moment and consider 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.
Tip #1: Submit a Detailed Personal Financial Statement
Private lenders in Los Angeles and other parts of California are generally not as concerned about your debt-to-income ratio as a traditional bank lender. However, it is still worth proving 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 for any major problems or red flags. For example, if you have a previous bankruptcy, foreclosure, or other bad debt, be sure to include a summary of what happened, lessons learned, etc.
Tip #2: Create a prospect that describes your experience in real estate and/or other business ventures
Hard money lenders are more inclined to approve a loan application from someone who has real experience in real estate investing, home repair and remodeling, etc. However, if you don’t have experience in this area, don’t worry. Take the time to explain your professional background and your experience with other companies and business projects.
Tip No. 3 – Be transparent and honest
Transparency is absolutely essential when applying for a private loan. Be sure to submit all requested documentation to the lender and be honest about any potential problems with the property to be purchased with the loan proceeds. Transparency is vitally important because you will be working directly with the decision maker rather than a middleman at your local bank. This is why building trust is so incredibly important in these types of transactions.
Tip #4: Set a consistent narrative for why your loan application should be approved
Make sure your app is consistent and understandable. This is especially true for the part of the loan application where financial projections are requested. If a hard money lender can’t understand your accounting logic and there doesn’t seem to be a realistic path to profitability, then your Los Angeles hard money loan could be denied.
If you’ve identified an investment property with tremendous growth potential, consider contacting the expert Los Angeles hard money lender to help turn your investment dreams into a reality.
