Since "hard money" lenders don't have storefronts like banks or finance companies, how do you find one? They're usually not listed in the phone directory under "hard money lenders". But they may be advertised in the classified section of the newspaper or online as "private lenders".
Hard money lenders are usually private individuals who have access to large amounts of cash. The easiest way to locate them is to start making inquiries to accountants and attorneys who have a wealthy client base. Often you can locate people who have experience making private loans. Of course, these people are the easiest to do business with since they already understand the process.
Attorneys that handle real estate closings are a good resource, especially those who have clients with large estates or trusts with real estate holdings. Often, these people are happy to discover a relatively low risk investment that can give them a return of 10% or higher.
Because these private loans are highly collateralized (30% or more down payment or equity is required), they're considered to be low risk. When compared with stocks or bonds, which have no hard assets as collateral, a private money loan becomes very attractive as an investment.
Accountants may also be a good resource if they have a wealthy clientele. Clients with large amounts of cash available are always looking for good investments. And again, if you can find people who have successfully loaned money before, it can make the process of structuring a new loan very simple.
Accountants are also in a position to educate their clients on the value of lending money as a business investment. Their clients already look to them for investment and tax advice, so the relationship of trust is already established. The accountant can evaluate the loan terms for the client, and add reassurance about the soundness of a private loan as a good investment vehicle.
But if the thought of approaching attorneys and accountants doesn't appeal to you, there are other ways of discovering who's in the private money lending business in your county. The names of private money lenders will appear on the recorded loan documents.
This can take some time to research, but you can easily weed out the names of large corporate mortgage companies like Wells Fargo or Bank of America. Most of the remaining names will be private lenders.
Last but not least, talk with real estate brokers who work with other real estate investors. Real estate brokers usually have a large network of resources available. And some brokers are even in a position to lend private money themselves.
