Although getting approved for a hard money loan is not that difficult, finding a reputable hard money or private capital lender is often the more challenging task. Here are three tips to help you find a quality source of private funding for your out-of-the-bank projects.

1. Seek out a lender with sufficient capital resources. Experienced hard money lenders should be able to fund numerous short-term and medium-term loans. If the lender is too small to fund multiple loans simultaneously, then you may have difficulties getting sufficient funds or extending your loan if it becomes necessary later on.
2. Look for a lender who can deliver funds quickly. As a borrower, one of the benefits of a hard money loan is the speed at which it can be acquired. The ability to obtain funds more quickly than your competitors can allow you, as an investor, to snatch up hot deals that others want (or, for developers, to avoid construction delays and get your property to market faster). If you’re getting referrals or references for your lender, be sure to ask if they got their funds in a timely manner, and avoid any lenders who have a reputation for taking longer to release funds. This can be a sign of a broker who is masquerading as a hard money lender rather than someone with actual control over the capital.
3. Choose a lender with experience in your local market. It’s important to find an experienced hard money lender, especially if you, yourself, have less experience. An experienced lender can provide advice and guidance in addition to capital resources. Also, dependability and principles tend to go hand-in-hand with experience. Private lenders live and die by their reputation, so a long-serving, mature lender is more likely to be a quality source of financing than one that is untried and untested.

When it comes to selecting the right private or hard money lender for your project, use your common sense and hunt out a lender with a good reputation and plenty of experience and capital. You should ask other investors for referrals, follow industry news, and avoid hard money lenders who are new to the market or even just your geographic area (real estate knowledge can be very localized, so local lenders can often understand the potential value of a distressed property better than a lender who is unfamiliar with the locale).