If a prospective borrower knows what information is needed when they apply for a hard money real estate loan it will not only save them considerable time but increase their chances for a successful outcome.  Listed below are the things that hard money lenders would like must know when they consider your loan request:

Describe your loan request.    This is the single most important item to provide.  If possible you should write up a short (one or two paragraph “Executive Summary” which tells the basic information on what this loan request is all about.  The summary should answer the following questions:

• What is the reason for the loan request?  Is this to pay off an existing lender – to purchase a property – to buy out a partner?  Describe.

• What is the address (including city and state) of the property?  What kind of property is it – multifamily, industrial, office, retail, single family?   Is the property an income producing improved property, or is it land?

• Is the security for the loan a first mortgage or second (or third) mortgage?  What is the amount of the loan requested?  If it is not a first mortgage describe the details of the underlying financing.

• What is the time frame within which you must close?  The more specific you can be the better.

• Try to outline the reasons   you are applying to a private lender instead of a bank or institutional lender?

• What is your business plan for this property?  Are you going to fix it up and sell it – hold for the intermediate term – are you an owner user, etc.

Provide a summary of factual information on the property:  the size of the improvements, the lot size, the zoning, and the age of the property.  If it is an income property detail the income it produces and the expenses it incurs.  Information on vacancy rates is important.

With the information above the typical hard money lender will be able to assess if this loan fits within their business plan and respond appropriately to you.  If they want to move forward you will need to prepare a full package on your loan request.  This package should contain the following:

• If this is an income property then the past 2 years and current year to date income and expense statements are essential.  A lease summary of the tenants is very helpful if you can put it together.

• Photos of the property are always welcomed by the lender.

• If this is a loan to purchase a property a copy of the Purchase Contract must be provided.

• Some lenders require personal guarantees and some don’t.  You should try to find out before sending any personal financial information.  If your lender does require a guarantee then you could send a copy of your PFS along with a copy of your credit report (if you have it).

Doing some upfront work before you apply for a private capital loan will pay dividends in getting you the best rates possible and the shortest turn around.

This blog was written by Bob Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender.  [google_authorship] has been in the private capital lending business for 41 consecutive years.