Would you be willing to sign over a cut of your company’s future profits in exchange for a small chunk of money today? For most real estate investors, the answer to this question is a resounding “no”, but it is a tantalizing proposition if you’re just starting your career. Hard money loans are a foundational tool in the house flipping business, and they’re one of the best ways new investors can get started with purchasing properties—just as long as you understand the costs and risks.

When I was a fresh-faced flipper, I had no problem singing on the dotted line to secure financing, even when I knew I’d be on the hook for interest payments and whatever else the lender was demanding within the next year or so. That ended up costing me a lot more money than it could have, but with the help of financing, I was able to grow my business out of Albany quite quickly.

You don’t have to accept those costs like I did, and all it takes to avoid them is knowing how to screen hard money lenders. Hard money lenders are going to be your critical business partners in Upstate NY, and you need to learn how to differentiate a good one from a bad one. I’ll show you how.

What To Look For In A Hard Money Lender

In case you aren’t familiar, hard money loans allow borrowers to use the equity that they plan to receive using the funds from the loan to collateralize the loan. In other words, you can buy a home on credit, and the lender has the right to seize your equity in the home if you don’t meet the interest payments and any other requirements (or covenants).

In general, when you’re searching for hard money lenders in upstate NY, you should look for:

• Attractive interest rates
• High loan-to-after-repair-value (LTV) ratios
• High loan-to-cost (LTC) ratios
• Favorable repayment periods
• Experience working with house flippers
• A lack of overly restrictive or burdensome covenants
• Fast turnaround time for loan requests
• Maximum and minimum loan sizes that fit your business needs

It might seem like a long list to keep track of, but it’s a matter of experience, and you’ll learn to spot the red flags very quickly. Beyond those factors, the number one thing you need to be on the lookout for is reputability.

Reputable hard money lenders will be up-front about all of the relevant metrics, covenants, restrictions, and underwriting requirements for borrowers. Disreputable lenders might downplay or fail to mention critical elements about the loan, especially regarding covenants that might entitle them to a share of your profits even if you make your payments on time. The best way to find reputable hard money lenders in upstate NY is to work with lenders who are already vetted by other real estate investors in your network.

Top Hard Money Lenders In Upstate NY

Now that you’re up to speed on what to look for in hard money lenders, let’s take a look at a few of the best hard money lenders in upstate NY so that you’ll have a few ideas about who might be a good fit.

• RCN Capital
  RCN Capital offers loans for as low as $50,000 and as high as $2.5 million with an LTV of up to 90% of the purchase price, and potentially up to 100% of the repair costs. The advantage of working with this lender is that they place a premium on experience when it comes to determining the rates offered to investors.So, while you probably won’t get the best rate with RCN Capital when you’re just getting your business off the ground, once you have a few flips under your belt, you’ll likely be able to get a much better interest rate and a more favorable set of covenants, which is pretty nice.

• LendingHome / Kiavi
  LendingHome, now known as Kiavi, is one of the most well-known hard money lenders in upstate NY. Its maximum loan value is $3 million, which is more than sufficient for most house flipping projects when you’re just starting out. But, as your business grows, there’s a good chance that you’ll need to find another lender, especially if you plan on having multiple projects running in parallel.In terms of loan parameters, its LTC is as much as 90% and the maximum LTV is up to 75%. This lender also offers a few term options. If you’re a well-capitalized investor, you can get interest rates as low as 6.95%, which is marginally better than most other lenders.

• Silver Hill Funding, LLC
  Silver Hill is a nationwide lender that has traditionally specialized in serving real estate investors through its small-balance commercial loan program and long-term rental financing solutions. While it is a relatively new entrant to fix ‘n flip lending, the team is leaning on their many years of experience to build a platform from the ground up that specifically addresses the needs of real estate investors today: reliability, competitive rates, and closing speed.

Thanks to an on-the-ground presence in New York, Silver Hill knows and understands the unique dynamics of NY’s local real estate markets. It offers loans sized up to 90% of cost for experienced investors and can also offer competitive terms to less experienced or new investors. Silver Hill can offer you funds to complete your renovations as well, helping you make your dollars go further. Finally, if you would like to hold on to your investment to generate rental income, Silver Hill can offer you a long-term loan based on the cash flow generated by your property.

Getting Your Dealflow Moving

If you’re still at a loss for picking a hard money lender, don’t fret. There’s a solution for getting in touch with the most effective hard money lenders for investors who want to get good terms and grow their business.

Becoming an independently owned and operated HomeVestors® franchise owner ensures you’ll have direct access to pre-vetted hard money lenders in your area. You’ll be able to apply for funds through a dedicated portal, which exclusively contains lenders other real estate investors have found to be good to work with. Plus, you’ll receive extensive house-flipping training, access to cutting-edge property valuation software, and a ready-to-go network of local investors to team up with.

You’ll have the know-how, the contacts, the tools, and the financial resources your business needs to grow. And you’ll also get access to the HomeVestors® lead generation platform, so you won’t be at a loss for opportunity.

Between setting me up with the right lenders and teaching me the ropes, franchising with HomeVestors® was one of the best decisions I ever made for my business, and it’s within reach for you, too.

Want to learn more about receiving home flipping or rental property renovation financing from the top hard money lenders in upstate New York? Request information about becoming a HomeVestors® franchise owner today. 

Each franchise office is independently owned and operated.