Here’s a lesson I wish I had known when I first started flipping properties in New York: If you want to be a big-time real estate investor in Buffalo, you’ll need to understand how to find and utilize the best hard money lenders first. And to do that, you should consider taking out debt to finance home purchases.

If you don’t, you might end up like my younger self who tried to scrape together private loan financing for his first flip with meager assets and an even meager credit score. In the months I wasted looking for a financier willing to take a risk on me despite my inexperience, I probably could have churned through four deals if I had worked with the right hard-money lender from the get-go.

While it’s true that taking out such a large credit line when you aren’t yet confident in your own ability to repair and resale homes can be intimidating, there’s no better way to gain skill other than to take the plunge. To help you along your way, I’ve compiled the top hard money lenders in Buffalo NY so that you’ll have a few solid options for financing. Let’s get started.

Why Investors Use Hard Money Loans

Real estate investors primarily use hard money loans and other forms of financing so that they can purchase and renovate properties without having massive cash reserves on hand. When you take out a hard money loan, you’re essentially getting a lender to give you the money you need to buy a property upfront. If you fail to pay interest, however, they’ll be able to grab control of the equity in the property. For flipping houses, there’s nothing better because you can also obtain additional funds that are earmarked for making renovations once you control the property.

But there are a few risks that you should know about. First, hard money loans often have high-interest rates and repayment terms that are shorter than two years. If you flub one of your flips by taking too long to turn it around, you could be in trouble. Lenders can also sometimes be entitled to take a share of your profits from the flip, so it’s important to work with reputable, reliable, and fast lenders to avoid hiccups.

The Best Hard Money Lenders In Buffalo NY

Now that you understand why hard money loans are worthwhile, let’s take a look at a few hard money lenders Buffalo NY has to offer.

RCN Capital

RCN Capital is one of the most cost-efficient hard money lenders Buffalo NY has, and it offers a few of the traditional house-flipping hard money financing instruments, including bridge loans, fix-and-flip loans, and rental property development loans. Typically, you’ll be able to get a loan for up to $3 million that’s worth 90% of a home’s purchase price—and which covers all of the renovation costs if you’re angling for a quick flip afterward. Under the best of circumstances, its loans clear in around 10 days, which is a bit better than the average clearing times of around two weeks. And with RCN’s interest rates starting as low as 6.15%, it won’t leave your cash flow tapped out.

The main issue with RCN is that it isn’t tailored to the needs of investors in the Buffalo housing market specifically. That’s not insurmountable, but it does mean that your views about the value and ease of a potential flip might clash with what their underwriters are willing to agree to lend.

The bottom line:

• Favorable loan offerings and loan features
• Doesn’t have much experience in the Buffalo market
• Medium to fast approval times

Residential Capital Partners

Residential Capital Partners is one of the fastest hard money lenders Buffalo NY has to offer as its fix-and-flip funds usually disburse after a lightning-fast two-day turnaround. This lender offers financing for up to 70% of a home’s estimated after-repair value (ARV), and it issues hard money loans for up to $1.25 million. For the vast majority of fix-and-flips, that ceiling won’t be a problem, but it might not be enough in some of the ritzier areas of Buffalo.

RCP’s loans typically include a 9-month term, which is on the shorter side of average. If you plan to use them, keep in mind that there are roughly $1,700 in appraisal and document preparation fees that you’ll need to have cash on hand to pay. What’s great about Residential Capital Partners is that its pre-qualification process is very fast, easy to navigate, and quite transparent, so you won’t need to wait long before knowing if you’re eligible to put down an offer on a juicy property.

The bottom line:

• Very fast approvals
• Relatively small maximum loan size
• Won’t ever cover 100% of purchasing or renovation expenses

Finance of America

Finance of America is a great hard money lender in Buffalo NY that’s catered to newer investors. It offers fix-and-flip loans for homes up to $3 million in value, and investors aren’t required to have any experience before getting financing. The catch is that if you don’t have more than 5 successful flips in your deal book within the last 36 months, you’ll be limited to taking out loans that are worth up to 90% of the total cost of your purchase.

Once you clear that bar, you can get more financing and eventually reach loans that cover 100% of renovation costs and as much as 95% of your total cost for the purchase, or for 75% of the estimated after repair value (depending on which is smaller). Rates start at 6.75% for a 1-year term, though you can also opt for an 18-month term in exchange for a higher rate. The flexibility is definitely great, and it’s also nice to have a lender that will work with you as you gain experience. Unfortunately, Finance of America doesn’t make any guarantees about the pace of its financing approvals, so you may want to use a different hard money lender for the most time-sensitive deals.

The bottom line:

• Good for beginners
• Flexible loan terms
• May sometimes be a bit slow to disburse funds

It’s Easier When You Have Direct Access

Rather than work with hard money lenders in Buffalo NY that might take too long to approve funds, it often pays to team up with a nationwide real estate investing company that has a closer relationship with lenders. That’s why owning an independently owned and operated HomeVestors® franchise is a great way to get in with some of the best lenders in the industry. Among the myriad of other benefits that HomeVestors® franchise owners gain access to, a dedicated hard money financing portal is one of the most important.

Working with hard money lenders who have been pre-vetted by HomeVestors® is an important step toward helping your business grow and closing more deals. Furthermore, you’ll partake in an initial week-long training program, leverage proprietary lead generation software, and have the ability to link into nationally known marketing campaigns. For my business, becoming a franchise owner was the right choice, and it could be exactly what you’re looking for too.

Want to learn more about the top hard money lenders Buffalo NY has to offer? Or maybe you’re interested in starting your real estate investing business in the city? Request information about becoming a HomeVestors® franchise owner today.

Each franchise office is independently owned and operated.