It’s a no-brainer that investing in real estate requires capital — the question is how to get it. Back when I was chomping at the bit to get started buying, rehabbing, and selling houses, I thought up several creative financing solutions. But, I was rightfully apprehensive about exhausting my retirement account and I knew I couldn’t pull it off with any conventional borrowing options. Digging deeper into other credit options for rehabbing an investment property led me to hard money lenders.

As a professional real estate investor with two decades of experience in flipping houses now, I’ve used plenty of hard money loans over the years. Simply put, it’s the best way to build your investing business. But, when you are just starting out, it can be hard to know what hard money lenders are looking for and whether you will qualify. So, let me give you a few tips for approaching hard money lenders and get started growing your business, too.

what are hard money lenders looking for

Why Hard Money is Your Best Funding Option

Hard money, a short-term funding option, is tailor-made for investors who need the cash on hand for financing investments like fix-and-flip deals. It provides several benefits compared to traditional funding, including: 

  • Speedy Approval: Fast funding can help you close the deal quickly while you continue rehabbing your fixer-upper property between repair draws.
  • Funding Major Fixers: Since hard money loans are approved on the after-repair value (ARV) of a house, you can get funding for major fixers like a total gut job on a house. 
  • Easier to qualify: Hard money lenders have less strict underwriting guidelines than banks and credit unions, so you have a good chance of getting approved for a loan if you have a good deal on your hands.

Unlike traditional financing institutions that evaluate loan applications based on income, credit score, and payment history, hard money lenders are largely interested in the value of investment property you are dealing with. Your loan gets approved based on the ARV of the investment property, and you can have the money in hand in a matter of one to two weeks.

What Are Hard Money Lenders Looking For?

The preliminary application is relatively short as it is just to let the hard money lender know if you even pre-qualify for the loan. It usually asks a few basics about you and the property such as estimated loan amount, property type, and any prior rehabbing experience. Once the lender is interested in your application, you might be asked to provide more details, including a copy of recent tax return, bank statements, corporate or LLC formation documents, renovation estimates, or a property appraisal. Either way, you need to be prepared to hand over a good amount of information unless the lender is already familiar with you. 

When you apply for a hard money loan, lenders will look over every detail related to the investment property. They are also evaluating your expertise and credibility as a real estate investor. You will want to be especially prepared to answer questions about these three key points:

Proof of liquidity

To qualify for a hard money loan, you need to furnish proof of your own financial position. If you don’t have a limited liability company (LLC), this may include personal financial statements. They want to know if you have enough cash reserves to take care of any holding costs such as taxes, HOA payments, and insurance, as well as monthly loan payments. While the loan is backed by the property itself, hard money lenders would like you to have some skin in the game—typically at least 10-30% of your own money. 

Rehab plan

Providing lenders with a plan of how and where the hard money will be invested helps win their trust. Details about the necessary rehab work along with estimates from contractors/ subcontractors and timelines for work completion can increase your chances of loan approval.


A portfolio of any prior houses purchased, rehabbed, and sold shows your expertise in real estate investing. Your lender might also be interested to know how the property looked after the rehab. Before and after pictures of any prior investment properties give a visual appeal to your loan application. 

Exit Strategy

Does your exit strategy for the house make sense? Are you experienced enough in real estate investing to successfully implement that exit strategy? Whether you plan to wholesale the house or sell it immediately, hard money lenders evaluate your previous experience and success in seeing the investment through before approving a loan. 

Valuation of the property

Property resale value is the biggest factor that hard money lenders look for before approving your loan. A lender wants to see that the house you are dealing with has enough upside potential to repay the loan amount. 

To build your reputation as a real estate investor, all of this information can be compiled as a credibility kit or package aimed at hard money lenders. Furnishing these details while applying for a hard money loan can convince a lender about loan repayment and develop the relationship for future deals. You want to get all the details right the first time. After all, it is their money you are working with! 

Qualifying for Hard Money Loans Made Easier

There was a time when I used to worry about what hard money lenders are looking for to get funding for my real estate investments. Thankfully, those days are long gone. Ever since I became an independently owned and operated HomeVestors® franchisee, I don’t have to fuss with hard money applications anymore. See, I gained access to some of the best hard money lenders through a proprietary lending portal in UGVilleSM

All I have to do is simply enter a few details about the investment deal on my iPad and I can receive funding offers quickly. Hard money lenders know our training and reputation, so they generally don’t hesitate on a good deal. They know the deals that HomeVestor® franchisees, like me, get are really that good. 

Ready to stop worrying about what hard money lenders are looking for? Get in touch with HomeVestors® today! 


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