It can be pretty difficult to choose the best hard money lender, no matter which city you’re looking in. But for some reason, Washington D.C. seems to be one of the most difficult. There’s no shortage of lenders looking to take advantage of new entrepreneurs and investors.
This is why I talked with Hard Money Bankers, one of the most trusted hard money lenders in D.C. I asked them what people should look for in their hard money lenders and what they should avoid like the plague.
Hard Money Bankers was more than happy to share their expert tips and advice, and here’s what they said.
Transparency is the Most Important Attribute
You should know who you’re working with, where they’re located, and what their processes and systems look like. If you talk to a hard money lender and they’re very vague about every question you ask, you should just stand up and walk away.
Better yet, run away. If you google the lender and can’t figure out exactly who you’re talking with or who you’ll be borrowing your money from, then this is not a good sign.
Choose Someone Honest
You do not want to take loans from a yes man, trust me. This will only end badly because no one will talk you out of a bad project, investment, or loan. Hard Money Bankers agree and insist that it’s always better to do business with someone that will be honest about bad ideas and impossible tasks.
If you throw out a ridiculous rate or number, and your lender immediately agrees with you and sees no problem, then they’re either lying to you, trying to scam you, or are a unicorn in the industry that will probably not be around much longer due to poor decision making.
Choose A Lender that is Local
Real Estate is a local business, and you need a local lender. Any reputable lender is going to service your loan and want to check out the property you’re investing in.
An out-of-state or even out-of-town investor isn’t going to be able to do this in a speedy fashion.
They won’t understand the local market, and logistically, they won’t be able to check out the property within a reasonable amount of time.
A local lender, especially a seasoned one, will be very familiar with the local market and be able to get boots on the ground ASAP. This will get you a much more honest loan.
Focus on Value, not Rate
Usually, an extremely low-interest rate means that you will have very little help and absolutely poor servicing. You probably don’t need me to tell you this, but this will inevitably cause miscommunication down the line and almost certainly lead to delays.
Delays mean lost money. Find a competitive rate from a lender that still offers great servicing, full transparency, and professional guidance.
Trust your Gut and Avoid Red Flags
Do your homework and pay attention to the lenders you talk to, especially when looking for a hard money lender in Washington D.C. Sometimes, it can be tough to sense a conman, but it can be extremely easy at times.
If you have a very bad gut feeling about a lender, and they seem shady or opaque, it’s okay to turn your heel and run. You don’t owe anyone your business, and your success depends on finding an honest, professional lender.
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