Two of the things that set hard money apart from traditional financing are speed and less paperwork. Still, there are some things a private lender would expect from you in order to get a loan approved and funded. You can make an already fast process even faster by being prepared before you apply.

Whether you are looking for hard money in the Salt Lake City area or elsewhere in Utah, we can help. We recommend that you consider the following four things before you apply. Getting a handle on them will streamline the process for everyone involved.

1. Consider Your Down Payment

Hard money and bridge loans never cover 100% of the amount borrowers need. Just as with traditional financing, you will need to bring some sort of down payment to the table. The chances are pretty good that your lender’s loan-to-value (LTV) ratio will be higher than a traditional lender’s. So plan accordingly.

We cannot tell you exactly how much you’ll need as every loan is different. But plan on putting down a substantial amount. Hard money lenders expect borrowers to have some skin in the game. When both parties share the risk, things go a lot more smoothly.

2. Consider Your Collateral

Being that hard money loans are asset-based, approval hinges on the collateral you are bringing to the table. Most of the loans we make cover real estate investments. That being the case, the asset being obtained is usually the collateral a client offers. Consider your collateral. What is its value compared to the amount of money you hope to borrow?

Your collateral needs to have enough inherent value to cover the amount of the loan. It is not a problem with most real estate transactions, provided you bring a large enough down payment to the table. But there are never any guarantees. So assess your collateral carefully. Know what you have and what you are bringing to the deal.

3. Consider Your Exit Strategy

Hard money and bridge loans are short term loans. As a general rule, anywhere between 6 and 24 months is ideal. You are going to need a way to pay off what you’ve borrowed within the agreed terms. So carefully consider your exit strategy. How are you going to make good on the loan when it’s due?

You might be able to arrange traditional financing at some point down the road. That is a common exit strategy in our business. Or you might have other properties you plan to sell. One way or the other, a strong exit strategy can only help you arrange the financing you need.

4. Prepare to Work Quickly

Finally, prepare yourself to work through the process quickly. A typical hard money lender doesn’t drag its feet. It does not take weeks or months and dozens of document requests to get things done. As soon as you apply, expect things to move a lot more quickly than you might be used to with traditional lenders. Hard money moves at a much faster pace.

This isn’t a bad thing, by the way. In fact, speed is one of the primary advantages of hard money. You can get your deals done more quickly because hard money lenders move quickly. It has been our experience that investors benefit from the speed we offer.

Address these four things prior to applying and you should find that the hard money experience is a rather pleasant one. Lenders in our business work hard to make sure that this is the case. We want your business. If you can work with us, we are ready to work with you.