It’s important to know your funding options when investing in real estate. Sometimes traditional bank loans are not the best option, so knowing where to turn is crucial. Hard money lenders are a great alternative, offering short-term loans backed by real estate collateral. These loans are helpful in situations where you need quick funding for a new investment, flipping a property, or when conventional loans aren’t an option. I’ve done some digging and found the six best hard money lenders to help with your investment needs.
- Kiavi: Best for fix-and-flip financing
- RCN Capital: Best for large loan amounts
- Lima One Capital: Best for various investment strategies
- Groundfloor: Best for new investors
- The Investor’s Edge: Best for 1-on-1 project assistance
- New Silver: Best for instant loan approvals
The Close’s Top Picks for Best Hard Money Lenders
| Kiavi: Fix-and-flip financing | Visit Kiavi ↓ | ||
| RCN Capital: Large loan amounts | Visit RCN Capital ↓ | ||
| Lima One Capital: Various investment strategies | Visit Lima One Capital ↓ | ||
| Groundfloor: New investors | Visit Groundfloor ↓ | ||
| The Investor’s Edge: 1-on-1 project assistance | Visit The Investor’s Edge ↓ | ||
| New Silver: Instant loan approvals | Visit New Silver ↓ |
What to Look for in a Hard Money Lender
Finding the right lender can make or break your investment, so it pays to do your research ahead of time. This will help you find the best lender with the terms that fit your investment strategy. Keep these factors in mind when you’re on the lookout for a hard money lending institution:
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Lender reputation:
Research the lender’s track record, customer reviews, and industry reputation to ensure they are reliable and fair.
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Loan terms:
Fully comprehend all loan terms, including interest rates, fees, loan-to-value ratio, and repayment schedule.
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Speed of funding:
Since time is often critical, assess how quickly the lender can process and fund the loan.
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Professional advice:
Consider consulting with a financial advisor or real estate professional to help navigate the process and select the best lender for your unique needs.
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Compare multiple offers:
Don’t settle for the first lender you meet. Compare different offers to find the best terms and rates.
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Transparency:
Ensure the lender is transparent about all costs, fees, and any penalties associated with the loans.
Kiavi: Best for Fix-and-Flip Financing
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Rates & Terms
- Starting interest rate: 8.5%
- Loan-to-value ratio (LTV): 95% LTC (loan-to-cost), covering up to 100% of rehab costs, 80% ARV (after-repair value)
- Upfront fees: No upfront fees; 2% to 3% origination fee
- Term: 12, 18, and 24 months
- Credit requirement: 640
- Min and max loan amount: $100,000 to $3 million
- Prepayment penalty: Yes
- Property types: Single-family homes, attached and detached planned unit developments (PUDs), and 2-4 unit rentals
Why I Chose Kiavi
Kiavi might be the right hard money lender if you’re a fix-and-flip investor. Fix-and-flip financing and efficient loan processing are kind of its thing. With cash-to-close in as quick as 7 days, you can compete with all-cash buyers on new purchases and get started on your project right away. Its streamlined technology allows you to bypass application fees, appraisals, and income verification, making the process even smoother and making it a great choice as one of the best hard money lenders for flipping houses.
Additional Features
- Prequalification: With just a soft credit pull, real estate investors can prepare to make quick offers on any opportunities that arise.
- Flexible loan amounts: With loans up to $3 million, Kiavi can accommodate small renovations and large-scale projects.
RCN Capital: Best for Large Loan Amounts
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Rates & Terms
- Interest rate: 9.99%
- Loan-to-value ratio: Up to 90% of the purchase price, 100% of renovation cost (not to exceed 75% of ARV)
- Term: 12 & 18 months
- Upfront fees: No upfront fees. 1% to 5% origination fee
- Credit requirement: 620
- Min and max loan amount: $50,000 to $3 million
- Prepayment penalty: No
- Property types: Condo, townhouse, single-family, duplex, multiunit, mixed-use; not for owner-occupied properties
Why I Chose RCN Capital
RCN Capital is a solid option if you’re handling large-scale developments or multiple rental properties, offering up to $3 million. It determines the maximum loan value based on the loan program and the value of the real estate asset as collateral. Unlike some of the newer, more tech-savvy lenders, RCN sticks to a pretty standard application process that involves credit checks, background checks, bank statements, and property appraisals.
Additional Features
- Rehab budget builder: This tool is available to help investors analyze their investments to understand cost, risk, ROI, etc.
- Video Library: It includes up-to-date videos that offer market updates, investment tips, and motivational content.
Lima One Capital: Best for Various Investment Strategies
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Rates & Terms
- Interest rate: 9.6% to 12% interest only
- Loan-to-value ratio: 92.5% of LTC, 75% ARV
- Term: 13 to 24 months
- Upfront fees: 1% to 2.25% of the loan amount
- Credit requirement: 600
- Maximum loan amount: $3 million
- Prepayment penalty: None
- Property types: Townhouse, single-family, multiunit up to 4; not for owner-occupied properties
Why I Chose Lima One Capital
Lima One Capital has an extensive lineup of loan options, making it the best hard money lender for all kinds of investment strategies. Its fix-and-flip loans offer various financing for flipping houses, fixing to rent, and even bridge loans. It’s got you covered for rentals, new builds, multifamily properties, and short-term rentals. Plus, it gives investors a bunch of different loan terms and structures, like loan terms from 13 to 24 months, nonrecourse deals, single loans, and portfolios. Best of all, you only pay interest on what you draw, not on unused funds.
Additional Features
- Case studies: Detailed case studies on the website illustrate the strategies, financial figures, challenges, and outcomes of real-world property investments.
- Podcast: A podcast covers various topics relevant to real estate investing and provides ongoing education and industry insights in an easily accessible audio format.
Groundfloor: Best for New Investors
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Rates & Terms
- Interest rate: 7.5%
- Loan-to-value ratio: 80% to 100% of LTC, 70% of ARV
- Upfront fees: $495 evaluation fee, 2.75% to 4% origination fee (can be financed), $1,200 doc prep fee
- Credit requirement: 650
- Maximum loan amount: $75,000 to $750,000
- Prepayment penalty: None after three months
- Property types: New construction, condo, townhome, single-family, multiunits up to four
Why I Chose Groundfloor
Groundfloor is one of the best hard money lenders for first-time investors since no experience is required. It’s a national hard money real estate lender that lets you begin with smaller amounts, perfect for gaining hands-on experience in real estate financing. Since it caters to less experienced investors, it asks for higher credit scores. It also has a solid education hub with tons of videos on building wealth and managing finances. Its crowdfunding investment options are awesome for newbies who want to invest in real estate without the hassle of buying properties.
Additional Features
- Blog: A regularly updated blog provides insights, updates, and educational content related to real estate investing and personal finance.
- Debt service coverage ratio (DSCR) loans: Long-term loans are available based on cash flow generated by the property instead of loan approvals based on the investor’s income.
The Investor’s Edge: Best for 1-on-1 Project Assistance
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Rates & Terms
- Interest rate: 12% to 18% interest only, with the option to roll monthly interest payments into the final payoff statement.
- Loan-to-value ratio: 80 to 100% of LTC, 75% of ARV
- Upfront fees: $495 evaluation fee, 3% to 5% origination fee (can be financed), $1,200 doc prep fee
- Credit requirement: No minimum credit score
- Maximum loan amount: $250,000 for 100% loans, $1 million for all others
- Prepayment penalty: None
- Property types: New construction, condo, townhome, single-family, multiunits up to
Why I Chose The Investor’s Edge
The Investor’s Edge is all about creating personalized investment plans and working closely with investors on their projects. It offers free one-on-one consultations to help you determine financial goals and the best investment strategies. Beyond consultations, The Investor’s Edge team helps you identify, fund, and sell your properties. If you want one of the best hard money lenders for flipping houses, it has a variety of specialized courses on flipping homes and land—great for newbies looking to gain the necessary skills and knowledge to thrive in the market.
Additional Features
- Gap financing: A short-term loan available to investors covers the difference between the total funding needed for a project and the principal amount already secured.
- The Investor’s Edge Software: A comprehensive tool for investors to efficiently perform real estate market analysis, property valuation, and investment strategy planning.
New Silver: Best for Instant Loan Approval
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Rates & Terms
- Interest rate: 9.25% to 11.5%
- Loan-to-value ratio: 90% of LTC, 80% of ARV
- Term: 24 months
- Upfront fees: 1.25% to 3% origination fee ($3,500 minimum, can be financed), $759 underwriting fee, $1,250 legal fee, $350 doc prep fee
- Credit requirement: 650
- Maximum loan amount: $100,000 to $5 million
- Prepayment penalty: None
- Property types: Residential 1 to 12 units, including single-family, condo, and townhomes; multifamily up to 50 units
Why I Chose New Silver
New Silver is a great option for investors who are comfortable with technology, thanks to its quick, AI-based loan approval process. Investors get instant online approval in just five minutes and close in as little as five days. The loans, backed by real estate, only require a soft credit pull and an assessment of the property’s value—no income verification is necessary. The platform simplifies the whole lending process, cutting down on paperwork and speeding up the time it takes to go from application to funding.
Additional Features
- Advantage program: Enhanced loan terms and rates for repeat borrowers who have successfully completed previous projects with New Silver.
- Fintech scholarship: Initiative to support students pursuing studies in financial technology-related fields.
Frequently Asked Questions (FAQs)
What are the typical interest rates for hard money loans?
Hard money loan interest rates are usually higher than conventional bank loan interest rates and typically range from 10% to 15% or more, depending upon the lender’s view of risk, property location, and the borrower’s financial situation. The higher rates reflect the increased risk that hard money lenders take by focusing on property value over borrower creditworthiness and the speed with which they provide funds.
How quickly can I receive funding from a hard money loan?
One major advantage associated with hard money loans is that processing is very quick. Usually, the funds are available to the borrower within a week or two of applying. This is possible because the value of property is checked against extensive credit checks with financial documentation, and hence, it can be used best in urgent real estate transactions.
What are the typical financing terms of the best hard money loans?
Hard money loan terms are much shorter than most bank loans. The average term is usually six months to a few years. This duration is commensurate with common usage for such loans in quick-turnaround investments, such as fix and flips. Most hard money loans also have interest-only payments with a balloon payment at the end of the term when the property would presumably be sold or refinanced to more traditional financing.
Methodology: How I Chose the Best Hard Money Lenders
We use a methodology focused on the most critical factors to find the best hard money lenders for real estate to create an unbiased review. I reviewed various lenders against multiple key factors to ensure I viewed them through the lens of what would be most important to a real estate investor. The detailed analysis then isolated lenders that support good, solid financial solutions and blend well with various investment strategies and goals. Here are the key factors considered:
- Interest rates and loan terms: Assessed the competitiveness and flexibility of each lender’s offerings.
- Speed of loan processing and funding: Evaluated how quickly each lender processes and disburses funds, a crucial factor for time-sensitive investments.
- Lender reputation: Examined customer reviews and industry feedback to gauge each lender’s reliability and overall customer satisfaction
- Transparency: Focused on how openly each lender communicates fee structures and loan conditions, ensuring no hidden costs exist.
- Geographical coverage: Considered the availability of services across different regions to accommodate investors in various locations
- Target audience suitability: Analyzed which types of real estate investors (e.g., fix-and-flippers, buy-and-hold investors, and commercial developers) each lender best caters to based on their product offerings and specialty areas
Your Take
Finding the best hard money lender may seem overwhelming if you’re not sure where to start. Understanding terms, rates, and fees, along with your project and financial goals, will accelerate your ability to move forward with an investment. The right hard money lender will do more than just finance an investment. They’ll support your overall strategy and want to contribute to your success.
Have you worked with any of the lenders on our list?
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