No one offers instant hard money loans, but compared to the time it takes to obtain conventional financing, it may seem like an “instant". For real estate projects, such as rehabbing, it will take a commercial bank at least a month to hand you a check, usually longer. Private lenders can get you your money in half that time.
Two weeks is the average turn around time for private lenders. That's perfect timing if you are about to bid on a foreclosure or an estate sale. That's about how long the trustees usually give you to pay the balance. Bankers may be keeping longer hours, but they still don't work that fast and with the economy the way that it is right now, they are denying as many loans as they approve. It often takes two weeks just to get a “sorry we can't help you".
There are no instant funding hard money loans, because anytime that you want to borrow a large amount of money, a process has to be completed. Credit card companies might offer instant approval for a few thousand dollars, but that approval is based solely on your credit score. Your credit score alone is not enough to convince a lender that you are a good risk and a few thousand dollars will not help you buy or build a house.
In addition to your creditworthiness, hard money lenders will want to look at your income, your employment history and your experience. They will also want to know that you have a plan. They say that no one plans to fail, but many fail to plan. In the world of real estate investing and rehabbing, planning is extremely important. If you skip the background work, then you may end up with a property that you cannot sell, rent or repair and of course, that means that you probably cannot repay the loan. If you get everything lined up properly, there should be no need for instant hard money loans.
Rehabbers, for example, start by looking for a property that “needs work". They check out the house, check out the neighborhood, determine what repairs will cost, determine what the “after repair value" will be and then make an offer to the seller. A small deposit will usually be enough to hold the property for a few days. If you get approval from the right financer, you can get a proof of funds letter, so the seller has no reason to look elsewhere for a buyer. If you get pre-approval, you can close the deal within two weeks, so you won't lose a motivated seller. So, while there may be no such thing as instant hard money loans, there are ways to get funding fast.
Remember, if someone promises you instant funding hard money loans , they're probably not telling you the truth. You can get money relatively quickly, but it will always take at least a couple of weeks.
James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Lending , a comprehensive resource for those looking to secure funding for real estate projects.