Hard Money Lenders
Level 4 Funding
Level 4 is a direct lender that seems to focus on consumers in Arizona and Texas. Per their site you can get a written approval in 24-48 hours with funding in a matter of days. Interest rates will start in the high 7’s and you can expect a payoff term of 2 months to 4 years. The specialize in trust deed investing and commercial finance loans. They claim to have provided over 30 million to applicants over the past few years.
Equinox Home Financing
Equinox offers same day approvals on hard money loans in California. They claim a 3 business day funding window once the loan file is complete with interest rates that start at around 8%. Equinox has no limits when it comes to the amount of properties you own and past bankruptcies or foreclosures shouldn’t be an issue. They can fund private money loans in California of up to $50 million.
North Coast Financial
North Coast has been providing hard money loans in California since the early 80’s. They’re based in San Diego, but they work with borrowers all throughout the state. Per their website they focus on fix and flip, investment property, and bridge loans. In additional to residential funding they can also handle commercial deals. North Coast will also consider funding owner occupied loans in the right situation.
Civic is a direct lender located in Southern California. They primarily provide fix and flip as well and buy & hold loans. They claim to have fast processing times as they do all underwriting in house and handle all appraises. Applicants will need to show at least 5 months of interest payment reserves and a sufficient down payment. Civic has no FICO or credit requirements and they also lend to LLC’s.
Equity Wave Lending
Equity Wave has been in business since the early 90’s and they claim to have lent well over 3 billion dollars. They’re primary focus is in California and they provide private real estate loans on any type of property from $100k to over $2,000,000. Per their website, Equity has one of the fastest processing times in the State and they can have money available in 1-2 weeks for approved loans. They also have an interesting finance program that’s geared towards foreign nationals who may not have an established FICO or Social Security information
ARC Capital is a California private money lender that claims to have over 350 investors that will provide funds for your lending needs. They’ve been in business since 2007 and feature a wide variety of financing options. Besides their California hard money loans, they also provide commercial financing and non owner occupied funding. Arc specializes in funding for California residents but they also provide services in many western states.
HLM is a direct private money lender that specializes in hard money loans and trust deed investments. They currently serve the states of Nevada and California and handle direct loans that range from about 100k to well over 5 million. Interest rates will range from 8-12% and they claim that foreclosures and bankruptcies won’t be an issue. Their primary focus is on non owner occupied properties.
The Norris Group
The Norris Group is a longtime leader in offering California Hard Money Loans. They claim to provide millions of dollars a month to clients all throughout the State of California. Their loan options range from tradition 1 year rehab flip loans with interest rates at around 10% to build to flip loans that come with an LTV of up to 65% of future value. The Norris Group also provides rental refinance programs that carries a term of 3 years.
PB Financial Group
PB Financial has provided direct funding in California for over a decade with well over 1000 loans funded. They claim to look past an applicant’s past credit issues and instead focus on the properties equity and repayment qualifications. Their hard money loans range from $30,000 to $3 million plus, with rates that start at about 8%. They may be able to finance your project even if there’s an active foreclosure or bankruptcy.
Evoque specializes in all types of residential and commercial lending with a focus on California private money lending. They’ve been in business for over 14 years and specialize in the Southern California market. Poor credit is not an issue with their hard money program and you can expect a window of 8-11 days to close a loan. Rates will vary with each independent lending circumstance and you can borrow up to 60% of current equity.
What is a hard money loan and why would I need one?
Hard money loans can go by a few different names. They are called private money loans and bridge loans. All these different names refer to the same specific type of loan that is secured by real property. Most companies require this property to be income generating. These loans are often issued by private companies and unaffiliated investors. As you can expect, the rates are higher with this type of financing when compared to traditional types of mortgage and real estate loans. Most lenders listed here claim to provide interest rates that average anywhere between 7 and 12%. These rates depend on a variety of factors that include the amount of collateral and ability to pay back the loan. While these rates are high, they represent the risk that's being taken on by private investors who are willing to lend their own funds. Private money loans will typically mature in a much shorter period of time as well, often a few months to a year at most. All large private lenders will have rates that fall within certain parameters. Most loan programs are consistent as well.
In an ideal situation you won't need to seek out hard money lenders. The vast majority of real estate borrowers will go with a traditional lender that affords them low rates and more favorable payment terms. This type of financing is for consumers that need cash quickly. Perhaps they don't want to deal with the traditional application loan process. Or there are issues that preclude them from getting a conventional loan. These issues could include lack of income or poor credit. With a hard money loan the emphasis is on the overall collateral. Most direct lenders focus on the total property value and down payment. Everything else is secondary. Another benefit of private cash loans is that they can bridge the gap between traditional financing. That's why you hear the term online bridge loans. Sometimes a traditional source of funding is not enough to secure the amount of financing you need. A bridge loan or private cash financing get you over the top.
There are hundreds of companies all throughout the country that provide direct loans. To save time and speed up the process it's important to understand a few things. You need to find a hard money lender that provides direct loans in your state. The last thing you want to do is find a company that fits your needs. Only to submit information and find out they don't provide funding in your state. With our list of private money lenders we break down which states each lender provides financing in. Another thing to consider is what the specific loan amounts are that each company offers. How much funding are you looking for and what are your preferred terms? Be sure your needs line up with what your specific lender can provide. Also be sure your collateral is sufficient to secure the private money financing. Remember this is private money not backed by a bank or traditional mortgage company. This type of financing is unique and often backed by real estate investors, not big banks. With an asset based loan, you will see a much quicker underwriting process as you're bringing collateral to the table in case of default. Each company has quirky rules that may disqualify you from being approved. We do our best to point out specific issues or restrictions for each lender in our list.
Answers From Our Experts
Most of these loans are issued by private investors. They can be a group of people pooling money together looking for a nice return on investment or a company that simply specializes in private money lending. One thing to remember with this type of funding is that private money lenders aren't backed by a bank or mortgage company. They're putting up large sums of cash and each lender has their own restrictions and rules when it comes to the qualification process. Some lenders can get you approved within one business day, the downside is always the fact that you will pay more in finance charges.
When looking for a lender that suites your needs make sure they are licensed and regulated to provide private funding in your state. Even though these online loans aren't provided by mortgage companies and big banks they still need to be licensed. Working with a licensed provider of online bridge loans will ensure that your protected by regulations and rules of your state. Be sure to look for the individual lender's licensing information If you're submitting your application online.
People use hard money loans because they need funding quickly. The lending environment in California is very crowded and companies will fight for your business to close a loan quickly. Unlike traditional mortgage financing, there's not a traditional underwriting process that takes weeks and sometimes months. Most private money loan companies want to make sure you have adequate collateral available in case the loan defaults. There's less emphasis on your credit report and past credit issues. As long as you have adequate income coming in from your property you should be in good shape and see a closing time that stretches out over a period of days instead of weeks. Applicants turn to hard money lenders because of benefits like a quick closing time. They know the rates will be higher and terms less favorable, but sometimes this is what you need to get fast cash.
While most companies can typically process a hard money loan in days instead of weeks they will often still need an inspection. We often see less emphasis placed on a physical inspection when talking about private investor funding. Often, inspection records and 3rd party appraisals can be sufficient in terms of a lengthy physical inspection. As with most types of financing, each company will have different terms and requirements to fund loans. While many aspects of the funding process can be done online, there are still some things required in person. A California lender require the applicant to pay for the property inspection before all documents are submitted for processing. Check with your lender to determine if a physical property inspection is required in their lending process.
Online lenders in California will work with a variety of properties and projects as long as they know there is a deal to be done and profit to be made. Some companies focus primarily on single family residential loans only. Others are more diversified and handle large scale projects like commercial buildings and land projects. There are also loans available for fix and flip and rehab projects. It all comes down to the lender wanting to know that money will be made on the initial financing. There are dozens of other uses for hard money loans that we won't even list here. Don't hesitate to ask if you have a project that's outside the box. Most online companies are looking to lend and will work you to finance most projects.
By this point you should already know that rates on hard money loans in California are high. While most traditional mortgage companies charge rates of 3-4%, a private money lender will often be at 7-10% depending on the risk involved. There's also the upfront points to take into consideration. California companies will often assess points that are 2-3 points higher than what you typically see. Even though the rates are often at 7-10% they can quickly climb into the teens for riskier deals. We've seen rates approaching 20% here in California for high risk commercial property loans. Often in situations like these the lender and applicant agree there is significant risk and the fees are set accordingly by the private money lenders.
That's one good thing about hard money lending. Good credit is not a necessary component of what you need to qualify with most online lenders that provide these private loans. The rates are high because these companies aren't judging your creditworthiness on past credit issues or foreclosures. Most people who apply online will have already sent off their apps to traditional mortgage lenders. These lenders will often deny them for funding because of low credit scores and past bankruptcies or foreclosures. As mentioned above, hard money lenders want to know that there is collateral backing the loan. As long as they see money flowing in in the form of rent or other payments they will be more comfortable to fund the loan. Lenders will want to make sure there is enough equity and money available to offset the risk of the borrower missing payments and defaulting on the loan.
Simply put a hard money loan occurs when someone puts up money for a real estate project. These types of projects can be single family homes or large commercial properties. We often refer to hard money lenders as private money lenders as they're essentially the same thing. With this type of funding, you're not relying on a bank or commercial funder to provide funds for a project. Most of the online companies shown in our listing are smaller non bank organizations that rely on funds from private individuals. There are also companies in California that rely on funds from groups of people that pool their money together. They do this to see a higher rate of return that what would be typical with traditional investments.