I deal almost exclusively with hard money lenders, working with both borrowers and brokers to match a particular transaction with an investor. In addition, I do have access to in house funds and serve as a direct hard money lender as well. This is my business, I do conventional loans for family, friends, referrals, but my main source of business is hard money.
Hard money today is taking the place of what sub-prime used to be. The glaring difference, however, is the loan to value requirements. In today's hard money lending environment, 65% loan to value is typically the maximum you will find. I do have some San Francisco hard money sources still going to 70% in San Francisco and Marin counties, but for the most part, that is a thing of the past.
Residential hard money loans have taken on a different face than they had only 12 months ago. Gone are the days of owner occupied anything goes lending. Today, not only is the loan to value important, but it is also important that the borrower can show the ability to repay the loan. Typically there are no DTI ratios per say that need to be met, and we can get creative if the situation warrants. The benefit of working with hard money is the flexibility in underwriting. If the requested loan is truly going to help the borrower's situation, there is typically a way to document that benefit.
Non owner occupied residential hard money loans are a bit less heavy on the documentation of income. These loans are still primarily loan to value driven. The topic to touch on with non owner occupied residential is the fix and flip scenario. Unless you have excellent credit and some money in the bank, there is not much financing available that will provide 100% acquisition. I do have access to some 100% hard money programs in the San Francisco Bay Area that will use appraised value vs. purchase price, but this financing is slowly drying up, not to return until this market sees some kind of rebound.
Additionally, land loans are becoming increasingly difficult to place. In today's market, you can expect to find money for 40-50% loan to value of your land. That value can be very subjective as well. Additionally, if you are building, you can usually expect some type of fund control on any cash out for land.
Hard money commercial loans are also loan to value driven, capping out around 65% (except in the San Francisco and Marin Counties, where 70% is still realistic). The good thing about hard money commercial loans comes down to the debt coverage. Banks are pretty tight on that debt coverage number, wanting to see 1.1 - 1.25. Hard money commercial loans are more concerned about the collateral value of the commercial property, and even with a debt coverage below one, can make sense.
If you are looking for a hard money loan, please feel free to contact me for more information. We are direct lenders of funds, and I also have resources and relationships with many hard money lenders. As a hard money specialist, I can work with you to package your loan properly and help you get it funded. Feel free to contact me with any scenarios or questions.