Cleveland Hard Money Lenders: Flexible, Short-Term Loans
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Kelsey Morrison Former HomeLight EditorClose
Kelsey Morrison Former HomeLight EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers. She has seven years of editorial experience in the real estate and lifestyle spaces. She previously worked as a commerce editor for World of Good Brands (eHow.com and Cuteness.com) and as an associate editor for Livabl.com. Kelsey holds a bachelor’s degree in Journalism from Concordia University in Montreal, Quebec, and lives in a small mountain town in Southern California.
Ready to take the next step in your Cleveland real estate journey? A hard money loan could help you secure that perfect investment property, whether you’re looking to renovate a historic home in Cleveland Heights or purchase an apartment complex in The Flats. Hard money lenders in Cleveland provide the speed and flexibility required to fast-track your projects. Ideal for situations involving tight timelines or limited startup capital, hard money loans offer an effective alternative to conventional financing.
If you’re a homeowner planning to buy and sell at the same time, we’ll also detail some viable options to make the most of your home’s equity. This article will explain the basics of hard money lending in Cleveland, helping you determine if this approach suits your investing or home-buying plans.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.
What is a hard money lender?
A hard money lender is a private individual or company that provides short-term loans secured by real estate. Unlike traditional banks that emphasize a borrower’s credit history, hard money lenders in Cleveland focus on the property’s value as collateral.
These lenders serve clients such as house flippers and rental property investors, who require fast and flexible funding. Loan amounts are based on the after-repair value (ARV), the projected value of a property post-renovation. They typically lend a portion of the ARV, striking a balance between profitability and risk.
Hard money loans come with interest rates from 8% to 15% or more, and repayment terms range from 6 to 24 months. Borrowers should also account for origination fees, closing costs, and points. If a borrower defaults, the lender can foreclose on the property to recoup their investment.
How does a hard money loan work?
If you’re a real estate investor in Cleveland looking for a quick and flexible financing option, hard money loans might be your answer. Here’s a closer look at how these loans work:
- Short-term loan: Unlike the conventional 15- or 30-year mortgage, these loans are typically for 6 to 24 months.
- Faster funding option: Approval can happen in just a few days, compared to the 30 to 50 days required for traditional loans.
- Less focus on creditworthiness: Lenders focus less on your credit score and more on the value of the collateral.
- More focus on property value: These loans are secured by collateral, typically a home, and are determined by the property’s loan-to-value ratio.
- Not traditional lenders: Hard money loans come from private investors or specialized companies, not banks.
- Loan denial option: They are suitable for those who have been denied a mortgage but have significant home equity.
- Higher interest rates: Interest rates are higher due to the increased risk, often ranging from 8% to 15% or more.
- Might require larger down payments: Down payments can be as high as 20%–30% of the property’s value.
- More flexibility: Because of minimal government oversight, hard money lenders in Cleveland have the flexibility to adjust credit score and debt-to-income (DTI) criteria, which can help in avoiding foreclosure.
- Potential for interest-only payments: Some loans offer the option for interest-only payments at the beginning, easing initial costs.
What are hard money loans used for?
Hard money loans serve various unique needs in Cleveland’s real estate market. They offer fast funding and flexible terms for those who might struggle with conventional loans. Let’s explore some common scenarios where a hard money loan might be beneficial:
Flipping a house: For investors involved in flipping homes, hard money loans provide quick cash for purchasing and renovating properties. This allows them to act fast, complete renovations, and sell for a profit within a short amount of time.
Buying an investment rental property: Hard money loans are ideal for investors looking to acquire rental properties that need immediate repairs. These loans enable faster renovations, allowing landlords to start earning rental income sooner than traditional financing would.
Purchasing commercial real estate: Hard money loans are suitable for commercial real estate purchases because they are fast and flexible. They allow investors to acquire properties quickly, crucial for taking advantage of timely investment opportunities.
Borrowers who can’t qualify for traditional loans: Those with significant home equity but poor credit sometimes turn to hard money loans. These loans are based on the property’s value rather than the borrower’s credit history, providing an alternative when conventional financing is unavailable.
Homeowners facing foreclosure: Homeowners facing foreclosure can use hard money loans to refinance their debts or buy time to sell their property. This can provide a temporary pause and prevent a foreclosure mark on their credit report.
How much do hard money loans cost?
Hard money loans generally cost more than traditional loans due to the higher risk and faster access to funds. Here are some of the typical costs involved:
- Interest rates: These can range from 8% to 15%, depending on the lender’s risk assessment.
- Origination fees: Lenders may charge 1% to 5% of the total loan amount as an origination fee.
- Closing costs: Additional fees at closing can include legal, appraisal, and administrative costs.
- Points: Lenders might charge points upfront, which are a percentage of the loan amount.
Using online calculators can help estimate these costs.
Alternatives to working with hard money lenders
Homeowners looking to tap into their home’s equity have several financing alternatives. Here are a few worth considering:
Take out a second mortgage: A home equity loan or home equity line of credit (HELOC) can provide necessary funds at lower interest rates compared to a hard money loan.
Cash-out refinance: Refinancing an existing property allows you to pull out cash for new investments, usually at lower rates than hard money loans.
Borrow from family or friends: Loans from family or friends often come with flexible terms and little to no interest, making them a cost-effective option.
Use a government-backed loan program: Programs like those from the FHA, VA, or USDA provide assistance with lower down payments and reduced interest rates.
Peer-to-peer loans: These loans are funded by individual investors through platforms such as Funding Circle, and they function similarly to hard money loans.
Specialized loan programs: These programs cater to specific needs, like fixer-uppers or refinancing existing investment properties.
Request a seller financing option: Sellers might agree to finance the purchase themselves, leading to lower closing costs and easier qualification criteria.
How to buy before you sell
The house of your dreams could hit the market when you least expect it, whether it’s a historic bungalow in Detroit-Shoreway or a downtown loft in a converted warehouse. For Cleveland homeowners wanting to buy a new home before selling their current one, HomeLight offers an innovative solution that simplifies the process.
HomeLight’s Buy Before You Sell (BBYS) program allows you to tap into your home’s equity to make a stronger, non-contingent offer on a new property. If your home qualifies, you can have your equity unlock amount approved within 24 hours, with no cost or commitment required. Once approved, you can confidently purchase your new home and sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
Though there’s a 2.4% flat fee based on your home’s sold price, the potential savings in other areas might more than make up for this cost. For example, you might save on moving expenses, temporary housing, and potentially the final purchase price of your new home. Plus, HomeLight’s BBYS fees are often significantly lower than the interest rates on bridge loans, which are currently between 9.5% and 12%.
3 top hard money lenders in Cleveland
Conventional lenders may not suit every real estate investment. If you need to act fast and make the most of an opportunity, hard money lending options in Cleveland could be the answer.
Secure Lending, Inc.
Secure Lending, Inc., based in Cleveland, has been in business for nine years. The company provides a variety of commercial loan programs, including fix-and-flip, fix-and-hold, bridge loans, office building loans, and ground-up construction loans for builders. Hard money loan amounts typically range from $75,000 to $3 million and are only available to businesses, not individuals. Investors must provide an exit plan and meet minimum credit score requirements. The company is licensed in 19 states, including Ohio.
Lending clientele: Residential and commercial real estate investors, plus developers
Loan criteria: Up to 90% LTV (fix-and-flip and fix-and-hold), up to 85% LTC (new construction)
Secure Lending, Inc. touts a 4.5-star rating on Google based on over 100 reviews. They are also accredited by the Better Business Bureau (BBB) and hold an A+ rating. “Secure lending is definitely one of my preferred lenders for both investors and first-time buyers,” wrote one reviewer. “I highly recommend their services. They can work with individuals in many financial situations.”
800-705-4308
Tidal Loans
Texas-based Tidal Loans services 45 states, including Ohio. Founded in 2016, this private direct lender boasts over 50 years of combined experience in real estate investing. They provide a range of residential hard money loan options, such as fix-and-flip, new construction, rental property, multi-family, commercial, and vacation rental loans. The company specializes in lending on single-family and multi-family residential properties intended for investment purposes. Once the required documentation is submitted, Tidal Loans can often close a loan by the next business day.
Lending clientele: Residential and commercial real estate investors
Loan criteria: Up to 70% of the ARV
Tidal Loans boasts a 4.9-star rating on Google based on over 70 reviews. Clients consistently commend the staff for their professionalism, dedication, and responsiveness. “The staff was fantastic to work with,” reads a recent review. “The loan application and funding process deserves 5 stars. We have even recommended them to others and will continue to do so.”
832-757-1262
The Hard Money Co.
Based in Milwaukee, The Hard Money Co. operates in 13 states, including Ohio. They serve real estate investors and do not offer personal loans or loans for primary residences. Loans can be funded within seven to 10 days, featuring six-month terms with a 15% interest rate. The Hard Money Co. is willing to work with investors of all experience levels, particularly flippers and those renovating rental properties.
Lending clientele: Residential real estate investors
Loan criteria: Up to 65% ARV
The Hard Money Co. maintains a 4.7-star Google rating from over 80 reviews. Reviewers highlight the staff’s professionalism, prompt service, and expert guidance. “Shelly Trotter was simply amazing to work with!” shared a client. “Her professionalism, sense of urgency, efficiency, and knowledge of the business truly speak volumes about her passion and drive for this business.”
414-269-5300
Investing in real estate?
Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.
Should I partner with a hard money lender in Cleveland?
Deciding on a hard money loan in Cleveland should be based on your financial situation and investment plans. Hard money loans are most beneficial for real estate investors who need quick access to capital and are willing to accept higher costs and shorter repayment terms. They work well for projects with tight timelines or when traditional loans are not an option. If you fit this profile, reaching out to a hard money lender in Cleveland could be the right move for your next investment.
For homeowners seeking to leverage their equity, consider HomeLight’s Buy Before You Sell program. This alternative allows you to avoid high interest rates and pay a small flat fee, making your offer more attractive and easing the moving process.
Always factor in your long-term strategy and consult a financial advisor before making major financial decisions. If you need to connect with experienced real estate agents in Cleveland, HomeLight can help you find professionals who have access to reputable hard money lenders.
Header Image Source: (photovs / Deposit Photos)
- "What is ARV and how is it calculated?," Rehab Financial Group
- "What Is Loan-to-Value and Why Does it Matter?," U.S. News (March 2024)
- "Why Do Hard Money Lenders Require A Down Payment?," RCN Capital
- "What Are The Costs Involved In A Hard Money Loan?," Northwest Private Lending
- "Bridge Loan Rates: Current 2024 Interest Rates," Vaster (October 2023)
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