Hard Money Lenders Denver: Quick Funding Options

Published on July 25th, 2024
11 min read

Joseph Gordon Editor
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Joseph Gordon Editor

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Joseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.

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Denver’s competitive real estate market offers numerous opportunities for investors and homeowners. Whether you’re looking to flip a property in Highland or invest in a rental in Five Points, choosing the best way to finance your investments is key. One option worth exploring is a hard money loan, known for its flexibility and quick approval process, ideal for the fast-paced Denver market.

In this guide, we will dive into the specifics of hard money loans in Denver. From the basics of what hard money lenders offer to a detailed look at alternative financing options, we’ll equip you with the information needed to make informed decisions about your real estate investments.

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 provides short-term loans secured by real estate. They cater primarily to house flippers and rental property investors. Unlike traditional lenders, hard money lenders focus on the property’s value rather than the borrower’s credit score. They determine loan amounts based on the after-repair value (ARV), which is the property’s estimated value after renovations.

Interest rates for hard money loans are typically higher than traditional loans due to the increased risk and convenience of fast funding. Hard money loan interest rates usually range from 8% to 15% or more, and repayment periods are shorter, usually between 6 and 24 months.

Additional costs can include origination fees, closing costs, points, and a percentage of the loan amount paid upfront. As with any secured loan, failure to repay a hard money loan can result in the lender seizing the asset, such as a house, to recover their investment.

How does a hard money loan work?

Hard money loans offer a unique financing solution tailored to Denver’s competitive market. Here’s a breakdown of how these loans work:

Short-term loan: Typically lasts between 6 months to 3 years, perfect for quick turnarounds.
Faster funding option: Often approved and funded within a few days, unlike traditional mortgages that can take 30 to 50 days.
Less focus on creditworthiness: Approval depends more on the property’s value than your credit score.
More focus on property value: Lenders assess the property’s loan-to-value ratio.
Not traditional lenders: Private investors or companies, not banks, typically provide these loans.
Loan denial option: Lenders may refuse if the property doesn’t meet their criteria or the project appears too risky.
Higher interest rates: Rates can range from 8% to 15% or more due to the risk involved.
Might require larger down payments: Often 20%–30% of the property’s value.
More flexibility: Terms can be negotiated directly with the lender, offering tailored solutions.
Potential for interest-only payments: Some loans allow for lower initial payments, focusing on interest-only until the end of the term.

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What are hard money loans used for?

Hard money loans can be a versatile tool for various real estate needs:

Flipping a house: Perfect for flipping homes, providing quick funds for renovations.
Buying an investment rental property: Investors use these loans to quickly secure rental properties.
Purchasing commercial real estate: Ideal for acquiring and renovating commercial spaces.
Borrowers who can’t qualify for traditional loans: Provides an option for those with less-than-perfect credit or unusual income sources.
Homeowners facing foreclosure: A solution for homeowners looking to avoid foreclosure by tapping into their home equity for necessary funds.

How much do hard money loans cost?

Hard money loans generally cost more than traditional loans due to the higher risk for lenders and the convenience of quick, flexible funding. Typical costs include:

Interest rates: 8% to 15% or higher, based on the assessed risk.
Origination fees: 1% to 5% of the loan amount.
Closing costs: Legal, appraisal, and administrative fees.
Points: A percentage of the loan amount charged upfront.

Online calculators can help estimate these costs.

Alternatives to working with hard money lenders

If you’re considering alternatives to hard money loans, here are some options:

Take out a second mortgage: Consider a home equity loan or HELOC.
Cash-out refinance: Refinance an existing property to pull out cash.
Borrow from family or friends: Often offers more flexible terms and lower costs.
Use a government-backed loan program: Programs like FHA loans can provide lower rates.
Peer-to-peer loan: Online platforms offer loans from individual investors.
Specialized loan programs: Explore options for specific needs like fixer-uppers.
Request a seller financing option: Some sellers may finance the purchase directly.

How to buy before you sell

HomeLight’s Buy Before You Sell program simplifies the process of buying a new home before selling your current one. This program allows you to make a competitive offer on your next home without the contingency of selling first. By covering the costs of your new home upfront, HomeLight helps you avoid the stress and uncertainty of timing both transactions perfectly.

The program offers several benefits:

Move into your new home before selling the old one.
Avoid double moves or temporary housing.
Gain more control over your selling timeline.

Here’s how it works:

Although there’s a flat fee of 2.4% of your current home’s sold price, the potential savings you could see in other areas might outweigh the cost. For example, you might save on moving expenses, temporary housing, and even the final purchase price of your new home. On top of that, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.

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A home that is building equity for its owners.

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3 top hard money lenders in Denver

Traditional lenders might not be the solution for every real estate investment. If you want to move quickly and capitalize on an opportunity, explore the hard money lending options in Denver.

Colorado Hard Money

Colorado Hard Money is a private money lender in both commercial and residential sectors. Operating for over 25 years, the company leverages the collective expertise of partners who have amassed over 100 years of commercial real estate lending since 1975.

Lending clientele: Real estate investors

Loan criteria: 60% maximum LTV

Colorado Hard Money has a 5 star rating on Google. One review stated, “This lending business should be described as a counseling service. Great honest advice even if they have nothing to gain.”

coloradohardmoney.com

303-963-9251

Hard Money Mike

Hard Money Mike is a personalized lending service tailored specifically for real estate investors. This lender prides itself on offering a human touch, ensuring clients communicate directly with a live person.

Lending clientele: Real estate investors, fix and flips

Loan criteria: Up to 100% of purchase and 100% of rehab

Hard Money Mike has a 4.8-star Google rating based on 39 reviews. Past clients have praised them for their service and expertise, and several clients commend the loan process as painless and smooth.

hardmoneymike.com

303-539-3000

Montegra Capital Resources

Montegra Capital Resources, LTD aims to offer lending services that traditional banks and institutional lenders could not offer the creative and practical funding solutions that commercial real estate investors require.

Lending clientele: Real estate investors

Loan criteria: Up to 65% LTV

Montegra Capital Resources has a 4.2-star Google rating based on 6 reviews. Past clients commend them for their professionalism and honesty.

montegra.com

720-893-8807

Should I partner with a hard money lender in Denver?

Deciding whether a hard money loan is right for you depends on your goals and circumstances. These loans are best suited for real estate investors who need quick access to capital for projects like house flipping or acquiring rental properties. They offer speed and flexibility but come with higher costs and risks.

For homeowners looking to leverage their equity without the higher costs of a hard money loan, consider HomeLight’s Buy Before You Sell program. This option allows you to buy a new home before selling your current one, giving you the convenience and financial flexibility needed in Denver’s competitive market. Explore all your options and choose the one that aligns best with your needs.

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