Hard Money Lenders Fort Lauderdale: Quick Funding Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Thinking about financing your next real estate venture in Fort Lauderdale? You might have heard about a hard money loan as a quick funding option. Whether you’re looking to flip a property or invest in rental homes, understanding how hard money lenders work can save you time and stress.
Hard money loans offer an alternative to traditional financing, focusing more on property value than credit scores. These loans can be particularly appealing in a competitive market like Fort Lauderdale, where speed and flexibility are essential.
Here’s everything you need to know about hard money lenders and how they can help you secure the funds you need.
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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 primarily used for real estate investments. Their clients typically include house flippers, rental property investors, and developers who need quick financing. Instead of relying on a borrower’s credit score, hard money lenders determine loan amounts based on the after-repair value (ARV) of the property.
The ARV is the estimated value of a property after renovations. Hard money loans come with higher interest rates and fees compared to traditional loans, usually ranging from 8% to 15%. If a borrower fails to repay the loan, the lender can foreclose on the property, making these loans a high-risk, high-reward option for real estate investors.
How does a hard money loan work?
If you’re a real estate investor looking for a financing option that provides speed and flexibility, connecting with hard money lenders in Fort Lauderdale could be beneficial. Here’s a quick rundown of how hard money loans work:
- Short-term loan: These loans usually have a repayment period of 6–24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders may extend the term up to 36 months if needed.
- Faster funding option: When you need to close a deal quickly, hard money loans can be approved within days, compared to the 30 to 50 days typical for a mortgage loan.
- Less focus on creditworthiness: Approval relies less on your credit score or income history and more on the property’s value.
- More focus on property value: These loans require collateral, such as a home, and are based on the loan-to-value ratio of the property.
- Not traditional lenders: Individual investors or private lending companies usually provide hard money loans, not traditional banks.
- Loan denial option: These loans are often used by those with poor credit who have been denied a mortgage but possess significant home equity.
- Higher interest rates: Due to higher risk, these loans have higher interest rates than traditional mortgages.
- Might require larger down payments: Borrowers may need to provide a larger down payment, sometimes up to 20%–30%, depending on the property’s value and loan specifics.
- More flexibility: With less government regulation, hard money lenders in Fort Lauderdale can set flexible credit scores and debt-to-income (DTI) criteria, and loans can help avoid foreclosure.
- Potential for interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially.
What are hard money loans used for?
Hard money loans can be utilized in various scenarios, making them a versatile option for real estate investors.
- Flipping a house: Ideal for investors looking to buy, renovate, and sell homes quickly, taking advantage of Fort Lauderdale’s robust real estate market. Flipping homes often require fast and flexible funding to maximize profits.
- Buying an investment rental property: Useful for acquiring properties that can generate rental income in desirable areas. Rental properties need quick funding to secure deals in competitive markets.
- Purchasing commercial real estate: Provides the necessary funds to secure commercial properties that might be challenging to finance through traditional means. Renovations and improvements on these properties can increase their value and profitability.
- Borrowers who can’t qualify for traditional loans: Helps those with poor credit or unconventional income sources obtain financing. Hard money loans focus on property value rather than credit scores, making them accessible to a broader range of borrowers.
- Homeowners facing foreclosure: Offers a lifeline for homeowners needing quick funds to avoid foreclosure and secure their property’s equity. Utilizing a hard money loan can prevent foreclosure and provide time to stabilize finances.
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 risk assessment.
- 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 hard money loans aren’t right for you, here are some alternatives to consider:
- Take out a second mortgage: A home equity loan or HELOC can provide funds at a lower interest rate.
- Cash-out refinance: Allows you to refinance an existing property, pulling out cash for new investments.
- Borrow from family or friends: Personal loans from loved ones can offer flexible terms and potentially lower or no interest rates.
- Use a government-backed loan program: FHA, VA, or USDA programs can assist with lower down payments and reduced interest rates.
- Peer-to-peer loan: Provided by individual investors through platforms like Funding Circle.
- Specialized loan programs: Consider loans for fixer-uppers or investment property refinancing.
- Request a seller financing option: Sellers may finance the purchase, resulting in lower closing costs and less stringent requirements.
How to buy before you sell
HomeLight’s Buy Before You Sell program offers a solution for those looking to buy a new home before selling their current one. This program allows you to make a competitive cash offer on your new home, moving at your own pace without the pressure of aligning closing dates.
The benefits of this program include avoiding the stress of temporary housing, reducing the need for contingent offers, and giving you the time to sell your existing home for its full market value. Costs are transparent and competitive, typically ranging from 9.5% to 12% interest rates.
The Buy Before You Sell (BBYS) program allows you to leverage the equity in your existing home to make a stronger, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved in 24 hours or less, with no cost or commitment required. Once approved, you can confidently purchase your next home and then sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
3 top hard money lenders in Fort Lauderdale
Traditional lenders might not be the solution for every real estate investment. If you’re looking to move quickly and capitalize on an opportunity, explore the hard money lending options available in Fort Lauderdale.
Benworth Capital
Benworth Capital, established in 2008 amidst the global financial crisis, offers an alternative financing source to traditional banks. Benworth specializes in private, or hard money loans, focusing on real estate’s significant role in economic stability and personal wealth.
Lending clientele: Real estate investors, homeowners, and international borrowers
Loan criteria: Up to 65% LTV
Benworth Capital has a 4.7 star Google rating based on over 2,000 reviews. Reviewers praise Benworth Capital for transparency and flexibility.
305-676-9632
Hard Money Lenders IO
Hard Money Lenders IO is a private lending company based in Florida. It specializes in real estate loans for investors and entrepreneurs. Established to cater to professional investors, the company offers business-purpose loans exclusively for non-owner-occupied real estate investments.
Lending clientele: Real estate investors and entrepreneurs
Loan criteria: 75% loan to ARV
Hard Money Lenders IO has a 4.9 star rating on Google, based on 22 reviews. Past clients commend Hard Money Lenders IO for providing a smooth and easy process, with loans being delivered in less than 2 weeks.
786-475-7691
GoKapital
GoKapital is recognized as one of the leading private hard money lenders in the United States, offering specialized mortgage solutions tailored for both seasoned and novice real estate investors.
Lending clientele: Real estate investors and entrepreneurs
Loan criteria: Up to 75% LTV and 100% of renovation costs
GoKapital has a 4.4 star rating on Google based on 40 reviews. Previous clients praise them for their professionalism and reliability.
886-257-2973
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 Fort Lauderdale?
A hard money loan might be right for you, but it depends on your financial situation and investment goals. These loans are best suited for real estate investors who need quick, short-term financing for projects like flipping homes or purchasing investment properties.
If you’re a homeowner in Fort Lauderdale looking to leverage your home’s equity, consider HomeLight’s Buy Before You Sell program as a flexible alternative.
This program allows you to buy your new home before selling your current one, providing the convenience and peace of mind that traditional loans may not offer. Visit HomeLight to explore your options.
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