Hard Money Lenders Indianapolis: Secure Your Next Deal
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Kelsey Morrison Former EditorClose
Kelsey Morrison Former EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers with 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.
Looking to up your real estate investment game in Indianapolis? Hard money loans could be your ticket to faster funding and flexible terms. Whether you’re eyeing a fixer-upper in Fountain Square or planning to renovate a commercial property near Mass Ave, understanding how hard money loans work can be crucial. These loans focus more on the value of your property than your credit score, making them accessible to a wider range of buyers.
In this article, we’ll explore the ins and outs of hard money lending in Indianapolis, from loan structures to costs, and introduce some top lenders in the area. We’ll also discuss alternatives for homeowners needing to bridge the gap between buying and selling a home. By the end, you’ll be able to determine whether this financial strategy aligns with your real estate goals.
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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?
Hard money lenders are private investors or companies that offer short-term, real estate-backed loans. Unlike traditional lenders, they focus on the value of the property being used as collateral rather than the borrower’s credit score. Their primary clients include house flippers and rental property investors who need fast access to funds and flexible lending terms.
These lenders use after-repair value (ARV) — the projected value of a property post-renovation — to set loan amounts. Typically, they lend a percentage of the ARV to secure their investment. Interest rates on hard money loans are higher, often between 8% and 15%, with additional costs like origination fees and points. If a borrower defaults on the loan, the lender can take possession of the property to recoup their funds.
How does a hard money loan work?
If you’re seeking a flexible and speedy financing option in Indianapolis, hard money loans might be the perfect solution. Here’s a brief overview of how they work:
- Short-term loan: These loans typically have repayment periods of 6–24 months, much shorter than the conventional 15- or 30-year mortgage terms.
- Faster funding option: Hard money loans can be approved within days, unlike traditional mortgage loans, which can take 30 to 50 days to process.
- Less focus on creditworthiness: Approval is less dependent on your credit score and more on the value of the property.
- More focus on property value: Loans are based on the loan-to-value ratio of the property, using the property as collateral.
- Not traditional lenders: These loans are provided by private investors or lending companies rather than traditional banks.
- Loan denial option: They are a popular choice for those with poor credit who have been denied a mortgage but have significant home equity.
- Higher interest rates: Due to the higher risk, hard money loans come with higher interest rates compared to traditional mortgages.
- Might require larger down payments: Borrowers might need to make a larger down payment, sometimes up to 20%–30%.
- More flexibility: Less regulation allows for flexible debt-to-income criteria and can help some homeowners avoid foreclosure.
- Potential for interest-only payments: Select hard money loans offer the option of interest-only or deferred payments initially.
What are hard money loans used for?
Hard money loans meet particular financing needs in the Indianapolis real estate market. They are often sought by investors who need quick access to funds or face challenges in securing traditional bank loans. Ahead, we’ll explore the common uses of hard money loans:
Flipping a house: Indianapolis house flippers often rely on hard money loans to quickly purchase and renovate homes. These loans provide rapid access to funds, allowing investors to compete in competitive markets and complete renovations for a profitable resale.
Buying an investment rental property: For those looking to buy rental properties, hard money loans offer a way to quickly acquire and repair properties. Investors can perform necessary renovations and start earning rental income sooner than with conventional financing.
Purchasing commercial real estate: Hard money loans are highly favored in commercial real estate for their speed and flexibility. They allow investors to act quickly on opportunities, making sure they don’t miss out on lucrative deals due to lengthy loan approval processes.
Borrowers who can’t qualify for traditional loans: Those with substantial home equity but poor credit may find hard money loans easier to acquire. These loans emphasize the property’s value over the borrower’s creditworthiness or income history.
Homeowners facing foreclosure: To avoid foreclosure, homeowners might use hard money loans to refinance or buy more time to sell their property. This approach can help them maintain ownership or at least avoid the negative impact of foreclosure on their credit score.
How much do hard money loans cost?
Hard money loans come with higher costs due to the quick access to funds and greater risk for lenders. Here are some of the common costs:
- Interest rates: Typically range from 8% to 15%, depending on the risk level.
- Origination fees: These fees are usually 1% to 5% of the loan amount.
- Closing costs: You may encounter additional fees like legal, appraisal, and administrative charges.
- Points: Points, a percentage of the loan, are typically charged upfront and range from 2% to 5%.
You can use online calculators to estimate your hard money loan costs.
Alternatives to working with hard money lenders
If you’re looking for alternatives to hard money loans, consider these options that might better suit your financial needs:
Take out a second mortgage: Access your home’s equity through a home equity loan or HELOC, which often come with lower interest rates compared to hard money loans.
Cash-out refinance: Refinancing your existing property can provide cash to fund new investments, usually at lower interest rates than hard money loans.
Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower interest rates, making them a more budget-friendly choice.
Use a government-backed loan program: Government programs like FHA, VA, or USDA loans help with lower down payments and reduced interest rates.
Peer-to-peer loans: These loans, available through platforms like Lending Club or Prosper, operate similarly to hard money loans but often feature different terms.
Specialized loan programs: Explore specialized loans for fixer-uppers or refinancing investment properties if you need to replace an existing hard money loan.
Request a seller financing option: Occasionally, sellers may agree to finance the purchase themselves, offering lower closing costs and looser eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing appears out of the blue. It might be a lovingly restored Victorian in the Old Northside or a luxury condo in a converted Methodist church. If you’re looking to buy a new home before selling your current one, HomeLight’s Buy Before You Sell (BBYS) program can provide a seamless solution.
The program allows you to use the equity in your existing home to make strong, non-contingent offers on new properties. If your home qualifies, you can get your equity unlock amount approved within 24 hours, with no upfront costs or commitments required.
Here’s how HomeLight Buy Before You Sell works:
The BBYS program charges a flat fee of 2.4% of your current home’s sold price. Despite this, the savings on moving costs, temporary housing, and potentially securing a better deal on your new home can make it worthwhile. Plus, HomeLight’s BBYS fees are generally lower than bridge loan interest rates, which typically range from 9.5% to 12%.
3 top hard money lenders in Indianapolis
Traditional lenders offer stability, but their approval processes can be drawn-out. If you need to close quickly, hard money lenders in Indianapolis are perfect for time-sensitive real estate deals. Here are three top-rated options:
CPL Investments
Located in Carmel, CPL Investments is a hard money lender catering to Indianapolis and its neighboring areas. Over the past decade, they have successfully completed more than 500 real estate transactions. They provide three primary lending services for real estate investors: fix-and-flip loans, short-term loans, and new construction loans. CPL Investments can close loans in just a few days, with approvals lasting for 365 days.
Lending clientele: Residential and commercial real estate investors and developers
Loan criteria: Up to 60%–65% of ARV
While CPL Investments isn’t accredited by the Better Business Bureau (BBB), the company holds an A+ rating. They also boast a 5-star rating on Google. Past clients commend their excellent customer service, quick response times, and commitment to finding solutions that benefit all parties involved. “I enjoyed working with CPL and would highly recommend them as a partner for any real estate investment project,” wrote one reviewer. “Early analysis helped with project selection, and their responsiveness was top-notch every step of the way.”
317-836-2807
Rental Home Financing
Located in Indianapolis, Rental Home Financing specializes in investment loans for residential rental properties. They provide various loan options, including those for short-term rentals, apartment buildings, and new construction. With more than 25 years of experience in commercial and multifamily mortgage lending, they excel in DSCR (debt service coverage ratio) loans and are authorized to lend in most regions across the United States.
Lending clientele: Residential real estate investors
Loan criteria: Depends on the loan program; in most cases, up to 75% LTV
Rental Home Financing touts a 4.8-star rating on Google based on more than 25 reviews. Clients highlight the professionalism, quick action, and responsiveness of the staff. “This is a great company that helped build our home rental portfolio,” reads a recent review. “We have secured six units with them now and plan to keep building through them. They were very helpful in the process with outstanding communication.”
888-375-7977
The Hard Money Co.
Located in Milwaukee, The Hard Money Co. lends in 13 states, including Indiana. Last year, they closed over 500 loans, totaling more than $81 million in funding. Exclusively lending to real estate investors, they do not provide personal loans or loans for primary residences. Loans can be funded within seven to 10 days, with six-month terms and a 15% interest rate. The Hard Money Co. serves investors of all experience levels, namely flippers and those renovating rental properties.
Lending clientele: Residential real estate investors
Loan criteria: Up to 65% ARV
The Hard Money Co. has a 4.7-star rating on Google from more than 80 reviews. Reviewers frequently praise the company for its professionalism, prompt service, and expert guidance. “This company was AMAZING to work with,” shared one client. “They guided me from start to finish and made sure we had a smooth transaction. We are currently working on another deal now with them.”
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 Indianapolis?
Whether a hard money loan is right for you depends on your specific real estate investment needs and goals. These loans are ideal for real estate investors in Indianapolis who need fast, flexible funding, especially when traditional financing isn’t available. Hard money loans can offer quick access to cash, albeit with higher costs and shorter repayment periods.
For homeowners in Indianapolis looking to leverage their home’s equity more cost-effectively, HomeLight’s Buy Before You Sell program is a great alternative. This program allows you to make a stronger offer on a new home while managing an easier move, all for a flat fee.
Always consider your long-term financial strategy and consult with a financial advisor to make sure it aligns with your goals. If you’re looking to connect with experienced real estate agents in Indianapolis who have access to trusted hard money lenders, let HomeLight help you find the best professionals for your investment needs.
Header Image Source: (Ryan De Hamer / Unsplash)
- "What is ARV and how is it calculated?," Rehab Financial Group (June 2023)
- "What Is Loan-to-Value and Why Does it Matter?," U.S. News, Ben Luthi & Rebecca Safier (March 2024)
- "Why Do Hard Money Lenders Require A Down Payment?," RCN Capital (April 2024)
- "A Comprehensive Guide to Common Terms Used in Hard Money Lending," LinkedIn, Joseph Walker (September 2023)
- "What Are The Costs Involved In A Hard Money Loan?," NorthWest Private Lending (March 2024)
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