Your Guide to Hard Money Lenders in Milwaukee

Published on July 25th, 2024

Kelsey Morrison Former Editor
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Kelsey Morrison Former Editor

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Kelsey 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.

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If you’re planning your next real estate investment in Milwaukee, you might find that a hard money loan is your best financing option. Whether your sights are set on flipping a vintage duplex in Riverwest or nabbing a rental property in Brewer’s Hill, hard money lenders in Milwaukee can offer the quick and flexible funding you need. These loans cater to investors with time-sensitive projects, those with limited startup capital, or individuals facing credit challenges.

If you’re not a real estate investor but need to bridge the timing gap between buying and selling a home, we’ll share some alternatives to help you make the most of your home equity. In this article, we’ll walk you through the basics of hard money lending in Milwaukee, providing insights to determine if this financing method aligns with your investment or home-buying goals.

What is a hard money lender?

Hard money lenders are private individuals or companies that provide short-term, asset-based loans secured by real estate. Unlike traditional banks, they focus on the value of the property being used as collateral rather than the borrower’s financial history. Their typical clients include real estate investors, such as house flippers and buyers of rental properties, who require fast funding and flexible terms.

To determine loan amounts, hard money lenders rely on after-repair value (ARV), which is the property’s estimated worth after renovations. They typically lend a portion of the ARV to secure their investment. These loans come with higher interest rates, usually between 8% to 15%, and additional fees such as origination, closing costs, and points. If a borrower fails to repay, the lender may foreclose on the property to recoup their investment.

How does a hard money loan work?

If you’re looking to finance your real estate project quickly and with more flexibility, hard money loans in Milwaukee might be the solution. Here’s how these loans typically work:

Short-term loan: Hard money loans typically have a repayment period of 6–24 months, which is much shorter than conventional 15- or 30-year mortgages.
Faster funding option: These loans can be approved within a few days, unlike the standard 30 to 50 days required for traditional mortgage approvals.
Less focus on creditworthiness: The approval process emphasizes the property’s value rather than the borrower’s credit score.
More focus on property value: These loans are determined by the loan-to-value ratio of the collateral property.
Not traditional lenders: Individual investors or private lending companies, rather than traditional banks, provide hard money loans.
Loan denial option: Individuals who have been denied traditional loans but have significant home equity often seek out hard money loans.
Higher interest rates: Due to their higher risk, hard money loans have significantly higher interest rates.
Might require larger down payments: Borrowers may need a larger down payment, often in the range of 20%–30%.
More flexibility: Lenders can offer flexible terms regarding credit scores and debt-to-income ratios, and help some homeowners avoid foreclosure.
Potential for interest-only payments: These loans may allow for interest-only or deferred payments initially.

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What are hard money loans used for?

Hard money loans are tailored to meet specific financing needs in Milwaukee’s real estate market. These loans are particularly useful for investors and individuals who need quick access to funds or face challenges with traditional bank loans. Here’s a closer look at how hard money loans are commonly used:

Flipping a house: For Milwaukee investors focused on flipping homes, hard money loans provide quick access to cash for purchasing and renovating properties. These loans help flippers acquire homes, complete renovations, and sell them for a profit within a short timeframe.

Buying an investment rental property: Investors looking to purchase rental properties can utilize hard money loans to acquire properties quickly, particularly those requiring urgent repairs. Unlike traditional bank loans, hard money loans allow landlords to complete renovations and begin generating rental income much sooner.

Purchasing commercial real estate: The flexibility and quick closing times of hard money loans make them ideal for commercial real estate purchases. They are valuable when fast decisions are needed to secure prime investments.

Borrowers who can’t qualify for traditional loans: People with a lot of home equity but poor credit often use hard money loans. These loans focus more on the asset’s value than the borrower’s creditworthiness.

Homeowners facing foreclosure: Those nearing foreclosure may use hard money loans to refinance or delay the process, giving them time to sell their property and avoid losing their homes.

How much do hard money loans cost?

The cost of hard money loans is generally higher than traditional loans due to the added risk and convenience of quick funding. Here are some typical costs associated with hard money loans:

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.
Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative costs.
Points: Lenders might charge points (a percentage of the loan amount) upfront, adding to the initial cost.

Online calculators can help you estimate the costs of hard money loans accurately.

Alternatives to working with hard money lenders

For homeowners looking to tap into their home’s equity, here are a few options worth exploring:

Take out a second mortgage: With significant equity in your home, a home equity loan or home equity line of credit (HELOC) can offer funds at lower interest rates compared to hard money loans.

Cash-out refinance: This strategy lets you refinance your current property and withdraw cash to finance new investments, often with lower interest rates than hard money loans.

Borrow from family or friends: Loans from family or friends can offer more flexible repayment terms and potentially lower or no interest rates, making them a budget-friendly alternative.

Use a government-backed loan program: Programs such as those from the FHA, VA, or USDA can assist in purchasing homes with lower down payments and interest rates.

Peer-to-peer loans: These loans, facilitated by individual investors through platforms like LendingClub or Prosper, function similarly to hard money loans but often have different terms.

Specialized loan programs: Consider specialized loans for fixer-uppers or refinancing existing investment properties if you want to replace a hard money loan.

Request a seller financing option: In some instances, sellers may be willing to finance the purchase themselves, which can lead to lower closing costs and less stringent eligibility requirements.

How to buy before you sell

Imagine discovering your dream home just as you’re preparing to sell your current one. Maybe it’s a historic gem in the Third Ward or a modern condo near Lake Michigan. If you’re a Milwaukee homeowner needing to buy a new home before selling your current one, HomeLight’s Buy Before You Sell (BBYS) program offers a seamless solution.

The Buy Before You Sell program lets you leverage your existing home’s equity to make a competitive, 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. This allows you to purchase your new home first and then sell your current one without the stress of juggling two transactions at once.

Here’s how HomeLight Buy Before You Sell works:

While there is a flat fee of 2.4% of your current home’s sold price, the potential savings in other areas can outweigh this cost. You might save on moving expenses, temporary housing, and even the final purchase price of your new home. Plus, HomeLight’s BBYS fees are generally lower than bridge loan interest rates, which are currently around 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 Milwaukee

Traditional lenders might not always be able to meet the needs of every real estate investment. If you need to move quickly to capitalize on a valuable opportunity, consider partnering with one of these top-rated hard money lenders in Milwaukee.

Hard Money Co.

Hard Money Co. is based in Milwaukee and provides funding options for real estate investors of any experience level. Last year, they closed over 500 loans totaling more than $81 million in funding. The company currently lends in 13 states, including Wisconsin. Their hard money loans typically come with a six-month term and a 15% interest rate. Borrowers can secure financing to help cover a property’s purchase price, repair costs, or both, but they will need to invest some of their own cash into the deal. Loans close quickly, often within seven to 10 days.

Lending clientele: Residential real estate investors

Loan criteria: Up to 65% ARV

Hard Money Co. has a Google rating of 4.7 based on more than 80 reviews. Customers praise them for being supportive, knowledgeable, and responsive. “This company was AMAZING to work with,” wrote one reviewer. “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.”

thehardmoneyco.com

414-269-5300

Best REI Funding

Best REI Funding, located in Green Bay, provides fix-and-flip and BRRRR loans to real estate investors. They’ll lend up to 90% of the purchase price and up to 100% of rehab costs, and rates start at 12% and 3 points. They offer residential and commercial funding in Wisconsin and several other states. The online application process is simple and straightforward, and loans can close in 10 days or less. Best REI Funding is even willing to work with first-time investors, which many in the industry are not.

Lending clientele: Residential and commercial real estate investors

Loan criteria: Up to 70% ARV

Best REI Funding has a Google rating of 4.3 stars based on a limited number of reviews. Previous borrowers highlight their efficiency, knowledgeable staff, and supportive service. “The team at Best REI Funding is amazing to work with,” shared a client. “Jeff and Derek will help you with your deals and help you find the best way to structure the deal. Jennifer in the office is always on top of things and makes sure everything is good to go for your closing!”

bestreifunding.com

888-341-2282

Mach1 Lending

Mach1 Lending, based in Milwaukee, is owned and operated by a husband-and-wife team that brings over 15 years of real estate investment experience to the table. They provide fix-and-flip loans for acquisitions and rehab. Note that Mach1 Lending exclusively lends to business entities for investment purposes only, such as LLCs or corporations. To date, they’ve funded over $10 million in loans without foreclosures. They have closed loans in as little as two days and provide a simplified online application process.

Lending clientele: Residential real estate investors and developers

Loan criteria: Contact Mach1 Lending for more information

Mach1 Lending earned 4.9 stars on Google based on nearly 50 reviews. Customers praise their professionalism, timely communication, and customer-focused approach. “I’ve used them seven times, and each time has been a wonderful experience!” reads a recent review. “They get everything done on time very efficiently, and also communicate with all others to make sure things are done how they’re supposed to.”

mach1lending.com

262-264-8606

Should I partner with a hard money lender in Milwaukee?

Whether a hard money loan is right for you depends on your specific situation and real estate investment goals. These loans are best suited for Milwaukee investors needing quick access to funds and flexible terms when traditional financing isn’t available. If you can manage the higher costs and shorter repayment terms, working with a hard money lender in Milwaukee can be an excellent choice for your next investment.

Homeowners looking to access their equity might find HomeLight’s Buy Before You Sell program more fitting. This program allows you to avoid high interest rates by paying a small flat fee. You’ll be able to present a more competitive offer and simplify your move.

Always consider your long-term financial strategy and consult with a financial advisor before making major decisions. If you need to find investor-friendly real estate agents in Milwaukee with connections to trusted hard money lenders, HomeLight can help you find the right professionals for your needs.

Header Image Source: (sepavone/DepositPhotos)

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At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Kelsey Morrison

Former Editor

Kelsey 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.