Hard Money Lenders Nashville: Secure Your Next Deal
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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.
Looking to kickstart your next real estate project in Music City with a hard money loan? Whether you’re planning to flip a Craftsman bungalow in East Nashville or invest in a rental property in The Gulch, hard money lenders in Nashville can offer the flexibility and quick turnaround times that traditional loans often can’t match. A hard money loan is particularly useful for those needing fast access to cash or dealing with credit challenges.
For homeowners not involved in real estate investing but needing to bridge the gap between buying and selling, we’ll explore some alternative financing solutions. In this article, we’ll introduce you to the basics of hard money lending in Nashville, helping you decide if this financial tool aligns with your real estate investment or home-buying goals.
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?
Hard money lenders are private individuals or companies offering short-term loans secured by real estate. Unlike traditional lenders, who base their decisions on the borrower’s credit score and income, hard money lenders focus on the property’s value. They commonly serve house flippers and buyers of rental properties who need fast and flexible financing solutions.
The loan amount is determined by the after-repair value (ARV), which is the estimated value of the property after all planned renovations and repairs. Typically, hard money lenders will lend a percentage of this ARV to protect their investment.
These loans have higher interest rates, often falling between 8% and 15%, and shorter repayment terms, usually from 6 to 24 months. Borrowers should also expect origination fees, closing costs, and points. If the borrower fails to repay, the lender can foreclose on the property to recover their investment.
How does a hard money loan work?
For those considering a hard money loan in Nashville, it’s important to understand the mechanics of how these loans work. Here’s a brief overview of the key features of hard money loans:
- Short-term loan: Hard money loans generally have repayment periods from 6 to 24 months, much shorter than the standard 15- or 30-year mortgage.
- Faster funding option: These loans can be approved and funded in days, compared to the 30 to 50 days typical of traditional mortgages.
- Less focus on creditworthiness: Approval is based more on the property’s value than the borrower’s credit score.
- 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 lenders, not conventional banks.
- Loan denial option: Even if denied a traditional mortgage, those with significant home equity can often obtain a hard money loan.
- Higher interest rates: Due to the increased risk, hard money loans carry higher interest rates compared to traditional mortgages.
- Might require larger down payments: Borrowers may need a hefty down payment of 20% to 30% of the property’s value.
- More flexibility: With fewer government regulations, hard money lenders in Nashville can offer flexible credit score and debt-to-income (DTI) requirements, making it possible for some homeowners to avoid foreclosure.
- Potential for interest-only payments: Some hard money loans allow for interest-only payments, easing the initial financial burden.
What are hard money loans used for?
Hard money loans serve specific needs in Nashville’s real estate market. They are popular among investors who need fast funding or have trouble securing traditional loans. Here’s a closer look at what hard money loans are used for:
Flipping a house: Nashville investors involved in flipping homes find hard money loans useful for quickly acquiring and renovating properties. These loans provide the funds necessary to compete in hot markets, make improvements, and sell the property for a profit.
Buying an investment rental property: For those looking to invest in rental properties, hard money loans offer a way to quickly purchase properties, particularly those that require renovations. This allows landlords to prepare the property and start earning rental income faster than with traditional financing.
Purchasing commercial real estate: Hard money loans are a go-to option in commercial real estate because they offer speed and flexibility. Investors can nab properties that need immediate attention, ensuring they don’t miss out on valuable investment opportunities.
Borrowers who can’t qualify for traditional loans: People with considerable home equity but low credit scores sometimes seek out hard money loans. These loans focus more on the property’s value, providing an alternative for those who don’t qualify for traditional loans.
Homeowners facing foreclosure: Hard money loans can help homeowners nearing foreclosure refinance their debts or delay the foreclosure process. This temporary measure can prevent the loss of their home and protect their credit rating.
How much do hard money loans cost?
The cost of hard money loans is typically higher due to the increased risk and faster funding process. Here are some of the costs involved:
You can use online calculators to estimate the total costs.
Alternatives to working with hard money lenders
Exploring alternatives to hard money loans? Here are some viable options to consider:
Take out a second mortgage: Tap into your home’s equity with a home equity loan or HELOC, which usually offers lower interest rates than hard money loans.
Cash-out refinance: Refinance your property to access cash for new investments at typically lower interest rates through a cash-out refinance.
Borrow from family or friends: Loans from family or friends can come with flexible repayment terms and potentially low or no interest rates.
Use a government-backed loan program: Programs by the FHA, VA, or USDA may offer assistance with lower down payments and reduced interest rates.
Peer-to-peer loans: These loans from individual investors via lending platforms operate similarly to hard money loans but with different terms.
Specialized loan programs: Consider specialized loans for fixer-uppers or to refinance existing hard money loans with better terms.
Request a seller financing option: Some sellers may agree to finance the purchase themselves, resulting in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect home comes along when you’re not even looking. Perhaps it’s an adorable 1930s bungalow in Sylvan Park or a two-story penthouse in Wedgewood Houston. If you’re a Nashville homeowner wanting to buy a new home before selling your current one, HomeLight offers a smart solution to simplify the process.
The Buy Before You Sell (BBYS) program lets you use the equity in your current home to make a solid, 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 upfront cost or commitment required. Once approved, you can purchase your next home confidently and sell your current one without the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
The program has a flat fee of 2.4% of your current home’s sold price. The potential savings in other areas, such as moving expenses, temporary housing, and the purchase price of your new home, could potentially offset this cost. Plus, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
3 top hard money lenders in Nashville
Traditional lenders aren’t always the best option for every real estate deal. When you need to move fast to take advantage of an opportunity, consider partnering with one of these hard money lenders in Nashville.
Nashville Money Guys
Nashville Money Guys offers hard money loan solutions for real estate investors. They specialize in providing fast funding for fix-and-flip projects and rental rehabs. The company primarily finances single-family homes, but they’ll also consider land deals, small multifamily properties, and small commercial properties. They do not provide loans for primary residences; all properties must be intended for investment purposes. Loans can close in 10 days or less, and the application process involves minimal paperwork.
Lending clientele: Residential real estate investors
Loan criteria: Up to 65% LTV
Nashville Money Guys has a 5-star rating on Google based on a limited number of reviews. Clients appreciate the company’s quick funding process and knowledgeable staff. “Hands down the BEST hard money lenders in Tennessee!” one reviewer wrote. “They’ve funded four of our deals so far, and each time has been super seamless.”
615-358-8820
Capital Fund 1
The Tennessee office of Capital Fund 1 is located in Brentwood, just outside of Nashville. The private hard money lender has been in business since 2009 and provides financing solutions for real estate investors across the state. They offer a variety of loan programs, including fix-and-flip loans, buy-and-hold loans, bridge loans, construction loans, and more. Capital Fund 1 doesn’t check credit, require third-party appraisals, or evaluate a borrower’s personal finances.
Lending clientele: Residential and commercial real estate investors, plus developers
Loan criteria: Up to 75% LTV (fix-and-flip)
Capital Fund 1 has a 4.4-star rating on Google based on over 100 reviews. Clients frequently commend the company’s friendly service, fast approval and funding, and reliability. Negative reviews point to difficulties reaching company representatives and delays in receiving loan payouts. “Reliable and professional, I’ve received two loans from them and both times they have given me exceptional customer service not to mention a fair deal,” shared a client.
615-455-5644
I Fund Cities
i Fund Cities is a lending platform that provides loans to residential real estate investors across the country with the exception of California, New York, and Nevada. Established in 2018, the company offers seven different loan programs: build-to-rent, fix-and-flip, fix-to-rent, new construction, multifamily, portfolio rental, and rental. They lend on single-family homes, townhomes, condos, multifamily properties (5 or more units), and single-family rental portfolios (up to 200 units). However, they do not fund properties designated as rural. Loans can close in as little as seven days, provided all paperwork is in order.
Lending clientele: Residential real estate investors
Loan criteria: Up to 80% LTV (fix-and-flip and fix-to-rent), up to 70% LTV (multifamily bridge), up to 65%–70% LTV (multifamily rental), up to 80% LTV (new construction and build-to-rent), up to 75%–80% LTV (rental and portfolio rental)
i Fund Cities boasts a 4.5-star rating on Google from over 50 reviews. Borrowers praise the company for their responsiveness to questions, fast closings, and competitive rates. “I can’t say enough good things about i Fund Cities!” reads a recent review. “Their real estate lending services have been a game-changer for my investments. They’re professional, efficient, and truly understand the real estate market.”
215-770-1505
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 Nashville?
Whether a hard money loan is right for you depends on your specific needs and real estate investment plans in Nashville. Hard money loans are best for quick-turnaround projects or when traditional financing just isn’t feasible. If you’re willing to accept higher costs and shorter repayment terms for the benefit of fast and flexible funding, a hard money lender in Nashville might be the right choice.
For homeowners wanting to access their home’s equity, HomeLight’s Buy Before You Sell program is an attractive alternative. By paying a small flat fee, you’ll avoid high interest rates, and be able to make a more competitive offer on your next home.
Before taking on a hard money loan, carefully consider your long-term investment strategy and consult with a financial advisor. If you’re in the market for an investor-friendly real estate agent in Nashville, HomeLight can connect you with top professionals in the area who can guide you through the process.
Header Image Source: (Ricky Beron/Unsplash)
- "Bridge Loan Rates: Current 2024 Interest Rates," Vaster (October 2023)
- "Why Do Hard Money Lenders Require A Down Payment?", RCN Capital (April 2024)
- "What Is Loan-to-Value and Why Does it Matter?", U.S. News (March 2024)
- "What are the Closing Costs of a Hard Money Loans?", Marquee Funding Group (January 2022)
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