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Hard money loans can be a quick and convenient way to obtain funding for your next real estate investment project, but if you are not prepared, it could make the process longer for you and the lender. The due diligence information that you provide the lender is the insight they need to decide whether or not to lend to you. Hard money loans depend more on the value of the property rather than your credit, meaning that you must have the proper information ready to be given to the lender to assess. 

While every hard money lender will require different due diligence information, here is some typical paperwork they might need. 

An Outside Appraisal 

Since a hard money loan relies on the value of the property, it is essential to have a proper outside appraisal completed to hand to the lender. This appraisal can help give an estimate of what the property is worth in the current market. 

This appraisal should be done by an outside party to ensure that everything is accounted for and reliably valued for the lender to dictate the loan amount.

A Property Inspection

Aside from an outside appraisal, a property inspection should be completed in order to give a clear rundown of the property’s condition. Again, this can assist the lender in figuring out how much the loan should provide. 

This inspection should cover areas such as a structural assessment, environmental hazards, and an inspection of the mechanical systems within the home. These can outline how much work the property will need to get to a habitable condition. 

A Legal Review 

A legal review of the property can outline the possible obstacles that the lender might face when getting their money back. A review will summarize the current liens and legal disputes on the property, if there are any to begin with. It will also show if the property is disobeying any zoning laws or environmental regulations. 

Many hard money lenders will want to know about current liens to ensure they will get their money back at the end of the term and to check that the property is legal to purchase and sell in its condition. 

The Borrower’s Financial Records

While much of the loan is dictated by the property itself, your financial statements are still a significant aspect of the loan agreement. There are minimal documents usually required, but they should show no derogatory marks on your credit from the last two years to ensure that you are able to pay back your loans responsibly. 

Be Prepared–Every Hard Money Lender is Different 

While this might seem like a thorough list, ensure you contact your desired hard money lender to see what you need to get your preferred loan. Each lender is different and might need documentation that another lender does not, and vice versa. Be the most prepared by being proactive. 
If you have further questions or wish to start on your next investment journey, contact the team at KC Investor Funding.