Hard Money Lenders Los Angeles: Quick Funding Options

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Looking to fund your next real estate venture in Los Angeles? Whether you’re aiming to flip a historic Craftsman in Echo Park or invest in a rental property in Silver Lake, hard money lenders in Los Angeles offer the flexibility and speed needed to close the deal. These loans provide an alternative to traditional financing — perfect for those with tight timelines, limited initial capital, or credit challenges.

Not just for seasoned investors, hard money loans can also benefit homeowners needing a quick funding solution. This article will guide you through the essentials of hard money lending in Los Angeles, helping you determine if this financing option aligns with your real estate goals or home-buying needs. If you’re a homeowner looking to bridge the gap between buying and selling, we’ll also explore some useful alternatives.

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?

A hard money lender is a private individual or company that provides short-term loans secured by real estate. Unlike traditional lenders, who emphasize the borrower’s credit and income, hard money lenders in Los Angeles tend to focus on the property’s value, which is used as collateral.

These lenders often work with real estate investors, including house flippers and those acquiring rental properties, who require quick access to funds and flexible terms. Hard money lenders determine loan amounts using the after-repair value (ARV), which is the estimated value of a property after renovations and repairs are completed.

Interest rates for hard money loans typically range from 8% to 15% or more, and repayment periods are usually between 6 to 24 months. Additional costs include origination fees, closing costs, and points. If a borrower fails to repay a hard money loan, the lender can seize the property to recover their investment.

How does a hard money loan work?

For real estate investors in Los Angeles seeking fast and flexible financing, hard money lenders might be the ideal solution. Here’s an overview 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 will even 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 in just a few days, compared to the 30–50 days typical for a mortgage loan.
  • Less focus on creditworthiness: Approval depends 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 typically offer 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 have significant home equity.
  • Higher interest rates: Due to heightened risk, these loans come with higher interest rates than traditional mortgages.
  • Might require larger down payments: Borrowers may need to fork over a heftier 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 Los Angeles can be more flexible about credit scores and debt-to-income (DTI) criteria, and loans can help sellers avoid foreclosure.
  • Potential for interest-only payments: Unlike traditional mortgages, hard money loans may initially allow for interest-only or deferred payments.

What are hard money loans used for?

Hard money loans are often used by Los Angeles investors who need their money quickly or who may not qualify for traditional bank loans. Let’s explore some of the situations where hard money loans might be a good option.

Flipping a house: For Los Angeles investors focused on flipping homes, hard money loans offer fast access to cash for purchasing and renovating properties. These quick-turnaround loans help flippers buy homes in competitive markets, make improvements, and resell them for profit quickly.

Buying an investment rental property: Investors seeking rental properties can use hard money loans to acquire properties quickly, especially those needing immediate repairs. Compared to traditional loans, hard money loans allow landlords to complete renovations and start generating rental income sooner.

Purchasing commercial real estate: In commercial real estate deals, hard money loans stand out for their adaptability and fast closing timelines. This makes them particularly attractive to investors who need to move quickly, especially when facing tight deadlines.

Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit or other disqualifying factors often turn to hard money lenders. These loans focus more on the asset’s value than the borrower’s credit score, making them accessible to a wider range of borrowers.

Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance their debts or buy time to sell their property. This can provide a temporary solution to avoid losing their home or having a foreclosure mark on their credit report.

How much do hard money loans cost?

The cost of hard money loans is generally higher due to the increased risk and quick funding. Here are typical costs:

  • 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, appraisal, and administrative costs.
  • Points: Lenders might charge points (a percentage of the loan amount) upfront.

You can use online calculators to estimate these costs.

Alternatives to working with hard money lenders

If you’re a homeowner looking for alternatives to hard money loans, here are a few options to consider:

Take out a second mortgage: If you have substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide the needed funds at a lower interest rate compared to a hard money loan.

Cash-out refinance: This option allows you to refinance an existing property, pulling out cash to finance your new investment. It often comes with lower interest rates than hard money loans.

Borrow from family or friends: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a more affordable option.

Use a government-backed loan program: Programs offered by the FHA, VA, or USDA can help buyers purchase homes with lower down payments and reduced interest rates.

Peer-to-peer loans: These loans are provided by individual investors through lending platforms like MeridianLink or Funding Circle. They function similarly to hard money loans but often have different terms.

Specialized loan programs: If you already have a hard money loan and want to replace it, consider specialized loans for fixer-uppers or investment property refinancing.

Request a seller financing option: In some cases, sellers may agree to finance the purchase themselves, which can result in lower closing costs and less stringent eligibility requirements.

How to buy before you sell

Sometimes the perfect home hits the market when you least expect it. Perhaps it’s a spacious townhouse in Culver City or an industrial loft in DTLA. For Los Angeles homeowners aiming to buy a new home before selling their current one, HomeLight offers a seamless solution.

The Buy Before You Sell (BBYS) program allows you to tap into your existing home’s equity to make a strong, non-contingent offer on a new property. If eligible, you can get your equity unlock amount approved within 24 hours without any upfront costs or obligations. This approval allows you to purchase your next home confidently and sell your current home vacant; eliminating the stress and hassle of moving twice.

Here’s how HomeLight Buy Before You Sell works:

While there is a flat fee of 2.4% of your current home’s sale price, the potential savings in other areas might outweigh this cost. You could save on moving expenses, temporary housing, and possibly even the purchase price of your new home. Additionally, HomeLight’s BBYS fees are generally much lower than bridge loan interest rates, which currently range from 9.5% to 12%.

3 top hard money lenders in Los Angeles

Traditional lenders can be a good option for real estate financing, but they may not always be the quickest or most flexible. If you’re facing a time-sensitive opportunity in Los Angeles’ real estate market, exploring hard money lenders could be a good way to move fast.

PB Financial Group Corporation

PB Financial Group Corporation, based in Los Angeles, was founded in 2006. They offer a variety of hard money loan programs for residential and commercial properties and have funded more than 2,400 transactions to date. Loan amounts range from $50,000 to $5 million, and their streamlined process allows them to close loans in as little as seven to 10 days.

Lending clientele: Owner-occupiers, heirs of probate estates, trust beneficiaries, plus residential and commercial real estate investors

Loan criteria: Up to 60% to 70% LTV

Hard Money Lenders California

Hard Money Lenders California, based in Los Angeles and Newport Beach, provides quick and flexible hard money loans for commercial and residential real estate investors as well as owner-occupiers. The company touts over 30 years of industry experience, and their hard money loans take about a week to 10 days to acquire.

Lending clientele: Residential, commercial, and development investors, plus homeowners

Loan criteria: Up to 85% LTV; in certain scenarios, up to 90% LTV

City Capital Realty

Located in Westwood, City Capital Realty helps with hard money loans for investors and property owners. They offer competitive rates, flexible terms, and funding ranging from $250,000 to $10 million. Most loan applications are approved in less than nine business days, providing borrowers with quick access to funds.

Lending clientele: Residential and commercial real estate investors, as well as homeowners

Loan criteria:  LTV up to 70% of ARV

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 Los Angeles?

Deciding whether a hard money loan is right for you depends on your specific situation and real estate investment goals in Los Angeles. Hard money loans are best suited for real estate investors who need quick access to funds for projects like flipping houses or buying investment properties. These loans are ideal when traditional financing is unavailable or too slow, offering fast, flexible funding options despite higher costs and shorter repayment terms.

If you are a homeowner looking to leverage your equity, consider HomeLight’s Buy Before You Sell program as a better alternative. This program allows you to make a non-contingent offer on your new home by tapping into your current home’s equity, with a flat fee rather than the high interest rates associated with hard money loans.

As with any major financial decision, it’s important to consider your long-term strategy and consult with a financial advisor. HomeLight can also connect you with investor-friendly real estate agents in Los Angeles who have access to trusted hard money lenders. Let HomeLight introduce you to top professionals who can guide you through your real estate investment journey in the City of Angels.

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