It doesn’t have to be difficult to get your hard money loan approved by a hard money lender. In fact, it should be easier than going through a traditional bank. At Murk Investments, we wanted to share with you some things you can do to get your hard money loan approved timely.

Hard money lenders will consider the LTV (loan to value) ratio when approving a hard money loan request. This is important because if you, the borrowers, were not to make the payment, the property would need to be sold and the proceeds from the sale would be used to repay the loan. Hard money lenders rely more on collateral (or the asset). The LTV ratio is determined by dividing the loan amount by the value of the property. At Murk Investments, we issue loans around 65% of the property value.

Have your equity financing in place or know exactly how much cash you can put into the deal when applying for the loan. This information is critical for us to be able to let you know if we have interest in the loan.

The type of collateral is also important for hard money lenders when determining if a loan will be approved. The most common property type for a hard money loan is a single-family home or an income producing asset. The property type with the most risk for a hard money lender is land because land does not necessarily produce income, so the value is based on future use. However, our firm has done loans on many different property types as well such as office, retail, industrial, and land.

We also like to know the exit strategy. Will you be doing tenant improvements and leasing out the project? Is this a development or fix and flip? What is your experience finding tenants and selling properties? Having a clear and decisive plan, and a history of doing so can help you.

At Murk Investments, we are local to the San Diego area and are comfortable working in this market better than a national or regional lender. We lend on properties in most San Diego markets. One of the most important factors we look at is the cash the investor is bringing into the deal. All of our loans fall under a 65% loan to cost.

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