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West Forest Capital

Should you use a local New Jersey Hard Money Lender or a National Lender?

Finding a Fix and Flip Project

If you are a New Jersey real estate investor and getting ready to do your first project, or perhaps have even completed a few, you may be asking yourself if it’s better to use a local New Jersey Hard Money Lender or branch out and use a national lender.  The answer depends on your specific needs, but very often it’s more beneficial to go with a local lender who understands the market more intimately.

 Advantages of New Jersey Hard Money Lenders

There are several reasons why local lenders are better hard money lending partners.  First, they are very familiar with the area, and are able to see value where a national lender may not.  For example, Montclair, New Jersey is well known for final sales prices that routinely go for 25-30% over asking price.  If a national lender is reviewing an appraisal, and doing their own comps on a fix and flip opportunity, they may see similar homes on the market priced lower than what the final sales price will be. The lender may conclude that the ARV appraisal is wrong, and that the deal doesn’t work from a Loan-to-ARV standpoint.  This puts the investor in a bind, desperately searching for a new lender on an extremely tight timeframe — we get calls like this routinely.   Conversely, local New Jersey lenders who know this market quirk would be comfortable with the appraisal and making the loan.

Another benefit of using a New Jersey hard money lender is their connections in the market.  In the past, we have been able to help our clients by recommending top notch lawyers, title companies, and even GCs.  Our borrowers often call us asking for our opinion on rehab schedules and estimated costs.  The reason we, as a local lender, are able to help is because we see many deals and know the key market participants and prices.  A national lender won’t be able to help for two reasons.  First, they simply don’t know the local markets.  National lenders operate within an underwriting box, and if your situation is even slightly outside of the box, they won’t be able to do the deal.  Second, national lenders don’t have the personal relationships, and often the time, to assist with questions on the project beyond the funding.  

Local New Jersey hard money lenders are also much faster to fund than national lenders.  Many national lenders are set up with a multi-layer approval process; actual decision makers don’t even look at the loan until all underwriting documents are available, sometimes taking a week or two.  On the other hand, local lenders have a much simpler approval structure.  We are set up as a partnership, which means when you call our office you always speak directly with a decision maker that can give you an answer on the spot!  If you are tried of the back and forth with national lenders, call us at 212-537-5833 and get an immediate lending decision before you hang up.   

Advantages of National Money Lenders

So, if New Jersey hard money lenders know the market better, are able to offer project advice, and are faster to fund, is there ever a situation when you should consider using a national lender?  The answer is yes, but only in very specific situations.

If you are investing in a straight forward fix and flip transaction, are an experienced investor, have a high credit score, and don’t have a compressed timeframe, a national lender may be able to offer better pricing; your rate might be 1 point lower. 

Final verdict

We advise to proceed with caution, particularly if the investment is time sensitive or the property type is mixed-used, commercial, or industrial.  We’ve seen countless situations when real estate investors go through the lending process with a national lender, only to find out the national lender cannot make the loan because during the underwriting process is an issue is uncovered.  Remember, these lenders are not familiar with the local markets, and therefore cannot overlook anything that falls outside their underwriting “box” – they simply are not comfortable with the risk.  A New Jersey hard money lender on the other hand can be flexible with their criteria because the risk of the unknown market is off the table. 

In the end, to ensure execution certainty, we always advise real estate investors to use a local hard money lender.

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To get started with your hard money loan,
please call us at 212-537-5833 or text us at 917-267-9523.

Hard Money Loans: FAQs

Hard money loans are short-term loans that are used to acquire investment properties to rehab and then flip for resale or rent. These loans are used by real estate investors and others who are looking to finance non-owner occupied real estate.

Yes, we can often pre-approve you on the same day as when you apply. For a pre-approval letter, please call us at 212-537-5833 or text us at 917-267-9523.

Yes, we do fund rehab costs through a hard money loan. In fact, we can fund 100% of your rehab costs. To do so, you will need to complete a portion of the project. We then send an inspector to review it, and we distribute the funds for the completed work. The entire process takes 2 to 3 days.

Yes, we provide extensions up to 6 months or longer on a case-by-case basis. We understand the timeframe complexities when rehabbing or building a new project – we will work with you.

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