Become a Hard Money Commercial Broker

Hard money lenders provide loans at high interest rates secured by assets, usually real estate. Hard money loans are typically only made to borrowers who are in distress in some way, such as that they are in bankruptcy or owe money on their mortgage. Commercial hard money brokers buy and sell these loans, usually purchasing from private lenders and selling them to larger organizations such as Fannie Mae or Freddie Mac.

Instructions

1. Learn more about hard money commercial lending. Hard money brokers connect hard money lenders with investors who are looking for a hard money loan. There are no certification requirements for becoming a commercial hard money broker, but success is reliant on a growing network of contacts among local businesses. An educational background in finance, real estate broker training or experience as a loan officer at a bank or other lender will all serve as valuable experience. Hard money lenders provide loans out of their own pocket, unlike "soft" lenders like banks, which use the fractional reserve banking system to create new loans at the stroke of a pen, limited by their current level of reserves.

2. Consider taking a course that might help you better understand real estate and the needs of businesses that are looking for hard money loans. Learn about bankruptcy and how hard money loans can assist those who are in significant financial distress. Hard money brokers are, in general, completely independent. The demand for hard money loans is not so high as to support large brokerage firms for the service. At most, a hard money broker might employ a small secretarial staff. Otherwise, it's typically a small-scale, entrepreneurial operation.

3. Learn more about real estate brokering. Real estate professionals who learn how to broker their own hard money loans can avoid having to contact an outside broker. During markets in which conventional credit is tight, hard money loans can be one of the only places that businesses can get affordable commercial loans.

4. Connect with commercial real estate brokers who may have a distressed base of customers that may need hard money loans to close deals quickly. Know the difference between hard money loans and typical loans. Hard money loans can only be used for commercial properties. In some instances, unoccupied residential properties can be considered commercial properties.

5. Learn more about topics like mortgage underwriting, foreclosure and bankruptcy law. Most hard money borrowers are distressed in some way. Brokering loans effectively to this customer base requires some savvy, as collection on the debts can be difficult.

6. Connect with wealthy investors looking to make hard money loans. Some firms also make hard money loans; develop a working relationship with them so that you know which borrowers to send to whom. Real estate developers are often interested in giving out hard money loans, because even if the loan fails to perform, they may end up adding to their asset base as a result.

Resources

• Commercial Finance Advisors: Hard Money
• Rebuz Hard Money Directory
• BusinessFinance: Hard Money Loan