What Private & Hard Money Lenders Really Want (And How to Give It to Them)
Tips for First-Time Borrowers (& 2nd, 3rd, 7th, & 10th-Timers Too)
Let’s be honest: borrowing private or hard money for the first time feels a bit like getting hazed by a fraternity. You want in, they’ve got the keys, and you're standing there with your dreams in one hand and your checking account in the other, wondering if you're about to get dunked in the deep end. Spoiler: you are.
But here’s the good news—you only have to take that first hit once.
Whether you're new to real estate investing or you've done a few deals but still feel like a freshman, this post will tell you exactly what lenders are looking for and why they care.
The Six Things PMLs and HMLs Want to See (In Order of Importance)
The Deal Itself – If the numbers don’t make sense, nothing else matters. The property is the collateral. Show the lenders meat on the bone.
Your Experience – Rookie? No shame, but be honest. Vet? Let your track record do the talking.
Your Relationship With the Lender – Do they know you? Like you? Trust you? Relationships reduce risk.
Money Down – Skin in the game says you're serious. No one wants to fund your 100% daydream.
Money in Reserves – Because Murphy's Law is real, and surprises always cost money.
Credit Score – Yes, lenders peek. No, it’s not the top priority, but it helps.
Why This Order Matters: One Word – RISK
Private and hard money lenders don't have FDIC insurance or a warm and fuzzy risk committee. What they do have is experience—and that experience tells them that every deal carries risk. Your job is to reduce it. The lower your risk profile, the better the terms you’ll get.
So let’s talk about how to become the kind of borrower lenders like to see coming.
Step 1: Take the First Hit
Your first private or hard money loan will be the most expensive money you’ll ever borrow.
You’re new to real estate investing (strike one).
You’ve got no track record (strike two).
You’ve never worked with this lender before (strike three).
That’s three layers of risk they’re eating. So yes—your first deal is going to come with higher rates, higher fees, and a requirement that you have some cash on hand. And you know what?
It’s still worth it.
Because this is how you get in the game. This is how you build your credibility. This is how you show you can swing the bat. This will make more sense as you continue reading.
Step 2: Prove You’re Trustworthy
Pay back your loan. On time. With no drama. That’s it.
Once you've done that, you’re no longer “some guy we just met.” You’re a borrower with a track record.
You might not get better terms immediately, but you’ve earned the lender’s attention. Keep doing deals. Keep succeeding. Before long, you're getting better LTVs, lower fees, and the kind of flexibility that makes other investors jealous.
Step 3: Get Better and Make Fewer Mistakes
Real talk: you’ll screw up early. Everyone does. But the goal is to make your rookie mistakes small and survivable (which is one reason why The Quantum Funding Company provides free consulting for our clients).
After your 5th or 10th deal, those growing pains start to fade. Your processes tighten up. Your numbers sharpen. You stop stepping on rakes. Are you ever going to be perfect? No. You’re human. But failures = education and when you’ve earned your PHD in REI Hard Knocks….
That’s when lenders LOVE working with you.
Now you're the person who gets approved fast. Now you’re the one they want to fund. Apartment buildings? Bulk packages? Multi-state flips? Let’s talk!!
Why? Because you’ve proven that you’re not just an investor. You’re a pro.
Final Thought: The First Deal Is the Hardest—But It Unlocks Everything
Yes, you’ll pay more on that first loan. Yes, you’ll need to show more. But that first sacrifice? That early discipline? That brave leap? It’s the price of admission to the wealth-building game you came to play.
Take the first hit. Make it count. And then keep swinging.
The big money? It's coming. Just don’t stop.
By the way, are you interested in learning how to do REI and prep for your PM and HM loans? Become one of our consulting clients. It’s free, you just commit to getting a loan through us….oh yeah, and you have to apply. Since it’s free we get tons of requests. We only take on serious, dedicated, hard-working clients. Send an email to info@quantumfunding.co and tell us you’d like to apply to be one of our exclusive REI consulting clients. You’ll be glad you did!
To learn more about prepping for a loan read the following blog posts:
What do you mean, no pre-approval? https://www.quantumfunding.co/blog/what-do-you-mean-no-pre-approval
Private Money vs. Bank Loans https://www.quantumfunding.co/blog/private-money-vs-bank-loans
The Power of Lending Relationships: How My Approach Empowers Real Estate Investors https://www.quantumfunding.co/blog/the-power-of-lending-relationships-how-my-approach-empowers-real-estate-investors
Signatures & Sledgehammers: Securing Funding for Your Fix-And-Flip Project https://www.quantumfunding.co/blog/signaturesandsledgehammers
