Hard money lenders in NY are not going to be interested in your project unless you can show them how it will help them make money. In order to do this you need to think the project through and have all the paperwork ready before you apply for a hard money loan. You need to show on paper exactly what you plan to do with the money you need to borrow.
Prepare a Project Analysis
The first thing you need to do during your development stage is to prepare a detailed analysis of the project and show exactly what you want to do. It doesn’t matter whether it is new construction, a rehab project or just a property in which you want to invest. Your analysis should include not only the details of the project but also estimated cost of materials and labor. You also need to provide a timeline for completion of the project.
Allow for Cost Increases
When you prepare your original project analysis you need to allow for any increases in materials, especially if you anticipate a substantial amount of time from the start of the project to completion (probably anything over 60 days will be subject to increases in the costs of material). The idea is to provide the hard money lender in New York with as accurate of a cost analysis as possible. The one thing you don’t want to do is apply for your loan only to find out later you need more money. While you don’t want to apply for more money than you need because of the short time frame for repayment and the high interest rate, you also don’t want to cut yourself short.
Have Photos, Drawings and Blueprints
When you begin meeting with hard money lenders in NY, you need to have as much information as possible about your project’s development plan. One of the easiest ways to do this is to have photographs, drawings (schematics) and blueprints. This will help the hard money lender see exactly what your plans are and allow them to see whether they are interested in investing in your project. Of course, this is of less importance when you are just buying a commercial building although you do need to show what you plan to do with the building and how you can turn it into a cash cow for the hard money lender.
Have a Detailed Timeline for Your Development Plan
Don’t go into the office of any hard money lender in New York without a detailed development plan that includes your timeline. While this may change over time, you want to at least show the lender what your current projections are and how you foresee the project unfolding. It’s easy enough to say, “I will complete it in six months;” the lender wants to know HOW you plan to do that and at what cost. This is no different than going to your bank and presenting a business plan—essentially this is what you are doing.