An effective way to finance your real estate transaction is by using “hard money lenders.” These lenders make short term loans based on ‘hard’ assets not your credit worthiness. These loans are made by private lenders not banks or conventional mortgage companies. The interest is usually substantially higher than banks because they are funding deals that the bank would normally decline. Consequently, their default rates are higher than the banks.

To protect themselves, hard money-lenders base the loan amount on a low percentage of the value of the property. Usually they will lend between 60%-70% of the market value. That gives them the opportunity to sell the property quickly if the borrower defaults on the loan.

This type loan is best used on re-hab projects that you plan to fix up and sell. Another option would be to fix up a property, put a tenant in it, and try again for more traditional funding. All the while you should be working on your credit rating to make yourself a more desirable borrower.

You can find hard money lenders by checking with mortgage lenders or real estate agents in your area.  You can also type in “hard money lender” using quotation marks in a search engine like Yahoo or Google.