4 Best Hard Money Lenders in South Dakota

South Dakota is a state that spans more than 77,000 square miles, but it is home to under 900,000 people. Located in the North Central region of the country, much of the state is rural and a part of the Great Plains. Noted for its strong Native American culture, beautiful natural areas, and the home to Mount Rushmore, a popular tourist attraction, South Dakota has much to offer home buyers.

Today, much of the state remains heavily used for agriculture, though its economy also includes a large sector of tourism, retail, finance, and healthcare. Its largest cities of Sioux Falls, Rapid City, and Pierre have less of a formal urban environment than most other states, but there are pockets of much more affordable real estate in this area.

Overall, the cost of real estate in South Dakota has risen steadily over the previous few years, like much of the rest of the U.S. Limited overall new construction is one key factor of this growth, especially with low interest rates making it very affordable to buy a home here. In 2022, the average sale price of a home in South Dakota was $241,500. There are areas where the home sale price is much lower, even as low as half of that amount. Finding affordable homes here is possible.

When it comes to rental income properties, South Dakota offers some benefits to investors. About 69.3 percent of people living here own their homes, and 30.7 percent rent them, according to the U.S. Census Bureau. There is demand for rental income in this area, then. Also valuable is that just 4.7 percent of rentals are vacant in the state, which may mean there is significant demand for these properties in other areas.

How hard money loans work

Some people hoping to buy investment property in South Dakota may wish to seek out a hard money loan to do so. Hard money lenders in South Dakota offer these asset based loans to those borrowers who wish to buy property that is sometimes hard to finance through your typical bank loan. That may include properties such as fix and flip projects, rental income properties, and commercial real estate development of other types. This could include vacation homes rented for a short amount of time or retail and residential mixed properties.

Hard money loans in South Dakota are very different, though, from typical loans. They are usually only in place for about 5 years, and some have a term of about 1 year. This short-term loan enables borrowers to secure the funds they need to buy the home so they can fix it and then sell it or refinance the loan into a more affordable loan. Hard money loans carry a significant amount of risk to the lender, too, which is why most have interest rates that range from 8 to 15 percent, and sometimes more. That high cost helps offset the risk.

Hard money loans are asset-based. That means the lender can pursue foreclosure of any investor that does not make payments as agreed in the loan terms. That is an important consideration because borrowers who default on the loan could lose any money they put into the project. Hard money lenders don’t want to see this happen, which is why they traditionally work hard with borrowers to ensure properties are worth the investment. Down payment and credit qualifications for these loans can differ widely between lenders, too. It’s always wise to learn as much as possible about the lender before investing.

4 Top South Dakota hard money lenders

If you’re ready to learn more about the best hard money lenders in South Dakota, here are the top options we’ve found through our research.

1. Stratton Equities

Stratton Equities is a nationwide direct hard money lender for real estate investors. Founded by Michael Mikhail in 2017, Stratton Equities has over five years of experience in the private lending market.

We reached out to Stratton Equities to get more information about their hard money lending program and here are some highlights:

• Loan amounts from $100,000 up to $5 million
• Investment properties only
• Single-Family, Condos, Townhomes, Multi-Family, Commercial, Mixed-Use, Office, Retail, Industrial and Warehouse are all ok
• Up to a 75% LTV
• Rates start at 7.25%
• Interest only payments
• Loan terms are 9-24 months
• Foreign nationals are eligible
• No prepayment penalty option is available

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

2. Easy Street Capital

East Street Capital is based in Austin, Texas but lends nationwide except in North and South Dakota. Founded by Stephen Hagerman in 2016, Easy Street Capital has over six years of experience in the real estate investing world.

We reached out to Easy Street Capital to learn more about their hard money loans and this is what we found:

• Interest rates range from 6.9% – 10.9%
• Points range from 2-3
• There is a $1495 document fee
• No minimum credit score required
• Down payments of at least 10% required
• Renovation financing ok
• Fix and Flip loans do not typically have prepayment penalties

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

3. HouseMax Funding

HouseMax Funding is based out of Austin, Texas but has a national footprint when it comes to real estate industry lending. Started by Jeff Fetcher and Alex Morris, HouseMax provides asset-based loan financing to investors for real estate transactions.

We reached out to HouseMax to learn more about their hard money lending program and here is what we found:

• Minimum loan amount is $75,000
• Lends up to 75% of the after-repair value (APV)
• 1-3 points origination charge
• 3 months reserves required
• Direct lender that approves loans internally and funds using their own private capital.
• Lends in urban and suburban communities in all 50 states.
• Goal is to close loans in 10 days or less.
• Specializes in fix & flip loans, construction and rental loans
• Multi-family and commercial properties are ok

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

4. LendSimpli

LendSimpli is a hard money lender based in Tampa, Florida. They can lend nationally in most states but may not be able to lend if the property is in a rural area. Founded by Brenden Crampton and Matthew Davies in 2018, they have nearly four years of experience in the private lending real estate investing market.

We reached out to LendSimpli to get more details about their bridge loan product and this is what we found:

• Loan amounts up to $5 million for 1-4 unit properties
• Loan amounts up to $20 million for 5+ unit properties
• Single family (1-4 units)
• Multifamily (5-20 units)
• No owner-occupied properties
• Loan terms 12-24 months
• Interest-only payments with rates starting at 8.50%
• Max LTC is 90% of project costs
• Minimum credit score is 660
• Prefer that you have at least two transactions in the past three years

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

What are the main advantages of a South Dakota hard money loan?

South Dakota hard money loans offer a range of benefits for borrowers. The biggest of which is being available. Since many other lenders will not offer loans on these types of properties, investors who do not want to use their private savings for a project may not have any other option than these lenders to turn to for their needs. There are far fewer regulations and stipulations on these loans as well, and often lenders will work closely with borrowers to ensure the terms meet their goals.

Another significant difference is in the way these properties are valued. South Dakota hard money lenders typically will consider the after repair value of the property rather than using the current value of the property based on its current condition. Some lenders may lend up to 70 percent towards the after repair value of the home, and others may be more. This allows investors to gain access to the loan they need to make repairs on property that could be in very bad condition.

If you like buying rental properties and feel you can fix and flip quickly, then working with a private money lender is a good option. Consider the purchase price and interest rates when deciding between different kinds of real estate loans, too, since this can all influence the property type you select and the loan rates you’ll ultimately go with.

Interest rates are higher, as are fees, but these are shorter term loans as well. That means borrowers may not be paying as much in the long term if they are able to sell the property or refinance the loan within the loan period. For those that only need a short term loan, this can be a very important investment feature.

Also notable is that these loans can typically close faster than the average conventional loan. There are fewer things to slow it down, like inspections or FHA guidelines. That means some properties may close within 30 days rather than the 60 to 90 that is otherwise common in these properties.

Looking for a hard money lender in a different state?

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