Why A Real Estate Investor May Need A Hard Money Loan

A hard money loan is a specific type of asset-based loan that comes from a non-bank source of financing and typically issued by private investors or companies.  Here are some advantages where a hard money loan can be the ideal type of financing for a seasoned real estate investor or novice:

  • Faster Real Estate Transactions vs. Bank Financing: Good real estate deals don’t wait for bank financing. These opportunities usually have investors lined up to purchase these properties & most of the time they have cash. In these situations, a real estate loan may be needed very quickly & banks are not known to move at warp speed.  It can take weeks or longer until the borrower receives an approval.  A hard money loan can be funded as quickly as 5 business days & save the deal for the borrower.

 

  • Bad Credit: Borrowers who can’t get conventional financing due to a recent foreclosure or short sale can still obtain a hard money loan.  Banks focus on the borrower’s credit & income.  Hard money lenders primarily focus on the value of the property as well as the equity, the amount the borrower is putting down for the property. When the banks say “No”, the hard money lender can still say “Yes”.

 

  • Leveraging Money to Purchase More Property: Real estate investors who purchase properties with cash many times can’t purchase another property because their money is tied up. This limits the amount of deals that can be done at one time & they may miss a great opportunity.  Using a hard money lender, the borrower can finance up to 80% of the purchase price & have the additional money for project renovations & other property purchases.

 

  • Distressed or Vacant Property Purchases: Often the best values in real estate can be found in vacant or distressed property purchases. Traditionally, banks will not loan on a property that is being purchased by a borrower who is wanting to purchase, rehab & sell for a quick profit (flip). Banks want long-term commitments on their loans by making profits from the interest & servicing rights.  Hard money lenders on the other hand are a reliable source for financing these types of purchases.

 

  • Foreign National Real Estate Purchases: For foreigners looking to buy real estate in the U.S., even with large down payments, it’s difficult for them to obtain a bank loan. Many hard money lenders will lend to foreign nationals on U.S. real estate purchases with adequate down payments.

A hard money lender can be a great asset when that once in a lifetime deal comes along.  It’s always a good idea to have a qualified hard money lender’s contact information when it does.

You can visit us at www.hardmoneysource.com or call us at 530-710-4262 for more  information.

~ Ken Hunter
c/o Hard Money Source

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CA BRE # 01845199