Stop Googling Hard money lenders, we are here to boost your real estate business!
April 21, 2022
The first thing to know is that it is a hard money loan, this term refers to a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.
Most hard money loans are used for projects lasting from a few months to a few years, these are short-term lending instruments that real estate investors can use to finance an investment project. Unlike traditional bank loans, the ability to obtain hard money financing isn't determined by the borrower's creditworthiness. Instead, hard money lenders use the value of the property itself in determining whether to make the loan.
The purpose of using these types of loans is to secure a property to renovate or develop and ultimately sell it for a profit. An investor might choose a hard money loan over a conventional loan because of the ease of access to the funds. Lending options from financial institutions often have complicated approval processes and weigh heavily on the borrower for approval. Hard money loans are asset-based and typically secured by a mortgage, so their approval process is much faster.
Hard money loans represent one of the single most advantageous funding opportunities for investors to take advantage of, few sources of capital can compete on the same level as hard money and offer the same competitive edge. It is hard money loans, after all, that many investors have to thank for acquiring their deals in the first place.
It doesn't mean that this kind of financing doesn't have downsides, but it is for sure the one with the most superior benefits for real state investor. Here we share some benefits of hard money loans:
Speed: Hard money lending is fast, as you can secure a loan in days or weeks (depending on negotiations). Time is essential, especially for large development projects, and hard money lending can help speed that process along.
Flexibility: Terms can be negotiated with hard money lending loans, since you are dealing directly with individual investors. Banks are not as flexible.
Collateral: With hard money financing, the property itself is your collateral for the loan. Some lenders even accept other assets, like your retirement account or residential property under your name, as a basis for starting a loan.
No "Red Tape": Getting a loan for an investment property with a traditional mortgage is difficult, if not impossible. Traditional borrowers need to worry about credit score, LTV ratios, debt-to-income, and several other indicators they need to meet criteria for. However, hard money lenders function as asset-based lenders who are more concerned with the property than the borrower's credentials.
Convenience: There is something to be said for the convenience of being able to close with cash. Having to supply a lender with bank statements, income documentation, tax returns, and leases can become overbearing and consume your focus and energy. Hard money, on the other hand, cuts out the middleman and a lot of the headaches.
Volume: Hard money lenders allow investors to leverage other people's money. That means investors could potentially fund more than one deal at a time. Traditional loans will do no such thing. If you want to fund multiple deals at a time, you should really consider a hard money loan.
Competitive edge: Hard money allows investors to beat out the competition, or at least those using a traditional loan. If for nothing else, sellers prefer the two things hard money offers: cash and a timely transaction.
That said, if you are looking to fund a deal, you may not want to ignore hard money; it could be the one thing that gets you what you need. At Gallagher Capital, we specialize in commercial real estate financing, our team has years of local experience and is able to analyze, structure and manage any loan, from origination through repayment. The discretionary fund structure offered ensures that capital is allocated efficiently and reliably, allowing our borrowers to successfully complete their real estate transactions on their schedule.
Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 800-369-2342.