What comes to mind when someone says, “hard money loan?” If you are anything like the millions of developers and real estate investors who are wary of hard money, you probably think of a predatory lender who swoops in with the intention of lending to own. It is time to change that perception. It’s time to rethink hard money loans.
Learn about the pros and cons of hard money loans below. Don’t hesitate to call Lionshare Lending today at 855.505.LEND for more information about how a private money loan is a great option for a variety of real estate deals.
Hard Money 101
Before we get into why it’s time to rethink hard money loans, let’s first take a look at what exactly is meant by hard money. This might seem obvious, but you would likely be surprised by just how many people don’t understand this type of lending.
Hard money lending, also known as private commercial real estate lending and commercial bridge loans, is a way to use collateral to secure your loan. Traditional lenders focus mainly on things like your financial history, credit score, and debt-to-income ratio. Hard money lenders, on the other hand, will take into account all of these factors but will also include the property as an important consideration in the approval process.
The Benefits of Hard Money
Now that we’ve touched on what hard money is and, more importantly, what it isn’t, let’s take a look at the benefits of hard money. There are myriad benefits, but the most important to investors are the speed and the flexibility that hard money offers.
Banks and other traditional lenders often take an inordinate amount of time when deciding whether to approve your loan application. The average time for a traditional loan is estimated to be anywhere between one to six months. That can be true for borrowers with sterling credit and a good debt-to-income ratio as well as those with a less pristine financial history.
One of the major benefits of hard money is that you get to bypass this lengthy process. You don’t have to wait six months for a decision. You can get approved in a matter of days or weeks depending on the complexity of your transaction. This, in turn, lets you close your deal quickly and efficiently, which is a major edge over your competition.
This speed highlights the other significant benefit of hard money – the flexibility of the loan itself.
While traditional financial institutions have a number of rigid rules and regulations that govern every step of the entire loan process, from the review of your financials to the underwriting itself, private lenders are able to offer more individualized services. This covers everything from the terms of the loan to the repayment process.
Rethinking Hard Money
Now that some of the benefits of hard money are clear, let’s take a look at why it’s time to rethink hard money loans as a whole.
Hard money offers you speed that your competition simply doesn’t have, providing the opportunity to close more deals in a shorter time period. It also lets you stand out in the competitive world of real estate investment, especially in an ultra-competitive market.
Hard money also offers an alternative for developers or investors with a less than perfect financial history. While banks or other traditional lenders will only consider the past, hard money lenders look to the future. What is the deal you’re considering? How can you most effectively close that deal successfully? These are the types of questions that private lenders consider.
Finally, it’s worth rethinking hard money because of the flexibility of the loan terms. Private lenders evaluate each borrower on a case-by-case basis. What works for a borrower in New York probably won’t work for a borrower in Florida. What works for someone in need of construction financing probably won’t work for someone doing a cash out refi. This level of personalized service is geared to helping set your investment up for success.
So, for all of the reasons above, it’s time to rethink hard money lending. Are you an experienced investor who needs quick financing from one of the nation’s premier hard money lenders? Then you need Lionshare. Call us today at 855.505.LEND to get started.