How a Hard Money Loan Can Save You Some Holiday Cash

While traditionally an ideal time to buy properties is in the warmer months, there is more than one advantage to doing your investment property hunting during the holidays. However, if you are strapped for cash as most people are during the winter months, you may think it’s not the best time to secure financing.

If you want to move in on a winter property from a motivated seller quickly, a hard money lender may be your best option, and be able to save you some cash in the long run. Here are several reasons why you should use a direct lender to finance your next cold month purchase.

There’s usually a fast turnaround. With conventional loans, a lender may take between 30 to 45 days to approve your financing, which is not great when trying to invest in a hot property. Some hard money lenders can get you an approval with a simple application within as few as five minutes, and if the property is deemed a great investment, they can get your financing to you within three to five days. This can make all the difference to a motivated seller during the winter months when properties are likely only to go on sale if a seller needs to be rid of it.

Hard money loans are seen as strong financial backing. Unlike conventional lenders, the property value is what’s taken into account for a commercial building loan, so it’s unusual for a lender to pull financing at the last minute. Conventional lenders may pull the backing for any reason during the escrow period, usually if something about the lender has been discovered as unfavorable. Hard money loans are considered to be stronger for sellers who are looking to close quickly.

Unlike cash offers, hard money lenders can keep you afloat during necessary rehabilitation. Cash offers may seem like a good idea, but saving the amount of cash needed to purchase and repair an investment building can take years, and unforeseen problems could make the cash run out faster than expected. With an investment loan, you can purchase the property as is in its value, and use the short-term loan to start the rehab quickly. You’ll also be able to finance any problems that may arise from the property without having to cut the budget elsewhere.

Hard money lenders can offer valuable, honest advice. A property is likely to be in its worst condition over the winter months, so if you are hunting during this time, you’ll likely encounter fundamental problems that will come up throughout the year. A hard money lender works with the buyer to help them succeed because they do not want to see failed properties and defaulted loans. They can offer valuable advice on whether the property itself is worth the investment, or if you should move on.