Seven Significant Reasons to Use a Hard Money for Real Estate Investment Loans
Real estate investment is a hot market in today’s investment realm. New buyers are coming into the field with questions about how to best find the capital they need for their real estate projects. Here’s a quick list of important facts about using a hard money lender for a real estate investment loan.
- It’s Faster. The paperwork of a traditional lending agency can take up to four months to process. This is a lifetime in a real estate investment. Compare this to a direct money lender who can approve your loan in a matter of a few weeks or days. Time is real money in a real estate investment and when the money comes faster, you’re set yourself ahead of the competition.
- No Credit Check. Real estate investing is a risky business. Being in it for a while is certain to bring in both success and failure. Don’t let the failure hinder your ability to gain capital for your next project. Use a hard money lender because they do not make their decisions based on personal financial history but rather on the value of the subject property.
- They are reliable. Since direct money lenders are typically private individuals or small businesses, they are more readily invested in your real estate project than a bigger corporate lender. Many times a bank will pull financing during escrow. A hard money lender will not do this because they are using asset-based loans.
- They can help you get a better deal. If the buyer is able to procure money quickly during the buying process, they are usually able to secure a cheaper price and a shorter closing. Having that money on hand from a real estate development loan can be very beneficial.
- Flexibility. A hard money lender can help you attain finances which are outside of a traditional lending method’s guidelines, like the number of properties you choose to invest in or the number of investors involved in the loan.
- Real estate advice. Chances are your direct lender is experienced in real estate development. They can be a (free!) wealth of knowledge to you, and as you use their advice in your real estate project, both of you will benefit from your mentor/mentee relationship.
- Networking opportunities. Unlike an impersonal banking institution, your hard money lender is a person just like yourself with connections in the real estate world which will enhance your entire profession. From contractors to insurance agents to property managers, your direct lender can provide you with a list of contacts and networking opportunities.