If you are looking for a source of funding to invest in a residential or commercial property, apart from applying for a bank loan, you should also consider contacting hard money lenders.
In the past years, the hard money lending business received a lot of bad rep, due to several lenders providing risky loans with the intention to foreclose on the properties given as collateral. Due to this, many real estate investors are still hesitant to contact hard money lenders for funding, despite the fact that the majority of the lenders are reputable businessmen.
This article will cover some of the benefits hard money lending can offer in comparison to other traditional loan options.
Hard Money Lending Is Fast
Compared to traditional financial institutions, applying for a loan from hard money lenders is virtually effortless. If you need the funds to close the deal quickly, visit www.hardmoneylenders.finance and you can get approved for a loan within as little as 24 hours.
This way you can make sure you don’t miss out on an opportunity, due to long loan approval and processing times. The reason why hard money lenders are able to process loans faster is that the loans are based solely on the presented collateral.
Additionally, if you happen to be a regular client having established a good relationship with the lender, the process can be even faster.
The Approval Process Is Simpler
Traditional financial institutions have an established array of requirements the borrower must meet in order to get approved for a loan. This means more paperwork and meticulous screening of the applicant, which can depend on your credit history, affect your ability to get a loan at all.
On the other hand, hard money lenders are more interested in the potential of the property and your business plan than your credit rating, which results in a smoother process if you have a sound investment and exit strategy.
Consequently, the amount of money you are able to borrow depends on the value of the collateral and the merit of your investment plan. This means that a private lender is likely to be able to lend you a significantly larger amount of money than any other financial institution.
Hard Money Lending Comes With Flexible Terms
Unlike banks, which offer pre-defined loan terms, hard money lenders, being independent businessmen, are free to negotiate and tailor the repayment plan to your needs.
Hard money lending is a competitive field, so if your investment plan has merit, the lender will do their best to not miss out on cooperating with you and lose a potential long-term client. Repayment schedules, interest rates and the loan amount are all subject to discussion and mutual agreement.
Hard Money Loans Make It Easier To Start Investing
If you are just starting out, you may find it hard to secure enough funds for your first investment through a bank loan, either because of your credit rating or lack of money in your account. Such a situation could be quite frustrating and mean passing on the presented opportunity.
With the already mentioned flexible terms, a reputable hard money lender can help you overcome this problem and allow you to buy your first investment property with much less of your own money than financial institutions require.
Once you have overcome this first and most common obstacle and earned your first dollar as an investor, future loans and investments will come much easier.
Hard Money Lenders Establish A Partnership With Their Clients
Considering the fact that hard money lenders are seasoned in their fields and that they want to invest their money into successful projects, they will utilize their knowledge of the market when reviewing a loan application.
This means that the borrower can expect to hear their opinion and advice on the presented investment plan, which can prove to be of great help. If a lender approves your loan, the success of the project becomes your mutual goal.
The insights and experience of the lender can increase the chances of your project succeeding, regardless of whether you are a first-time or an experienced investor. Additionally, if you establish a good working relationship with the lender, they are likely to offer you more favorable terms in the future.
Although hard money loans can seem like really risky business at first glance, you should take your time to analyze all the differences and benefits it has to offer, compared to bank loans for example.
Knowing how and when you can use this alternative source of funding can help you land some great deals and become better at what you do.
The truth is that all investments carry a certain amount of risk. However, partnering up with a hard money lender and using their knowledge and experience to your advantage will help you understand these risks better, increase your chances of success and ultimately aid you in becoming a better investor.