Taking the “Hard” Out of Hard Money Lending in California

What is a hard money lender? And why is it that many of them prefer to go by a more friendly-sounding monitor — private lender? It is most likely because when people hear the phrase hard money lender, they automatically assume a person is talking about a loan shark. What needs to be realized, though, is that hard money lending is not bad. In fact, it can be a very reliable source of funding for people who are looking to make fix-and-flip investments.

Reasons you can take advantage of a hard money lender

The following circumstances are examples of instances in which you can take advantage of a hard money lender:

  • A property is identified that you must purchase in a very short amount of time in order for you to make a good profit on the investment you make.
  • You are interested in buying a piece of property that requires extensive rehabbing but you do not want to pay for the rehab out of your own pocket.
  • You are unable to secure funding through a traditional banking institution.
  • You want to take advantage of a short and simple loan application process.
  • You need quick access to money.

You have probably heard a few things about hard money lenders before, and these things may not have been good. What you need to realize, however, is that these lenders are just as interested in making money and making sound investments as you are. They want everyone involved in the loan process to be satisfied, including the borrower. When you choose a hard money lender, you should make sure you are borrowing from an entity that provides you with a constant supply of financing as you never know when you will need to access funds for the fix-and-flips you are investing in.

The Benefits of Hard Money Lenders

As you can see already, hard money lenders bring many benefits to the funding table. Let’s take a quick look at a list of these benefits:

  • You don’t need to meet a long list of requirements to qualify for financing.
  • You can take advantage of asset-based lending.
  • More collateral options than you will find through traditional banks.
  • Hard money lenders understand the importance of making repairs to your fix-and-flip properties.
  • Lower down payments than you will have to pay to secure funding through a traditional bank.
  • Faster loan approval.
  • Quick access to funds.
  • The application process is very simple.
  • No hidden fees.
  • Reasonable and affordable loan rates.
  • Rehab properties can take advantage of short-term bridge loans.
  • Repayment options are very flexible.

A hard money lender shares the same vision you have in regards to the investments you are making. They have an extensive amount of knowledge relating to fix-and-flip investments, which is why they are so eager to lend money to help you fix up the properties you buy. They are more apt to lend money because they lend funds based on the after-value of a property rather than the current-value. They take into account what the property will be worth once the repairs and remodeling have been completed.

Knowing How to Choose a Hard Money Lender

As you can imagine, all of the benefits brought to you by a hard money lender can only be accessed if you partner with a lender that is reliable and reputable. This is why it is so important to choose a lender that has a good reputation and that you deem as trustworthy. To help you assess the reputation and trustworthiness of a lender, you should ask yourself the following questions:

  • Is the hard money lender licensed?
  • Is the hard money lender bonded?
  • Does the lender have extensive knowledge relating to the real estate area in which you are wanting to purchase property?
  • Does the lender have references you can contact?
  • Does the lender make it simple to understand any listing fees?
  • Does the lender offer flexible repayment options?

The Takeaway

If you are looking to invest in a fix-and-flip, you need to make sure that you consider all of your financing options, including hard money lending. You may have heard bad things about this lending practice in the past, but truth is, it is a very reliable source of funding that can provide you quick access to the money you need to make the most money out of your next investment.

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