Hard money loans for real estate investors.

Hard money loans for real estate investors provide more alternative forms of financing that are very advantageous in more than one way. In fact, hard money loans are a great go-to source for capital investments because these present a convenient acquisition strategy. So, let’s take a look at what hard money loans are and why these are often used by savvy real estate investors.

Hard Money Loans Explained

We’ll begin by explaining what hard money loans are and how they work. Compared to traditional bank financing, these are quite different. These are private debt instruments, funded by a group of investors.

Put another way, a group of diverse investors pool their money together and loan it out. In return, they earn a profit while giving loan recipients some big benefits. Because of the source, this means there’s far less red tape to wade through and that’s a good thing for borrowers.

Hard Money Loans for Real Estate Investors

Hard money loans for real estate investors are a wonderful alternative to traditional financing. Since the big recession, banks have become and remain more risk-averse. Although some lenders have relaxed their stringent requirements, commercial loans remain much more difficult to obtain. Meaning, when real estate investors need funding capital, it’s harder to find a viable source.

Top Hard Money Real Estate Loan Benefits

Now, let’s take a look at the benefits of hard money loans. First, we’ll tick-off a few downsides (which are inevitable with any type of financing). Usually, hard money loans require higher down payments and come with slightly higher interest rates. And, these are short-term loans -- but that’s also an advantage in most circumstances. Here are the biggest advantages to hard money loans for real estate investors:

1.    Fast funding. Unlike traditional lending sources, which often take weeks to months, hard money loans are quickly funded. But, due to the source of hard money loans, who are business-oriented individuals, things move much more quickly.
2.    Flexible terms. Another component of traditional commercial loans which frustrate borrowers is the terms. Usually, these aren’t very flexible but that’s not the case with hard money loans. Instead, hard money loans often feature flexible terms for borrowers who can customize their debt instruments to better fit their needs.
3.    Higher rates of approval. Unlike traditional bank loans, hard money loans boast higher approval rates. This is due to the fact there is a motivation to make the loans accessible.

4.    No or minor prepayment penalties. Generally, hard money loans do not include prepayment penalties, making them all the more attractive and beneficial.

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