When it comes to hard money lending, whether you’re looking to fix and flip a property or invest or build, these types of loans are generally going to be your best option. Conventional loans are hard to come by due to their strict regulations and requirements, and they’re even worse if your financial situation isn’t up to par, but with hard money loans it’s an entirely different story. If you’re a builder, contractor, landlord, or fix and flipper looking for a loan, consider these points before going through the long process of dealing with bank loans:
Pros
- Hard money loans give you more flexibility than traditional loans. We don’t have a complicated underwriting process, we don’t have strict regulations you have to fit into; when considering whether to approve your project for loan, we look at the value of the property itself, not your financial situation. This gives us more room to negotiate all aspects of the deal to fit your specific needs because we are able to evaluate each deal individually.
- In many cases with this type of work, you’re often in need of a deal that can be closed quickly. When working with banks and credit unions, you can always expect a lot of paperwork to be completed along with their standard processing and approval times, and you don’t always have time for the process even if you are able to meet their standards. When you work with hard money lenders, we can typically close your deal much more quickly – some within as little as 24 hours, and most within a week, depending on your plans for the property. This allows you to not only turn your properties around for profit much faster, but makes for faster closing timeframes the more you work with us.
- Because we invest in the value of the property itself, we are typically more willing to accept different types of collateral – this is as long as you, the borrower, can present profitable collateral to secure the loan, of course. This encompasses anything from solid plans for the property once it’s fixed to the current value of the property as-is, and will give us a much better understanding of the deal.
Cons
As with anything, hard money lending does come with a couple of cons as well. For instance:
- Because the nature of our loans is exclusively for those fixing, building, or renovating property, our loans are available as a short-term means of financing only. They can range anywhere from 6 to 24 months, but because of this, the payments for month are typically higher.
- Our interest rates are also typically higher, and this is due to the nature of acceptance. Because we base approval on the value of the property, we take on more risk, and therefore it is beneficial for you to ensure you’re managing your investments properly and carefully to avoid default.