Property investment is one of the most reliable forms of business in the world. As long as you’ve been prudent and selected a region where growth is occurring, there will always be a need for buildings. Of course, growth also means that demand for new things will increase. So while people will always want to buy an existing home or building, often demand outstrips supply.
When that happens, there are real opportunities, especially for people that take the initiative to create new buildings. In situations like this, you’ll need to consider getting a hard money construction loan.
The Big Difference
In business, timing is everything. A deal or opportunity can appear, and it may be extremely promising, but only if you’re fast enough to capitalize on it. New property development is one of those areas. Once a new region is up for development, many people see the possibilities and move quickly.
Construction loans from a hard money lender can mean the difference between losing a great investment opportunity, and having first mover advantage. Unlike banks, a hard money loan can get approval much faster. The loan is also primarily concerned with the same goal as you; profit. A construction loan is usually assessed by the value of the property when it is complete, rather than how credible your credit rating is.
Of course this means that because individual financial records are less demanding, the actual terms of the loan make up for it. This type of loan often has shorter terms, higher interest rates and more points, but it balances all of that by backing up your investment based on the promise of the profits you’ll make.
Ultimately, it’s up to you to see a good business opportunity, and ensure that the chance to make a profit is there. If you’ve made an intelligent, calculated risk, a hard money construction loan is a great way to get moving on it quickly and ensure that the chance you’ve taken pays off for everyone. Always make sure you’ve done your due diligence and thoroughly researched your project before you go seeking a construction loan.