5 Benefits of Hard Money Lending for Real Estate Investors
Hard money is a type of financing typically used by investors to purchase properties that need to be repaired or renovated. Hard money loans are made by private lenders and are secured by the property's value, not by the borrower's creditworthiness.
Hard money loans are typically short-term loans, lasting for one to three years. They usually have high-interest rates and origination fees, but they can be a good option for borrowers who cannot qualify for traditional financing.
Investors who use hard money can often get properties at a discount, because they can close quickly and do not need to worry about repairs or renovations. Hard money can be a good option for experienced investors in flipping properties.
What Are the Misconceptions about Hard Money Lending
There are many misconceptions about hard money lending. Some people believe that hard money lenders are only interested in lending to people with bad credit, but this is not true. Hard money lenders are willing to lend to anyone with the collateral to back up the loan.
Another common misconception is that hard money loans are always expensive. While it is true that hard money loans can be more expensive than traditional loans, this is not always the case. Hard money lenders are typically more interested in the collateral than the credit score of the borrower, so they are often willing to offer lower interest rates.
Some people also believe that hard money lenders are only willing to lend on investment properties. However, this is not always the case. Hard money lenders are can lend on any type of property, including primary residences.
What Are the Benefits of Hard Money Lending
Hard money lending is a type of financing typically used by real estate investors. This type of financing is typically more expensive than traditional financing, but it can offer some benefits that make it worth considering for certain types of deals. Here are five benefits of hard money lending for real estate investors:
1. Fast Financing
Hard money loans are a quick and easy way to finance real estate investment projects. In most cases, you can get funding within a week or two. This is much faster than traditional bank financing, which can take 30-60 days.
2. No Personal Credit Check
Another benefit of hard money lending is that your personal credit score is not a factor. Lenders will only consider the value of the property you're buying. This is helpful if you have bad credit or no credit history.
3. Less Paperwork
Hard money loans also require less paperwork than traditional bank loans. This is because the lender is primarily concerned with the value of the property, not your financial history.
4. Flexible Terms
Hard money loans typically have shorter terms than traditional bank loans, usually 1-5 years. This gives you more flexibility to sell the property or refinance to a traditional loan when ready.
5. Finance Residential and Commercial Properties
Hard money loans can be used to finance both residential and commercial properties. This type of loan is often used by investors to purchase fixer-uppers or properties in need of repair. The shorter loan terms and higher interest rates make hard money loans a more expensive option than traditional loans, but they can be a good option for investors who need to act quickly.
Conclusion
If you are considering a hard money loan, it is important to do your research and understand the terms of the loan. Hard money loans can be a great option for borrowers who cannot qualify for a traditional loan.
If you're looking for a local hard money lender in California, Jaken Finance Group is a great option to consider. We are a direct lender that offers loans for both residential and commercial properties. We have a quick and easy application process, and they're able to fund loans in as little as five days. Let us get you that quick funding for your next real estate project. Contact us today to get a free quote!