For some reason, people often think they understand what a hard money lender can and can’t do. But, in most cases, they have the wrong idea about the benefits of using hard money when investing in real estate. That’s why we are about to share some information with you that will clarify the perks of using a hard money lender, a rehab lender, a private money lender when you are buying investment property.
1. Hard money lenders are not “put off” when they see an application from a “self-employed” client. Traditional banks sometimes do snub their noses at a self-employed applicant for a loan. Traditional banks, however, like to see a client that has a steady, reliable income stream.
2. The application and the approval wait are both shorter for a client who is applying for a hard money loan, than it is for a client applying for a traditional loan.
3. Most hard money lenders are not looking at the perfect credit rating when loaning money to an investor. Neither are they interested in a huge amount of disposable income. What they are interested in is the veracity and merit of the specific venture, property, or project that is being presented at that time.
4. The client’s personal financial history is not put under the microscope as much as it would be if applying for a loan at a bank. Home loans, tax history, general money situation is much less audited than it would be with other loan avenues.
5. When borrowers are declined at a bank, it is all very official and very scrutinized. A “no can do” from a bank can be embarrassing, humiliating, and unnerving.
6. When dealing with a rehab lender, the fact that it takes less time is a plus. This means that the borrower can spend more time on the business at hand.
7. If your investment needs to close quickly, that is something a bank cannot do. It takes weeks, if not months, for a bank to wade through its often voluminous paperwork and red tape. A hard money lender can get your money to you in much less time.
8. Let’s say that you discover not one fantastic piece of property, but two hard to resist investments, but you don’t have the expendable cash to invest in both at one time. This is where private money lenders can help you make it happen. They can loan you the money for the property you intend to work on first, and for the projected property, depending on your eligibility.
9. If you have a line of credit at a bank, but you need more than the bank is willing to give you because of unforeseen damage on a property, or other unexpected costs, a hard money lender can step in and help you have the money you need now.
10. Maybe you have enough friends, family, investors, or partners who are willing to chip in on your project, but you would rather spend your time finding new acquisitions than cajoling others to support you. This is a perfect scenario to seek help from a hard money lender.
No, a hard money loan is not the perfect answer for every project that you may attempt, but, in many, many cases, it is the perfect solution for your ongoing investment projects.