Real estate investors know how project financing can be done in two ways – traditional bank loans or hard money loans. Many investors use the latter to finance real estate projects and make the most of all the advantages that a private loan offers. If you are new to this alternative type of loan, you should first learn all about the benefits of borrowing hard money from hard money lender Los Angeles.
What is a hard cash loan?
Instead of a financial organization, you lend money from a third party or private lender. It is a private money loan. A creditor can be an individual, a company or an organization. The borrower’s intention when applying for a hard loan is to buy a property, repair it, and sell it. In a new construction case, the investor wants to build a new project and then use it for rent or put it up for sale. They need the funds quickly and without too much fuss.
Private moneylenders say yes when banks say no
Obtaining funds from traditional lenders, such as banks and nationalized companies, is one of the biggest challenges for any real estate investor. There are several reasons for this, starting with a lengthy and complicated application process, during which the lender checks the borrower’s income and credit score. If something goes wrong during the procedure, the traditional lender will strictly say no. Things are very different with hard moneylenders. As they have the property as collateral, they do not consider the investor’s income or credit score.
Less hassle in the application process
While low bank interest rates can be attractive, mandatory requirements such as complete income documentation, tax returns, rents, and bank statements are required. Real estate investors often cannot go through such lengthy processes, which is why they often choose hard money loans. The interest rate may be higher, but they will get you through the application process in a few hours and will avoid all the hassle.
Fast approval and financing
The average bank usually takes about 30 days to approve a loan. With property values fluctuating each week, 30 days is a very long time to wait. Hard money loans offer investors the ability to get their funds within days. It allows them to compete for properties and close deals with sellers before the competition catches up. This benefit is essential for investors because it gives them the freedom to look for new properties.
What happens if a real estate investor takes out a traditional loan for a property and then finds another profitable deal in the middle of the term? They will not be able to buy the new property until they sell the old one or pay off the loan in full.
Hard moneylenders offer flexibility, allowing investors to buy new properties even if they are already involved in another real estate loan. While hard money loans may not be for everyone, for a specific group of people they are ideal. If you are looking for fast closing, low fees, low payments and no prepayment penalties, contact hard moneylender Los Angeles now.