Benefits Of Using A Hard Money Broker
Hard money loans are commonly used by real estate investors that want to take advantage of a particular opportunity that may not be easily financed through traditional financial institutions. If the purpose is to buy a piece of property and flip it within a matter of weeks or months then this might be a good option. It’s also used by those who may not have a high enough credit score to get a loan through a traditional bank. Here we’ll take a look at some benefits of using a hard money lender.
Hard Money Brokers can be a valuable contact for your business.
These are legitimate sources to borrow money from. This is not in any way like a loan shark or anything that is illegitimate. This type of lender serves a particular purpose and is used by many investors and businesses for a range of purposes. The majority of the time a hard money broker will have many lenders it represents allowing them to find you the best deal possible. Their business will be set up with a specific investment strategy that it uses and the business will have its unique structure. Using this type of lender can help cut through the bureaucracy that is found in traditional banking companies.
This Type Of Lending Gets Its Name Because It’s Secured By Using Hard Assets
There are some advantages of using this type of lender over traditional banking. When it comes to purchasing commercial real estate, a hard money broker is able to consider in greater depth the true value of a particular property. This often makes it easier and more viable to get a loan through this type of lender. Hard Money and Private Money are two of many products a Hard Money Broker will have at its disposal to get you the money you need quickly.
The term hard money often gives people who aren’t familiar with it the wrong impression. The term simply refers to the fact that the loan is secured by a hard asset. If someone is purchasing a commercial piece of real estate then the loan would be secured by that asset. In some cases, there might be other hard assets that are attached to secure the loan. This simply guarantees the lender that they will get their money.
Hard Money will have rates higher than a bank.
Some investors who have never used this a Hard Money Broker may see the higher rates as a negative issue. In fact, however, they are precautionary. The nature of the loan means it is a higher risk and that means that it’s reasonable to charge a higher interest. This helps to protect the investor and ensure that it’s worthwhile for them to make the loan.
Because this type of loan is secured by a hard asset and is accompanied by a higher interest rate it means that the lender is protected and the borrower is able to get the loan that they may not qualify for under other circumstances. This makes it a win-win situation for both parties. These types of lenders are in business to make loans on unique investments and are often better able and better suited to do so than traditional avenues for getting loans.
Using A Hard Money Broker Can Still Be Profitable
There are countless investment opportunities that present themselves and that can be very profitable even when using a hard money loan. In fact, when it comes to real estate investing this loan is often more viable because it has some options that wouldn’t be available through other financial institutions. That means an investor can take advantage of an opportunity that can ultimately be very profitable even when using this type of loan and paying the higher interest.
The main thing that investors need to be certain of is the amount of profit potential the investment has. Provided that you are confident enough that you can turn enough profit then it is well worth getting this type of loan. Very often the terms of the loan will be much more favorable than they would be going through another institution.
It Is Possible To Get This Type Of Loan Even On A Project That Will Last Longer
On average, this type of loan is used for short-term projects. This can range anywhere from six months up to a year or two at the most. The brokers are in the business of loaning money and for that reason, if presented with the right preposition then a longer-term loan can be worked out. The biggest thing is that the borrower is able to present a good exit strategy.
One way of doing this would be to have a way to secure a traditional loan after a year and pay off the hard money loan. You may also negotiate to have the possibility of getting an extension on your loan if circumstances come up that you couldn’t foresee ahead of time. As long as you and the lender are in agreement then it shouldn’t be a problem.
Many Kinds Of Businesses Use These Types Of Loans
There is a range of businesses that might find the need for this type of loan. Small businesses, in particular, find themselves in situations where they don’t qualify for a loan through a traditional bank. For that reason, they may go to a hard money lender for a loan. This can often mean the difference between staying in business or not. In other cases, it may mean that the business is able to make a move forward that grows that business.
These Loans Are For More Than Just Flipping Houses
Those that are familiar with this type of lending think of it as something that house flippers use. That is certainly one of the common purposes of getting a hard money loan. There are other commercial projects that this type of loan can be used for as well. This is especially true when a business or investor has a reason for needing a short-term loan that can be paid back in a year or less. This is a bridge loan and operates similarly to a hard money loan. Bridge loans are very common in commercial real estate.
If you’re in need of a hard money loan or interested in getting more information then visit us online at nealfunding.com. Will be glad to discuss the matter with you and answer your questions. Visit our site today.