Here are 3 reasons investors love hard money loans:
If you are interested in the real estate business, you've probably heard of hard money loans or private lending. These terms refer to money from an individual or a company instead of a bank. These loans are typically taken out for a short period and are most often used for real estate. Today, we will look at some of the benefits of these types of loans. Generally, the rates for hard money loans are higher, and the terms are shorter. However, the ease and convenience compared to acquiring a bank loan are particularly appealing to real estate investors.
Quick Funding
It's not always quick and easy to secure a loan. Banks may require more forms and statements, which can delay the loan's acquisition process. On the other hand, private lenders can speed up the process, as they can use the liquidation value of the collateral to make decisions. In this case, the collateral we are speaking of is real estate. The liquidation value defines the likely price that the real estate will sell for given it meets the appropriate terms, which include a quick sale and a motivated buyer, among other conditions. For this reason, private lending is your best bet when you are looking to make moves quickly to secure a great real estate opportunity!
Flexibility
While banks typically follow strict rules, private lenders can create their terms, which can benefit both them and the borrower. This flexibility gives borrowers and lenders the chance to make a loan work, that may not work with a bank loan. Banks are more likely to say no to a loan than private lenders. This is another reason why hard money loans are such an awesome option for real estate investors. Greater flexibility means more opportunity!
Ability to Pursue More Deals
If investors find a new deal in the middle of their term with a traditional loan, they cannot pursue it until the loan is paid off or the property is sold. This is not an issue with private loans. This type of loan allows investors to buy additional properties, even in the middle of a term with a previous property. With hard money loans, investors have even more chances to buy and sell properties. The lack of limits with these loans makes them very appealing to those looking to do more business.
These are just a few reasons private lending benefits real estate investors. If you are a real estate entrepreneur in the Kansas City market, check out North Oak Investment. This full-service private lending company knows the KC market and has over 40 years of experience! If you work with them, you'll see why hard money loans are the way to go!
