If you ask a seasoned real estate investor the best way to fund projects, they’ll probably tell you to find a private money lender who can help you get hard money loans. Conventional loans through a bank have all sorts of regulations, many of which don’t make sense when it comes to real estate investing. They’re geared for people who are going to live or work in the structure they’re buying. However, as an investor, you won’t be living in the building you buy. You’ll be fixing it up as quickly as you can to sell. So what are the advantages to hard money loans? Here are our top five.
1. A quick application process means quick funding for the deal. If you’ve ever bought a house to live in, you know that there is a mountain of paperwork to sign and documentation to turn in. But for a hard money loan, the main thing the lender wants to know is what is the property worth and will it sell for enough to make the deal worthwhile. Approval for funding can take as little as one day, and the funding itself takes around five to 10 days.
2. You don’t have to prove an income history or have top credit scores. Because the basis of the loan is the worth of the property, the investor’s income or credit score are secondary issues. The most important thing is to make sure that you’ve done your homework to show the lender that the proposed property will sell for a good price, given the work you plan to do on it. A lower credit score is just not as important for an asset-based loan.
As a Private Money Lender, LendingXpress Will Help You Get Funding Fast
3. You have an edge on a property with multiple bids or if you want to negotiate the price. Because your money will come a lot faster than someone getting a conventional loan, you look more attractive to a seller who wants to move quickly. The other advantage you have with hard money funding is that the process has fewer wrinkles that can derail a deal altogether. This means it’s easier for you to negotiate a lower price, since your funding is a better bet.
4. There are no limits on the number of hard money or private money loans you can have. With a bank, you are usually maxed out at four loans. That may be fine when you first start out in real estate investing. However, once investing is your main job and not just a side hustle, you might find you have more than four properties going at a time. As long as you’re doing good deals, your hard money lender can continue to work with you.
5. With a private or hard money lender, you get another expert examining the deal. They are used to working with real estate investors and have a lot of experience in real estate. They will be able to advise you on whether the deal really is a good one and on the best way to get it funded.
To get your next deal funded, contact LendingXpress. We work with investors everyday and would be happy to help you, too!