Hard money lenders fill a gap in the financing sector where the larger, more institutional money does not fund. While that is true for hard money in general, there are many different shades of hard money sources to consider. Depending on the project, sometimes it is important to utilize local hard money lenders rather than the larger firms that operate on a national level.
There are many hard money lenders these days funding nationally. Online crowd funding sources, large pools that are well capitalized and other sources that can be viewed as semi-institutional. On the other end of the spectrum, you still have local hard money lenders and brokers who work with individual investors on a more local level. There are benefits to both avenues of funding, and deciding on which avenue is best can depend on your project.
For investors looking for the lowest cost of capital, the larger shops are often times going to have pricing power that the smaller, more local hard money lenders don't. The upside is the lower cost, but the downside is less personalized service and less flexibility for out of the box scenarios. For experienced investors who know exactly what they need, have experience, have capital to work with and have a well defined project, it can make sense to look at pricing alone.
For investors with projects that are out of the box, however, working with a smaller shop or a more local hard money lender can mean the difference between obtaining funding or not. Many of the local hard money lenders work with individual investors who know specific areas well. These are investors looking to make a return on their money, but who want to know the project well. Many times they want to be within driving distance of the property. They may want to do a personal site inspection and meet the borrower. They work on a more personal level, and are willing to finance projects that may not fit the pre-defined boxes that many of the larger firms have.
Additionally, they are more often going to be willing to finance assets that the larger shops have no interest in. Land is a good example. Hard money loans for land can be difficult to fund - especially if the land is not an infill lot, located in a major metro area or fully entitled. Construction is another example. Working with a local hard money lender can often times be beneficial simply for the flexibility when it comes time for draws to be disbursed or when dealing with change orders and re-allocating the upfront draw schedule. Having personalized service, and someone who will hear your story, understand it and then work with investors to put together funding for it has benefits that cannot always be weighed simply with a price tag.
There are many projects that are unique, and finding a local hard money lender to work with can make a big difference when it comes to successful funding. Here at All California Lending we strive to offer that personalized one on one experience. We work with many small investors, groups and funds that give us access to niche products to fill the gaps and help get good projects funded. Learn more about what we do by visiting our website here.