For many investing in real estate, the qualification requirements of traditional banks can be cumbersome. Income documentation for self employed real estate investors can be a challenge. Credit requirements can be difficult to overcome. The speed of the transaction can be a hindrance. The current condition of the property can be an issue.
Getting a loan from a bank can be a trying experience; even qualified borrowers struggle to secure loans for financing their investment property. When traditional loans will not get the job done and you need to close quickly and with certainty, hard money loans can be the most practical solution.
What are the Benefits of Using Hard Money Loans?
Usually, the interest rates are higher on hard money loans when compared to more traditional loans. While the cost is higher, there are many benefits to utilizing hard money lending for your investment property transactions. Perhaps the biggest benefit is the ability to close on a transaction. For investors, you cannot make money on a transaction that you cannot close!
Perhaps the biggest benefit of hard money loans is the flexibility they offer. Whether for commercial property, residential property, land, construction or unique scenarios, hard money loans offer flexibility that more traditional bank loans cannot compete with. For example, property condition is one area of flexibility where hard money loans shine. Whether it is a residential property in need of repair or a commercial property that is vacant or generating low levels of income, a hard money loan offers the ability to overcome the issues that may make a property a solid investment.
Bank loans are notoriously slow. That is especially true these days. It is not uncommon for a residential loan to take 30, 45, 60 or even 90 days to close. For commercial transactions, you can even extend those time frames. Hard money loans, on the other hand, are typically going to close in 2-4 weeks.
While there are outlier situations where it may take longer, there are also scenarios where the loan can close more quickly. Closing in 10 days or less is not out of the question with hard money loans in California! With the market hot and competition high for attractive investment property, being able to close quickly can mean the difference between securing the deal and losing out.
Hard money loans for investment property in California are mostly underwritten based on the collateral. While credit, income and other items do come into play, the main factor is the equity in the property. This is true for purchases as well as refinances. If the deal makes sense, the loan to value is within reason and there are no red flags, chances are good that the deal can and will close.
We work with hard money loans in California for most property types. We specialize in getting financing approved for transactions that must close quickly or for transactions that are not able to secure bank funding for one reason or another. Not only can we help with acquisition loans for out of the box scenarios, but we can also help with refinances to secure cash for investment or business purposes. Firsts, seconds, even thirds - give us a call to see how we can help you!