Everything You Need To Know About Hard Money Lending | RCD Capital

Everything You Need To Know About Hard
Money Lending!

A hard money loan is a type of loan that is financed against tangible assets by private lenders.
Simply put, it is asset-based financing such as real estate. In exchange for money, the borrower
keeps his property as collateral. Additionally, hard money is often employed by seasoned real
estate investors as in this loan the term is shorter whilst the returns are higher in contrast to
traditional loans.
Furthermore, hard money lenders New York usually lend money for a period of up to 3 years.
Also to qualify for hard money the property is damaged as well as despair. Traditional loan
institutes don't provide hard money loans against distressed property, so private lenders including
private companies offer hard money mortgages.

Here we have some of the ultimate advantages of hard money loans
for your next big real estate project!

● Approval Is Fast

It can be a quite daunting task for real estate investors to acquire loans from traditional institutes
like banks. There are myriads of reasons the hard money loan from banks are disapproved
because they verify the borrower’s credit score, his income, and most importantly decide the
amount of the loan of the appreciated property along with numerous other paperwork and
formalities. In case of any issue or doubt, the banks will say no!

Perhaps, in this case, real estate investors opt for hard money lending New York, they keep the
property as collateral but don’t delve deeper for credit scores and other formalities. All they want
is the loan amount should be analogous to the property amount.

● Turnaround Time Is Swift

Another astounding advantage of hard money is the fast turnaround time. The hard money
mortgage is closed at a faster speed than procuring loans from traditional banks. Usually, banks
take 30-40 days to grant the funds; the duration is high for real estate investors as the value of
property skyrockets within days. In this case, hard money lenders are the best-fitted option as the
deal is closed within days.

As professional real estate investors, it’s ideal to choose hard money loans and work on multiple
deals rather than waiting for 30 days to close one single deal. So, hard money is considered an
ideal alternative to traditional bank loans.

● Minimal Requirements

The aforementioned private lenders have minimum requirements for granting mortgage funds,
particularly compared with traditional bank loans. All they require is borrowers to have equity in
the property they are using as collateral, sufficient funds to make the monthly payouts, and most
importantly enough expertise. Besides this, minimal requirements also mean the chance of loan
approval is high.

Not to mention, the traditional lending institute has a long list of documents to be approved to
qualify for the mortgage. Plus, the chances of saying “no” are higher when procuring money
from banks. Each year the loan approval list of banks is getting amplified. So, for real estate
individual’s hard money lending can be the safest bet!

In addition to this, there are some red flags issues often raised by banks such as any short sales,
any foreclosure in recent time, any loan modification, and in some cases bankruptcies. The most
imperative factor that may avert you from obtaining a loan from banks is bad credit.

Plus, even if your credit score is higher but you have 2-3 ongoing mortgages then the bank may
say no for any other loan. Fortunately, real estate investors often have these issues because hard
money lending is still available to get a loan and start working on the property.

● Flexible Term

Probably the best advantage hard money lending offers is flexibility. There are a plethora of
loans that hard money provides including fix and flip loans; these types of loans are not generally
financed by traditional banks. In the fix and flip loans, the borrower involved in real estate
purchases the property and does the requisite amendments and renovation in the house and then
sells the property for profits and repaying the loan amount.

Usually, the loan period required by real estate investors is 12 months and the same duration
doesn’t work in the traditional lending institutes because banks want the mortgage for a longer
period of time.

On top of that, there are myriads of other issues also that prevent a borrower from qualifying for
a bank mortgage like any electrical or foundation or plumping problem in the collateral house.
Plus, banks are not permitted to fund outside their lending criteria.

On the other hand, private lenders i.e. hard money lenders for new construction are able to
proffer the borrower's needed amount to invest in the property, do the needful repair and
renovation, and sell the property to repay the amount in short duration.

Additionally, hard money lenders are ready to fund the borrower even if they already had taken a
mortgage from any other source. Whereas traditional lending institutions such as banks often say
no to the borrower.

● Generate Referral Business

Another top reason for opting for hard money lending is when you apply as a real estate investor
for a hard money mortgage. You get a chance to meet the other real estate aficionados as well as
private hard earned money lenders who have years of expertise in the industry that may help you
crack a good deal. The referral by the lender may assist you to witness a few prospering
properties that you can invest in and gain good return on investment.

So, to thrive in the real estate marketplace it’s crucial to grow the network. With hard money
lenders you get connected with the right people, gain knowledge for feasible expectations on
property value, and they provide you with insightful information and knowledge, which may
help you in the future.

Conclusion

Having said that, hard money is all about flexible term duration, minimal approval requirement,
faster fund processing, and convenience- all the imperative aspects needed by any real estate
investors in today’s hyper-competitive market. All thanks to trustworthy and dedicated hard
money lenders the investors can focus on the tasks that matter the most for their business and
strive for success.

Source:http://msnho.com/blog/everything-you-need-know-about-hard-money-lending-rcd-capita
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