When novice investors need capital, they often start looking at banks right away. While banks can work for some, it is important not to dismiss hard money lenders as a viable option; contrary to what some beginners might think, hard money loans are not just for poor people with bad credit. In fact, the right private lender can turn you into a savvy investor. Here’s 4 benefits of using hard money loans for real estate investing
Fast Closings & Multiple Deals
Once you decide that you want a property, it’s best to close as fast as you can. The longer you draw out a closing, the more likely it will be for things to start blowing up. Traditional lenders often take a minimum of 6 weeks to close. On the other hand, hard money lenders can close in as little as 1 – 2 weeks! With this speed, you can secure multiple properties rather quickly.
It’s Less Expensive Than Having a Money Partner
Since they usually don’t have much capital, a lot of novice investors will team up with a partner that does. In such a scenario, the investor will choose the property, and the partner will front the money. Generally, the 2 partners will spit profits 50/50. If you let a hard money lender provide the capital, you’re more likely to make a profit that’s higher than 50%
It’s Easy to Qualify
Banks are generally much stricter about who they loan money too. For example, they often will only approve people who have cash in the bank, good credit, a consistant verifiable income, low debt, and a strong debt to income ratio; by contrast, hard money lenders are usually more understanding. Since hard money loans are backed by collatoral, income verification and credit history isn’t as essential to them. As you might imagine, this is especially attractive for people who are self-employed.
Loan Programs Are More Consistent
Banks will sometimes change rates or stipulations if they pick up on something specific, like the property’s location or size of the deal. Since private lenders are making multiple commitments to customers at a time, they essentially have to stick to their established loan programs. From loan to value to pricing and underwriting–private loan programs are structured in a way that favors consistency.
Need a Hard Money Lender? Sachem Lending Has you Covered!
Serving Connecticut, Rhode Island, New York, Massachusetts, and Florida, we at Sachem Lending can help you get the capital you need for your next investment property. No upfront fees, fast closings, and no income verification is but the tip of the iceberg of what we can do for you. Want to learn more? Give us a call today!