The Advantages of Using a Hard Money Lender

In today’s fast-paced real estate market, hard money lenders are gaining market share, primarily because they are subject to fewer strict government loan regulations and, in turn, are able to be nimbler and more creative than conventional lenders.

Hard money lenders offer non-traditional financing for commercial properties, residential development, construction and land loans, without placing heavy emphasis on personal credit scores or ratings.

Real estate investors and borrowers can take advantage of the following benefits of working with a hard money lender.

#1: Fast Loan Approval

Using a hard money lender like Private Capital Northwest means that funding can be provided in as fast as three business days.

Private money lenders fund loans with less paperwork and in shorter time frames. Unlike traditional lenders, whose underwriting standards may take several weeks or even months to approve for investment property loans, hard money lenders are able to quickly and efficiently process loans within a matter of days or weeks. This allows investors and developers to quickly obtain the funds necessary to proceed with their development, investment, or rehabilitation undertakings. Hard money lenders place particular emphasis on the valuation of a borrower’s asset to determine loan-to-value (LTV) ratios.

#2: Flexibility

Hard money lenders are more flexible, enabling developers and real estate investors to offer other collateral, such as other properties or projects, as collateral for a loan. In addition, loan terms are customized to meet the timelines that work best for the borrower.

Because hard money lenders face less restrictions, borrowers don’t deal with as much red tape.

#3: Fewer Restrictions

Since most traditional lenders are required to follow internal policies and government regulations, non-conforming loans are often difficult—if not impossible—to obtain from traditional lenders. Hard money lenders are not subject to strict government regulations, which allows them more flexibility to provide sensible financing and, in turn, offer a personal and customized experience for borrowers.

#4: Future Value Assessments for Rehab and New Construction Loans

Private money lenders can offer LTV ratio that is based on the finished value of the collateral (i.e., the value after a property has been fixed and is ready to flip). This gives borrowers the ability to include the funds needed to complete a project in the total loan amount. These types of loans are especially important for a loan on properties that have a construction component.