Flipping a property is one of the most exciting and potentially profitable real estate deals that any investor can make. Still, finding the money to make one of these deals can be problematic. Seasoned investors know that private or “hard” money is an excellent, alternative option for financing when traditional funding sources are not available for one reason or another. Here are some of the reasons why:

Availability

Investors with private or “hard” money make their own decisions without having to report to an oversight or approval board. As such, they can invest in any deal that makes financial sense to them. The bottom line is there is more money for non-traditional loans or deals that wouldn't have a chance at getting funded by a bank.

Flexibility

In a similar vein, private money lenders can set any terms that meet their own risk tolerance and financial goals. They are in no way constrained by the needs of shareholders in a company nor by its upper management.

Affordability

Contrary to conventional wisdom, traditional lending institutions make their money on loans through fees and not from the interest. Hard money lenders, however, are likely to hold onto a loan for its stream of payments. This makes the loan more affordable for the borrower in the long run.

Security

Hard money loans are secured in the same ways as conventional mortgages. This means the same legal contracts as well as an appraisal, inspection, and escrow. Both parties are well protected with the lender having the additional protection of a first trust deed on a real property at a lower than normal loan-to-value ratio.

Expertise

Hard money lenders – companies set up to provide a convenient platform for borrowers and lenders to meet – are experts in the multi-family real estate market. In addition, they have access to a wide range of other, reputable real estate professionals. With these resources, both the borrower and the lender can be assured of a safe, secure, and profitable deal.

A Final Note – To the uninitiated, finding a hard money loan may seem like a daunting task for financing investment properties, but in many ways, they are easier to obtain than traditional mortgages. While the particulars are somewhat different, they “look and feel” just like a conventional loan. Consider one for your next multi-family deal.