Typically, traditional lending institutions are not really interested in any real estate deals other than those involving buyers who wish to buy and reside in a single family home. While they will offer excellent terms to these potential buyers because of FHA guarantees, investors looking for money to buy fix and flip, buy and hold, or 2-4 SFR Multifamily properties, face a far more daunting task when it comes to finding investment capital.

Commercial lending is simply a different animal. Borrowers must prove the value of the property based on its income earning potential rather than on the strength of their own credit. While this may strike the novice investor as a problem, commercial lending - that is, hard money loans - actually offers the more experienced investor far more versatility and affordability. Here are the basics:

Trust Deeds

These financial instruments serve as the protection of last resort for lenders. In the event of a default, they guarantee that a lender will be able to recoup their investment. A point of fact, they serve the same role as a traditional mortgage on a single family home. In addition, trust deeds offer the same legal safeguards and commitments as a regular real estate loan.

Hard Money Loans

The real beauty of hard money loans is that they are far more varied in their terms than the usual mortgage. In fact, the only thing limiting their range is the imagination of the lender and the borrower. This specific fact makes them ideal for those entrepreneurs that wish to borrow or lend in a non-traditional real estate situation.

Hard Money Lenders

The key point in this environment, however, is that borrowers and lenders are usually unable to find each other in a relatively safe and secure way. It is simply too difficult, on an individual level, to vet every potential business partner and deal. Hard money lenders, on the other hand, facilitate the process by doing this for a multitude of deals.

The Bottom Line

By offering the same service to a number of clients – both borrowers and investors - hard money lenders provide a platform where every real estate investor can affordably meet their financial goals. In short, the combination of investors, borrowers and real estate professionals on a hard money lending site provide the best in commercial lending opportunities.