The finding and use of hard money financing may or may not be known or seen as a viable alternative to the average real estate investor, but it is a legitimate funding source that is eschewed by traditional lending sources because it cuts into their own profits. In fact, “hard money” is used all over the country to get deals done that would otherwise never be consummated. Here are three tips to get the most out of this resource:
Hard Money Financing Tip #1: Understand the Platform
Hard Money lending companies provide a place where trust deed investors, borrowers, and real estate owners can engage in mutually beneficial deals without the need to engage the expensive services of traditional lending institutions. These companies not only vet the deals and the participant, but also provide access to a wide variety of real estate professionals that are usually necessary to finalize a deal.
Hard Money Financing Tip #2: Embrace the Versatility
One of the most important features of hard money financing is the flexibility that accredited investors bring to the process. These seasoned investors bring their own money to the party and are thus able to fund any deal that makes sense to them without the need to get authorization from a loan committee or other higher-ups. In short, you can set the terms that make sense to you and the lender.
Hard Money Financing Tip #3: Utilize the Community
While not every real estate investor will be involved in every deal, a Hard Money Lender is typically more than happy to share their experience and their expertise. With so many investors and professionals involved, every type of deal has probably been seen at one time or another. Showing yours around will most likely let you know of any potential problems before they develop. This process will save you time, money, and aggravation. Do not overlook this valuable resource when assessing and crafting your real estate investment deals.
A Final Word
Hard Money Lenders may seem like an unlikely place for the inexperienced investor to find financing for his real estate project, but it can actually be far easier than with a traditional investor. Consider one the next time you find an excellent real estate deal that you think a traditional lending institution will not fund. Even better, investigate the options available there before approaching your bank. You may save yourself a lot of wasted time, effort and money.