How To Fund Your Next Real Estate Investment
Real estate funding can be a hassle. It takes time to find the right lender to work with. Not every lender may be open to understanding the special needs of a real estate investor. When a lender is found that is willing to work with the investor it may be a good idea to stick with them.
Real Estate Investor’s Preferring Hard Money Loans
Most real estate investors find themselves trying to beat the clock. When a property opens up that looks as if it could have potential, it is in the investor’s best interest to snap it up. However, if the investor does not have the savings to fund it they may find themselves having to pass it up. In most cases passing up a piece of property is not an option, which means they will have to borrow the money. Since the property has potential and is priced very reasonably the investor will want to find funding quickly.
If funding is not found quickly, another investor could purchase it. This goes on all the time. The real estate industry can be a tough industry that requires quick decision making. Working with traditional mortgage lenders can be difficult for real estate investors. The time it takes to process a loan can take up to 2 months and then a few extra weeks to transfer the funds into the investor’s account. Most investor’s simply can can’t wait this long. The property they are attempting to purchase will most definitely be gone under these circumstances.
With hard money lenders, it is understood that time is of the essence. Hard money loans typically take only 2 weeks to process. Once the loan is processed and approved, the funds are quickly transferred into the bank account of the investor. This is preferred by investors instead the 2-month wait. Hard money lenders recognize that if the loan is not processed quickly, the investor could lose a money-making opportunity.
Private lenders are able to make decisions faster because it is their money they are using. With traditional banks, it is the money of the community that is being used. Because of it personal money the lender is using they are able also to overlook certain things like
- low credit scores
- bankruptcies & foreclosures
- Collateral variation
Real estate investors do better in business when a good credit score is on their side. However, that is not always the case. Hard money lenders know this all too well and are willing to look past a low credit score. Even if the credit score is below 500 the loan process will still continue. El paso hard money loans work hard to get everyone approved and moving forward. They understand that things happen. They also understand the struggle that many small businesses have to endure. Most hard money loans recognize that a low credit score does not tell the whole story of a potential borrower.
Traditional banks not only put a great deal of weight on the credit score of the applicant but also on bankruptcies and foreclosures. Some traditional mortgage lenders will cease the loan process, once it is discovered that a small business applicant has undergone a bankruptcy or foreclosure. This is just not the case with hard money lenders. Once it is revealed that the small business has experienced a little bad luck the lender may simply ask for an explanation.
Once everything has been verified and confirmed during the loan process the lender will then began to discuss collateral options. El Paso hard money loans make it a point to accept different forms of collateral. Unlike traditional banks that will only accept real estate property, hard money lenders are more open. As long as there are no legal commitments tot he collateral, in most cases, it will be accepted. For example, a potential borrower may put up his/her retirement fund or another business that they may own. This is fine with hard money loans. Making it harder for small businesses to borrow is not their goal. Instead, their goals are to help to pave the way for others to succeed.