The often misunderstood concept of hard money lending has been known as the black sheep of the money lending industry for a long time. As a matter of fact, hard money loans in some shape and form have been around since ancient civilizations. Hard money is a valuable concept of credit financing dating back to around the 18th-century B.C.E.
Hard money lenders have become an increasingly mainstream source of alternative financing in recent years. Nevertheless, some potential and current investors lack a thorough understanding of what makes hard money loans a suitable funding choice.
Novice real estate investors may be a stranger to industry terminology, but seasoned investors are relatively familiar with the term of a private money loan. In fact, many investors tap into the versatile resource for their own financial endeavors. Private money loans are ideal real estate loans for properties and investors that don’t fit the traditional mold.
When it comes to securing a loan for real estate, most people turn to one out of two possibilities: a conventional loan from a bank or financial institution or a private lender that offers non-traditional financing. The terminology between the variety of private loans can lack clarity, but understanding the difference between private and hard money loans is more clear-cut than you think. Let’s examine closer where the distinction lies.
Commercial real estate, in plain terms, is definable as a non-residential property that’s income-generating. In comparison to residential investments, such properties can be a dominating source to amass wealth and generate solid cash flow. Commercial real estate loans are solely for business but can be generally sorted into three broader categories: loans for development purposes, loans for investment purposes, and loans for business purposes.
Private money lenders traditionally offer quick, convenient funding for rehab projects, flippers, and cash-out refinancing. As noninstitutional money lenders, private lenders are beneficial for borrowers who want to close real estate deals promptly. However, the varying types of private money loans are a bit more complex to explain.
Private hard money lenders are distinctly different from traditional money lenders such as banks and financial institutions. The best thing about hard money lenders is their flexibility: they have the ability to lend money for real estate projects that traditional lenders won’t fund. Hard money lenders can also specifically tailor loans to borrowers by focusing on the borrowers’ needs.
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Private money lenders are sometimes the very best source to turn to when you want to invest in a property. Unlike traditional loans from financial institutions, qualifying for a private loan is much simpler and easier. If you meet the right qualifications to secure this type of loan, you can expect prompt action and approval in order to achieve your goals with essential funding. Let’s take a closer look at a few of the reasons to consider a private money loan as a financing option today.
It was very early in the pandemic when fears of economic recession started to circulate. Though at this time we were only just beginning to see the potential impact of COVID-19 for what it was, it was rapidly becoming clear that lockdowns and shuttered industries could lead to drastic financial consequences. This led to a lot of questions about recession, some of which revolved around the housing market.