Hard money lending is a simple, fast, and effective way to meet your financing needs in a short period of time. Many real estate investors find it to be an incredibly attractive option when they need loans fast – with very little paperwork to fill out, flexible loan terms that are open to negotiation, and financing that can go as high as 70% of the value of the property (depending on the lender), even the most sudden need for fast cash can be met with hard money lending.

Private hard money lending is so simple because it is largely based on the potential value of the property, rather than your individual income, lending, or credit history. Typically, the private lender will only require the loan application, an inspection and appraisal of the property (under the lender’s control), and the verification of the title. Nonetheless, you may still have to gather up tax returns, bank statements, or other documentation, even though the property is the direct collateral for the loan.

Because of the minimal paperwork, as soon as the lender and borrow agree on the terms of the loan, the money becomes available in mere days – a big difference when compared to a bank, where a loan approval can seemingly drag on for an interminable amount of time. Hard money lending is also available for a multitude of real estate investment purposes, many of which are not always attractive for traditional lenders. Private lenders specializing in hard money lending will underwrite everything from new construction, distressed properties, properties in danger of foreclosure, and bankruptcy.

Learning more about hard money lending can uncover many possibilities for your current or future real estate investment. Whether you are dealing with a commercial property or residential property, hard money can be a pivotal element to your success. Make sure to conduct proper research and consider your individual situation before settling on hard money as your solution.

Risky or Innovative?

Many people talk about hard money lending as a risky venture, and the reason why banks typically have chosen to shy away from them. In 1980’s and 1990’s hard money lenders felt the pinch from overestimating the real estate market and funding properties well beyond their market value. The real estate crash of that period indeed made hard money lending seem like a poor strategy.

These days, hard money lenders are much better equipped to handle even the most volatile markets, due to the much higher interest rates they demand. Whether this strategy overcomes the ‘risky’ label remains to be seen. But what is undeniable is that making hard money lending available for real estate investment can be a great advantage for borrowers.

Hard money lending is innovative for anyone in need of a loan because of is the freedom it offers. It doesn’t generalize what a ‘good borrower’ is like many loan programs will do. It takes into consideration the many unconventional reasons why one may need a loan that is available to them in a short period of time, with minimal restrictions.

Even someone with excellent credit and in impeccable financial standing may find himself or herself in the position of needing a short-term loan that can propel them to the next stage of their venture. When immediacy is involved, approaching a private lender is arguably the most expedient way to obtain a loan, and the flexibility of terms can be even more of an advantage if your investment outlook is positive.

So is hard money lending ultimately a risky proposition or an innovative option for borrowers? Any investment and loan solution comes with risks to consider, but that is where common sense, strong investment planning, and a realistic perspective of your investment value. Weighing the balance between the pros and cons of relying on hard money lending and basing your decision on hard facts is what will make or break your investment.

To find out more about hard money lending and how it can impact your investment, consult Lighthouse Capital Funding. We are a private hard money lending institution that specializes in providing a convenient and effective solution to your real estate financing needs. Contact us today.