Tough Credit: Helping Hard Money Lenders
As with all economic recessions, big businesses fail while relatively obscure unknowns rise. Just as the real estate bubble burst in 2006 and banks began to flail in the wake of the aftermath, hard money lenders took this opportunity to rise from the ashes. Banks, scared to fund anything less than credit perfect loans, has allowed hard money lenders to become a primary source of funding for many residential and commercial real estate investors.
While many of these loans go to small construction firms, land developers or other businesses that require unusual financing terms, private lenders are reaping the benefits of higher interest rates and higher points.
In fact, hard money lenders reported an increase in business by 20-percent over 2007 to 2008. While it doesn’t mean that land development has increased, experts perceive this as a redistribution of loans.
With fast loan funding, many hard money lenders are able to offer funding within a matter of days or weeks, a considerable improvement over banking counterparts that are typically looking at a minimum of 60 days for a residential loan and up to six months for a commercial loan.
Hard money lenders focus on financing approximately 60- to 70-percent of a property’s potential value, a far cry from lender’s traditional 80- to 90-percent of loan-to-value programs. Working fast, hard money lenders strive to assess the true value of a property, which means by nature they employ real estate professionals with detailed expertise and knowledge.
With higher loan rates, many question whether borrowers pay mortgages in a timely manner. In fact, since many investors that obtain hard money financing are serious about investing in profitable properties, less than one-percent of properties are taken back through the foreclosure process.
When done right, private lending works. In fact, it has significantly helped improve the real estate investor industry, allowing borrowers to obtain financing for both short-term and long-term investment opportunities.
Better Than Loans offers fast loan funding for special, unique properties that often go unfunded by big banking corporations. These types of properties include: apartment complexes, self-storage facilities, multi-family, office buildings, warehouses, land development, equipment/machinery, retail centers, raw land, mobile home parks, restaurants, resorts, mixed use, gas stations, convenience stores, hospitality hotels and motels, taverns, pawn shops, new residential developments, golf courses, marinas, auto body repair chops, owner occupied businesses, industrial properties, medical offices, conversions, gold mines and special purpose properties such as theaters, churches, public utilities or schools. Better Than Loans focuses on commercial building loans, bridge loans and apartment building loans.