Advantages of Hard Money Loans for Commercial Real Estate
Commercial real estate is a potentially very lucrative field to invest in. However, it can also be difficult to get financing, especially if you are working on more than one project at once. Conventional bank loans are notoriously restrictive in the commercial real estate world. Fortunately, there is an alternative that many investors can turn to: hard money loans.
What Is Hard Money?
A hard money lender is a type of lender that offers loans backed by physical property, often real estate, and that are typically more expensive than conventional mortgages. Like a bank, a hard money lender makes its revenue from the interest on the loan. Additionally, it may charge a fee for originating the loan.
Benefits of Hard Money
Hard money financing offer: several key benefits for commercial real estate investors. These are some of the reasons you may want to choose this type of loan:
- Quick Turnaround: Typically, hard money approval processes are much faster than those of conventional loans. You can receive the funds more quickly also. This is advantageous in the commercial real estate world because you may want to take advantage of a time-sensitive opportunity.
- More Generous Limits: Many borrowers can receive larger loans from hard money lenders. This can be useful when you want to take your next big step in real estate investing. Furthermore, you may not need to make a down payment. Whereas a bank may ask for 20% down, a hard money lender may only ask for a low down payment or none at all.
- Easier Qualification: It is often easier to qualify for a hard money real estate loan. If you have less than perfect credit or otherwise are in need of more flexible qualification requirements, hard money may be the way to go.
- Great Option for Newbies: Those easier qualification requirements make hard money a great option for new real estate investors. If you can’t get a conventional loan because you only have minimal experience in commercial real estate, a hard money loan may be the option you are looking for. It is a great way to help you get started in the field.
These benefits make hard money lenders a good choice for many commercial real estate investors. The next time you are considering buying some commercial real estate, consider whether this alternative capital source is right for you. Learn more about hard money today and prepare for your next big project.
