Why Use a Hard Money Lender?

Hard money lenders solve a unique problem for real estate investors. The fact is that banks and other conventional lenders reduce a borrower to a set of financial indicators like credit score, income, and debt-to-income ratio, making it extremely difficult to get the funds you need when you need them.

Fortunately, hard money lenders are more focused on the equity in your property. They are partners in your investment, and their products allow real estate investors to adapt to ever-changing market circumstances. Below we detail the benefits of hard money loans and why you would use them.

How Hard Money Loans Work

Hard money loans are approved based on the collateral of real estate rather than one’s credit score. The collateral model allows the lender to quickly approve an individual’s loan request and provide them with funds. In contrast, traditional loans are wrapped tight in red tape, and even if you’re approved, they typically take months to close.

Below we expand on four reasons you would use a hard money loan.

Speed

The time you spend waiting for a conventional bank to complete their underwriting could be the difference between an opportunity taken or lost. Time constraints are particularly inconvenient in a seller’s market where rare and lucrative opportunities disappear quickly. Hard money loans can set you above the competition because the expedited application and underwriting process allows you to close quickly, something sellers prefer.

Flexibility

Conventional lenders offer, unsurprisingly, conventional loans. High volume and an emphasis on a narrow range of loan types and structures result in rigid lending practices.

In contrast, hard money lenders tend to have much more flexibility regarding loan products, so they can offer a creative solution tailored to your specific needs. Two examples of these loan products are fix & flip loans, and a typical bridge loan.

Fix & flip loans allow real estate investors to potentially profit without making high out-of-pocket contributions. When flipping a house, the less time it spends sitting on the market once you’ve renovated, the less monthly interest you have to pay on your loan. Hard money loans are outstanding for this situation because they are designed to be paid back quickly, typically once the house has been sold.

Bridge loans are another type of hard money loan product. Bridge loans are short-term and designed to “bridge” a gap in financing between selling one property and purchasing another. In other words, you don’t have to wait for the profits from the initial property to fund the desired property.

Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained in this message is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. (the “Manager”). Any and all information herein is deemed reliable but is not guaranteed.