Hard money is an option for investors primarily for these reasons:
Ease of Use
- Most hard money lenders have minimal requirements in terms of documentation, credit, and experience. You can qualify quickly and get through the loan process very easily. Very different than a traditional loan.
Speed
- This is a huge factor. If you need to close a deal in 3-5 days, HMLs are a great option. The market is really crazy right now and being able to close quickly is a big plus for seller.
Limit Cash Required to Close
- If you are being asked to put 10%-20% into a deal by a hard money lender, you should continue to evaluate options. There are many lenders out there willing to finance 100% of cost...even to new investors. The asset is a primary factor in terms of risk mitigation, so make sure you look at all components of the quote you get.
Rates, fees, and points vary. Good news is there a ton of options. Just make sure you work through all components before pulling the trigger. Everyone should be able to quickly provide an accurate estimate for cash to close, monthly payment, and an overall breakdown of costs for any deal you are evaluating.
Hope this helps.
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