If you are torn between choosing hard money lenders and conventional lenders, it may help to compare the two. Obviously, there are major differences between the two types of potential financing you could receive. For instance, looking at hard money lenders, California trust deed investors are ripe for the picking. In other words, there is no shortage of hard money borrower thus there is also no shortage of lenders that cater to this particular market.
The reason you see a wealth of hard money lenders is because they ultimately help bridge the lending gap. What is the lending gap? Well, the lending gap is common with conventional lending. In essence, it is the gap between acquisition and refinancing. In other words, with conventional lending, you have to pay a larger down payment, which often cuts into the available capital for expense or renovation. In other words, unless an investor wants to pay out-of-pocket for renovations they are not happening with conventional financing.
Moreover, everyone knows this, especially hard money lenders. California commercial developers and trust deed investors just need better options. This is generally, where bridge loans and construction loans come into play—all of which are hard money loans. Other major differences, of course, include the amount of time it takes to approve and the level of flexibility in regards to loan terms. So, what do all these differences mean when it comes time to evaluate conventional lenders? Well, that is a great question. The truth is conventional financing has its place in the wonderful world of commercial real estate. Therefore, it is up to you ultimately decide which kind of financing and what type of lender are right for you.
With that being said, there are still a few handy tips that you can use when evaluating conventional lenders. For starters, you should have a good idea of who you want to work with i.e. do want your lender to be a credit union, a private lender or actual banking institution? Next, you want to be clear on the terms of your financing as conventional financing often has terms of 10, 15, 20, 30 years. You will also want to figure out if you want a fixed or adjustable rate. This means deciding who offers the right terms and best rate option.
Lastly, you will need to decide what kind of financing is best for you. In the world of conventional financing, this means nonconforming or conforming loan limits. If you are too sure of any of these terms, then it may be time to sit down with a few lenders to ensure you are making the best decision. Ultimately, both hard money lenders and conventional lenders will take the time to help you figure out your options.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.