First, we should explain exactly what commercial hard money lenders do. As stated in Arixacapital, they are an investor who makes loans that are secured by real estate. Often times you will be paying higher rates with these types of loans compared to a loan from a conventional bank. But there are some benefits to keep in mind that do outweigh the extra costs.
It is important to remember that these lenders may require a much higher rate compared to banks, but they also usually require much less documentation for approval. Also, compared to banks they have fewer approval requirements and are mostly only focused on collateral as part of the loan deal. This is a little different than what you are probably used to since an excellent credit score and documentation of cash flow is needed for approval from most traditional banks. But in these cases, collateral is more important with these lenders.
When dealing with banks, it can take a long time to get approval. The process takes a longer time when dealing with banks because banks not only consider collateral for approval but also requires proof of excellent cash flow along with an excellent credit score. When not dealing with banks, you can usually get your loan approved much faster because they only need to assess a few pieces of documentation and a few variables like collateral.
So, what exactly is the point of commercial hard money lenders? Sometimes when it comes to time, real estate investors need to get a deal done rather quickly and want a speedy place they can go when meeting a real estate loan deadline on-the-fly. They may have to pay extra for this speedy service, especially when it comes to the interest rate, but they are paying extra to save time.
You might have to pay more, but it makes sense to use commercial hard money lenders for many reasons. Banks can’t always get the job done in time and if you need to meet a quick approval deadline, this is the way to do it. Great investment opportunities may not always have the financial strength to get approval from banks or they may not be able to get additional on an already existing baseline credit. Plus, if it is allowed, larger amounts of loans are more likely to get approved this way.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com 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.