Hard Money Financing is King!

Hard money, financing vs. bank loans.

With limited availability of funding from banks and other institutions hard money for many borrowers is the only game in town. Hard money lenders are helping with the purchase of both residential and commercial properties. Popular among lenders are loans to finance the purchase of non-owner occupied houses for short term holding. Typical dollars loaned on these properties are $100,000 to $600,000. Buyers are purchasing the properties substantially below the current market value. After repair and fix up they are sold for potential short term profit. If annualized the return on invested dollars can be substantial.

Hard money, also called private money financing is also available for apartments and small commercial properties. Bank guidelines are more conservative for these loans. Documentation is very  extensive as banks pick and choose who to lend to. Fortunately, hard money lenders are in the market and are more liberal and aggressive than banks!

While hard money is available it is not as plentiful as it was prior to 2007. Many hard money lenders were burnt by the recession and have not returned to the market. Currently, there is a greater demand for loans than available money. As the real estate market improves private money lenders will return as they did after the seventies and nineties recessions.

It is more important than ever to present a complete and professional package to lenders when applying for financing. With the large volume of applications lenders have a tendency to put the poorly prepared packages at the bottom of the stack. Additionally, make honest full disclosure. Lenders will automatically turn down a loan if they feel the borrower is less than honest.