Facts that Bust the Myths about Hard Money Loan Lenders

2. Most hard money and private capital lenders are trustworthy and genuinely want to help the borrowers and not exploit them! Are you looking for a lender who can provide you hard money loans in San Diego County? But you find it risky? Then check out the following facts that will clarify the myths about hard money lenders. Hard money lenders are legitimate businessmen and their job is to lend money to the people who do not qualify the bank norms or need money urgently. Usually, such lenders either run as Corporations, LLCs or sole proprietors with a well-defined business structure and investment plan. They operate similar to that of banks with an exception i.e. they do not have to sign a contract with the government and national guidelines. These lenders should be fully licensed through the state as well as through the federal government. If you are dealing with a lender or hard money broker who is not licensed, you should think twice about doing business with them. As the name suggests such loans are secured by hard assets. So if your hard money loan investing is done for commercial real estate then the property that you are investing on is the hard asset. Although this is similar to bank lending, the difference is that the private hard money lenders prioritize the property and value over the credit score of the borrower and even the income generated from the property. The interest rates for hard money loans are higher, but there is reason behind it! These high interest rates are not predacious rather these are precautionary. This is the trade off for lower qualification requirements. Additionally, these are typically individual investors putting money at risk, and they do this in order to obtain a better return than they might with lower risk dividend, bond or other investing. If the upside to the investor is not there, there is no reason to make a higher risk investment with their money.

3. Hard money loans can be profitable for borrowers as well. Usually, people who seek quick loans opt for hard money loans. Many deals are secured by the speedy closing by the private lenders and sometimes the profit margin is high enough to ignore the higher interest rates! However, it doesn’t work for every deal. So make sure you factor in the cost of the hard money loan which will ensure that the loan will be beneficial for your specific real estate transaction. Do you have a longer rehabilitation project in mind? Hard money loans can work for you as well! Typically the term of hard money loans lies between twelve to twenty-four months, but they can be written for longer terms in certain circumstances. Meanwhile, it is also necessary to have at least one exit strategy before applying for hard money loan. Even some of the legitimate businesses make use of hard money loans. Generally, small businesses find it difficult to qualify for bank loans or other traditional loans therefore they opt for hard money loans for financing for capital equipment or ongoing operations. Hard money loans can be best used for more than just house-flipping. Usually hard money loans are considered as the perfect solution for house flippers but the loan can be useful for commercial projects such as developments and rehabilitation projects on properties as well. For example, hard money loans do not require minimum debt service coverage ratio numbers like the banks do, so financing a vacant commercial property, under-occupied apartment building or other distressed property is a perfect use of private hard money loans. Conclusion: All California Lending can help with hard money loans in San Diego County of all shapes and sizes. If you are in search of legitimate hard money loan lendersin San Diego County you can count on them.

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