Hard Money – Things You Should Know As an Investor
Category : Hard Money Loans , Real Estate Loans
First and foremost, hard money is the money lend by private investors based upon the asset and not the borrower. It is quite easy to get and is called hard because it is based upon the hard assets, such as property.
It doesn’t ask for the typical requirements like other traditional lenders do. Hard or private money lenders don’t care what was your credit history or job history. They just care about whether the property is good enough or not and if they would be able to make good profit on it.
Their security is based upon the assets you have and not particularly based upon the borrowers. That is why, they are called “hard” as they lend upon hard assets.
There are few hard money lenders who ask for the background of the borrower as well and they ask for some of these income and credit related details but then, they can’t be termed as true lenders.
True hard money lender’s security is based upon the asset. They give loan to an investor because they believe in the property.
Let’s discuss the different types of lenders currently working in the market:
1. Business Lenders – They lend based upon the business and they usually look for cash flows or accounts receivables within that particular business and lend according to that.
2. Commercial Lenders – This is also based upon the assets, in particularly commercial properties.
3. Residential Lenders – This is for single family houses, duplexes, threeplexes and fourplexes.
You have to choose amongst these, which suits you the best. Basically, they can be divided into two, i.e. lenders who lend based upon the real estate and lenders who lend upon other things except of real estate.
So, if you want hard money loans for your business but you want it to be secured against real estate, then you need to look for lenders who deals in real estate and not in business.
Another important thing to realize here is that hard money loans are not signature loans. If you don’t have a property and you are going to a lender and asking him to give you loan because you have good job, credit history and income, you won’t get it.
You can’t keep yourself as a security in front of a lender. You have to have a good deal in hand and you will get hard money loans within 7-10 days if your property is really good.
You should also keep in mind that hard money loans are extremely different from title loans i.e. you can’t go to a hard money lender and ask him to keep your car as a title and give you loan. They won’t because they need a hard asset to give you a loan.
These are the basic differences between all the lenders that are working in a market. There are business lenders and real estate lenders and if you need a loan for your property, then you should go for real estate hard money loans.
You need to realize that everything here, is based upon the assets. So, you would be looking towards what those assets are and the value of those assets. The lender is going to lend based upon the asset of what you currently have.