Even if you are incredibly new to real estate investment, we bet you’ve heard the term “hard money.” Yet odds are, you know very little about how hard money actually works.
That’s why we’ve put together this quick introduction to hard money loans. Read on to better understand these loan types.
Who lends hard money?
Hard money loan lenders are typically private individuals or small groups, such as Bankers South. Here at Bankers South, we lend money based on the value of the property; NOT solely on your credit score, assets, or income.
Who borrows hard money?
Developers and real estate investors typically turn to hard money loans to finance a project or property quickly. Investors can borrow up to 50% the purchase price of the property, though this usually must be backed up with collateral. So, if you’d like to purchase development property or finance agricultural land, and you can’t do so quickly (or at all) with conventional financing, a hard money loan might be the best approach for you.
As mentioned, these loans can be acquired readily – sometimes within a matter of days (7-14 days) – as opposed to loans from traditional lenders, which will extend the process of securing an ag loan or real estate loan for up to a month or even longer.
What’s more, you are guaranteed a professional, individualized experience when dealing with an ag lending company like Bankers South. Here, investors work directly with one of our knowledgeable lenders, rather than a big processing team, thus bypassing the entire loan committee or underwriting processes common when dealing with a conventional lender.
Hard money loans are usually best suited for short-term investments – flips, rehabs, or initial purchases. Borrowers commonly use hard money to function as a bridge loan – a short-term loan intended to hold the investor over until the property is ready to be sold, developed, or until traditional funding can be secured.
The beauty of these loans is that they are quick and completely based on collateral – not personal financial status. This makes these loans very attractive in the eyes of investors.
Need quick financing for a new property? Financing agricultural land? Contact Bankers South to discuss whether a hard money loan is your best option to kick-start your project or operation.