Advantages of Working with a Local Hard Money Lender

Consumers have several loan options when looking to purchase a new home or start a new project. In addition to commercial lending, consumers can work with a local private lender or a “hard money lender”. Working with a local hard money lender has several advantages, including fewer requirements, faster closing times, and greater flexibility. Whether you are a landlord looking to secure additional properties or earn your living by flipping houses, hard money loans are a great choice.

What is a Local Hard Money Lender?

Hard money lenders can be private companies or individuals that offer short-term, non-conforming loans for commercial or investment properties and accept property or an asset as collateral. A private hard money lender can potentially loan larger amounts of money and will often work with individuals who may have been denied by a traditional lender.

Top 5 Benefits of Local Hard Money Lenders

Flexible quickly funded financial solutions for real estate investors.

Fewer Loan Approval Requirements

One big advantage of working with a hard money lender is their ability to lend money to investors with fewer loan requirements. Hard money lenders tend to focus more on the value of the property and require fewer personal documents for loan approval. While private lenders still calculate their potential risk by lending to you, they are generally easier to lend from than traditional banks. 

Loan Terms Flexibility 

Working directly with the private company or individual that will be funding your loan allows you more flexibility in negotiating your loan terms. There is often room to buy down interest rates or negotiate loan terms that are more outside of the box depending on who you’re working with. Over time, you can build better relationships and trust with a private lender, who in turn may be able to offer better rates and better terms.

Assessment of Future Value vs Current Market Value

Traditional home loans do not take the future value of the home into consideration. When securing a home loan with a commercial lender, the bank will assess the current value of the home as it stands. This leaves many borrowers with no funds for improvements and renovations, requiring them to take out a second mortgage. Local hard money lenders consider the future value of the home when determining loan amounts. This is particularly beneficial for house flippers who will need additional funds to repair and upgrade their investment home. 

Quicker Home Loan Closing 

Time is of the essence for any successful real estate investor. When working with a hard money lender, investors have much less time spent dealing with commercial bank bureaucracy and can get their deals closed much more quickly. In fact, many hard money lenders can close in as little as 7-10 business days if all paperwork is in order. Closing on your loan faster allows you to get started on your project sooner, saving you time and money.

Increased Cash Capital Availability 

By utilizing hard money lenders, investors’ cash capital is free to be used as investments in other projects. Private local lenders are more likely to lend for several investor projects at one time. Completing a higher volume of projects overall yields a greater return on investment.

If you’re considering a new property purchase as an investment in Houston, Austin, San Antonio, or Dallas Ft. Worth, LJC Financial has options for you. Contact LJC Financial today to learn more about our finance solutions for real estate investors.