The commercial real estate arena has almost as many financing models and lending products as there are property types. However, hard money loans are among the most popular financing solutions for independent property investors.
Traditional Loans Can Be Fickle
For as much as people rely on banks and traditional lending institutions, there is a divergence when it comes to commercial real estate solutions. Traditional lenders have large capital reserves to offset the risk associated with borrowers who default on commercial real estate loans. Any uncertainty in the economy, and lenders quickly tighten their requirements, making it more difficult for commercial real estate investors to get adequate financing for their transactions and projects. Additionally, interest rates on traditional loans can fluctuate wildly as the Federal Reserve adjusts for inflation. Borrowers experienced numerous interest rate hikes on traditional loans over the past four years, raising the amount they had to repay.
Hard Money Loans Are More Efficient
Property investors trust hard money loans for a number of reasons. First, hard money loans are not as arbitrary as traditional loans, because they are structured around the property or development project at hand. This provides tangible value that can be used to determine the amount of financing received.
Second, hard money loans are very versatile. Traditional loans for commercial real estate can be used for purchasing investment properties. The risk associated with traditional real estate loans increases drastically when borrowers bring land development, renovations, and other uses to the table. Hard money loans can be used for property acquisitions, upgrades, repositioning, development, cash-out, and more.
Third, hard money loans can be arranged quickly. Traditional loans can take months to go from the initial application, through various departments, to the approval board. Funds from hard money loans can be accessed in as little as two weeks. This allows property investors to adhere to their schedules, take advantage of time-sensitive opportunities, and keep projects moving. The commercial real estate arena doesn’t operate on a nine-to-five schedule, and getting fast access to funds is far more beneficial than trying to navigate the red tape of traditional lending institutions.
Learn More About Hard Money Loans
At The Capital Rams, we provide hard money loans to property investors for a wide range of purposes. To get the fast and efficient funding you need, contact our offices.