Benefits of Private Money Lending

Efficient and reliable access to capital is a must for every successful real estate investor. The market has grown increasingly competitive over the last few years, making it even more essential to avoid any delays when attempting to purchase a promising investment property. The issue is that traditional lenders can take several weeks or months to underwrite a loan, making them an incompatible financing option when the market dynamics demand fast closings. That’s where Express Capital Financing’s (ECF) streamlined underwriting approach and extensive lending experience come into play—filling the funding gap vacated by conventional mortgage providers and providing investors with the resources they need to buy and sell properties at competitive rates to maximize cashflow. Here’s a quick look at some of the key advantages of private money (also called ‘hard money’) loans and how you can leverage these benefits to grow and scale your investment business.

Hard Money Loan Advantages

1. Lending Premised on Future Value, Not Current Value

Conventional mortgage providers like banks and credit unions typically do not offer loans for distressed properties that require major renovations. That presents an issue for fix-and-flip investors looking to buy rundown homes and resell them after making significant upgrades. That’s where private lenders like ECF come into play. We specialize in creating customized lending programs specifically geared for fix-and-flip investing. The financial experts at ECF offer clients optimal leverage by focusing on the after-repair-value (ARV) of the real estate asset during the loan application and underwriting process as opposed to its present value. The ARV is the projected market valuation of a distressed property post renovation. The planned property renovations, such as adding additional square footage, modifying the floorplanor upgrading fixtures, are all taken into account by a certified appraiser and then compared to similar properties in the area to determine what the property can be sold for in the future. The ARV approach to underwriting gives real estate investors a distinct advantage. Because the ARV value of a property is significantly more than the present value, investors can qualify for a higher loan amount by partnering with ECF as opposed to a conventional lender.

1. Flexible Loan Terms

Private money loans are a form of collateral lending that are primarily based on the potential of the investment asset to generate a profit in the future. That means hard money lenders do not focus on an investor’s credit score or financial record when evaluating a loan application. Instead, they adopt a more holistic approach when it comes to determining what projects they will support. With years of experience assisting real estate investors successfully complete investments of all sizes, the ECF team knows the elements of a promising investment and are willing to work with investors to create a viable financing plan to make it work. This inherent flexibility makes it possible for investors who would otherwise be unable to qualify under conventional lenders’ stringent regulations to gain access to the capital they need to fund their business operations.

1. Quick Access to Funding

You simply cannot put a price on efficiency in the real estate investment industry. The main reason traditional financial institutions simply cannot match private lenders when it comes to the real estate investment industry is that private lenders can close on properties in a fraction of the time that it takes banks to process loans. The current market is extremely competitive, meaning sellers want to close as fast as possible with minimal delays. While all-cash offers are the best-case scenario, private money loans are the most effective alternative. With ECF’s streamlined underwriting process, we can get you the capital you need to close on a property in a matter of days as opposed to the weeks or even months that it would take a bank—giving you a major leg-up on the competition.

Get Started Today!

At Express Capital Financing our advisors engage in a solutions-focused, consultative approach. We understand each client’s specific needs and goals and present the best approach to satisfy the client’s requirements. ECF possess a unique market knowledge that is critical in today’s complex and volatile environment. Contact us today to learn more about how we can help you achieve all of your investment goals!