Why Use a Hard Money Lender

San Diego, CA - Many people ask me why someone would use a hard money lender, also known as a private lender or private money lender, to fund a loan. Below, we have compiled the Top 5 Reasons Why a Borrower Would Use a Hard Money Loan. 

Poor Credit or Lack of Steady Income

Many Borrowers use hard money because they have poor credit due to a bankruptcy or recent short sale or don't have steady income because they are a business owner. These borrowers typically don't have access to conventional bank financing and must turn to hard money to fund their purchase or refinance.

Needs to Close Quickly

Many Borrowers approach a hard money lender for a loan because they need to close quickly. This maybe because their original lender declined the loan a week or two before close, the seller required a quick close, or they need complete a refinance to take advantage of another investment opportunity. In all these cases, they need to close quickly and conventional bank financing will not be able to move quick enough. Unlike Banks, most hard money lenders can close within 5 to 7 business days.

Fix & Flip / Rehab or Construction Loan

Very few banks will fund a fix and flip or construction loan. Experienced investors maybe able to get construction financing for larger projects, but even in those scenarios, the borrower must have a strong financing statement and deposits with the bank. Hard money lenders, on the other hand, may have lending programs designed specifically for these types of loans and will fund the loan based upon the completion value.

Property is in Poor Condition or Under Performing

Banks prefer to fund properties that are in good condition or are performing income properties. As a result, banks are rarely interested in funding distressed real estate purchases or refinancing properties that require significant repairs. As with fix and flip and construction loans, hard money lenders specialize in funding value add real estate opportunities. In these cases, the borrower is usually borrowing the funds to update the property which will increase its value. 

Short Term Bridge Loan Request

Bridge loans are short term loans, normally between 1 to 3 years. Borrower may require a short term bridge loan to fund the purchase of a property, update an existing property, or to fund another transaction. In all these cases, the Borrower only needs the loan for a short period of time. These types of loans are best funded by a hard money lender because most banks prefer longer term loans. Additionally, these types of loans are usually funded to correct an issue that would have resulted in a traditional lender declining the loan request.

Hard money lenders play an important role in real estate finance. Borrowers use hard money lending because they cannot obtain financing from a conventional lender, typically  due to their credit or lack of income, the condition of the property securing the loan, or the duration of the loan. However, hard money lenders are usually able to overcome these issues fund the loan request.

TaliMar Financial is a California hard money lender in San Diego, CA. We specialize in funding residential and commercial fix and flip, construction, and short term bridge loans. Contact us today at (858) 201-3253 or visit talimarfinancial.com to learn more about our hard money lending programs.