When Should You Consider A Hard Money Loan?

When Hard Money Makes Sense

You may be surprised to learn why many investors select the private lending path for their commercial financing needs and how Hard Money loans are an integral part of the commercial real estate investing process.  There are several good reasons to consider for getting a Hard Money loan instead of a conventional mortgage from a bank. Here are the main benefits this lending option offers to investors:

• Time and Convenience – Applying for a mortgage is time-consuming. It can take months to close on a loan, which puts investors at risk of losing out on a particular investment property. With a Hard Money loan, it’s possible to get funding in a matter of weeks. That’s important if you’re funding a large-scale development project and can’t afford deviations from project timelines. If closing quickly is the highest priority, securing a Hard Money loan might be the right choice for you. For example, purchase and sale deadline, competitive offers, bank foreclosure sale, auction, or quick access to funds for another investment.

• Flexible Terms – Because we are a bridge lender, with PMF Partners, your loan is paid interest-only monthly and due in one or two years.  There are no fees or other costs due upfront other than 3rd party reports (appraisal).

• Collateral – With a Hard Money Loan, the property itself usually serves as collateral for the loan. But, depending on the loan amount, there is a possibility to secure the loan using personal assets, such as an investment account or other real estate.

• Leverage – We lend up to 65% of the value of the property. If you have a lot of equity in your property we can do a cash-out refinance.

• Reduced Purchase Price – Sometimes, a cash offer or the ability to close in less than 10 days can be required, preferred, or can get you a lower price.

• If the property is not lendable through conventional banking – Many times a project is not eligible for conventional financing.

• You Can’t Qualify – PMF Partners is a collateral-based lender whose primary focus is on the value of the property pledged as collateral and a strong exit strategy. Debt to Income, FICO, and W2 income are not standard requirements for our loans.

In the end, the primary value of a Hard Money loan is the speed and ease with which you can have access to capital.  If having quick access to capital allows the real estate investor to make a profitable investment, then Hard Money can absolutely be a great resource.  An investor’s exit strategy, (how the investor is going to pay off the loan) can be a key factor in considering this loan type.  In most cases, the sale of the property once a profit has been made or the refinance of the property with a conventional loan are the most common exit strategies for real estate investors.

The Bottom Line 

Hard Money loans are a good fit for investors who need to get funding for an investment property quickly, without any of the red tape that goes along with bank financing. PMF Partners are experts in financing hard to finance deals (hard money, private money).