There is a lot of fiction out there about hard money loans. Here are 10 facts you may not know:

1. Hard money loans can make complex deals happen. When you have a seemingly high-risk deal that is rejected by bank and conventional lenders, a hard money lender will often be willing to consider the loan request.
2. Hard money loans are not as expensive as they may seem. While the interest rates are higher than conventional loans, these costs are often outweighed by the returns (and other benefits such as saving a non-refundable earnest money deposit) that borrowers expect to reap.
3. Cash reserves are important. Private lenders want to know that you will be able to make monthly loan payments even if unforeseen issues arise with the deal.
4. Hard money loans can be used for many purposes. These include tenant improvement or rehab financing, cash-out loans, and non-recourse loans. Private bridge lenders will also consider loans for those who can’t obtain conventional financing such as foreign nationals and landlords of marijuana-tenanted properties.
5. Hard money loans can be closed quickly. The typical timeframe is two to four weeks, as opposed to the two to three months it can take for a bank lender to provide funding. Having all of the application materials ready to go when you apply will help with that timeframe.
6. Hard money lenders are flexible. Because they are usually private individuals or small businesses, they can use creativity to structure a loan that will fit your needs.
7. Hard money lenders use asset-based underwriting. This means that distressed properties or anything that you plan to rehabilitate are not a problem as long as the property satisfies the lenders loan-to-value (LTV) requirements.
8. Hard money loans allow you to make cash offers. This will make you a more attractive buyer. Once you’ve established a relationship with a hard money lender, it is easier to get the funding (in cash) that you need to take advantage of the best real estate investment deals in your area.
9. Hard money loans are short-term and typically require interest-only payments. This frees up your cash flow for rehab costs or other investments.
10. Hard money lenders value character over credit. They won’t reject your loan simply because you have a low credit score. Instead, be prepared with explanations for any credit blemishes.

Contact Montegra at 303-377-4181 to find out more about how our hard money loans can help you with your real estate investments.