One of the main advantages to hard money and private capital loans is that they can close much faster than their traditional counterparts (in a matter of weeks rather than months). Establishing relationships with your local hard money lenders gives you another tool in your real estate investment financing tool box. So if you have a deal you want to close before the heat of the summer sets in, a hard money lender might be just what you need.

Here are four ways that hard money loans can help you close your deal quickly:

1. Speedy approval and underwriting process. The time it takes to close a private loan is directly related to how quickly you can provide complete documentation on the property to the lender. If you’ve already conducted the necessary due diligence and have it available for the lender at the time of your loan request, then your loan will close more quickly. Most reputable hard money lenders will respond to loan requests within 24 hours and are able to close most loans in a matter of weeks.
2. Flexible requirements and loan structuring. Private lenders focus on removing obstacles for their borrowers rather than obstructing their access to financing, so most do not have hard-and-fast requirements for debt service coverage or credit scores. These lenders are also more willing to structure the loan to fit the needs of the project rather than trying to force the project to fit the constraints of their loan.
3. Minimal red tape. Unlike bank loans, with private loans you’re dealing directly with the ultimate decision-maker rather than a middleman who has to report back to a committee. Private lenders are also willing to work directly with the borrower, so it is often unnecessary to work through a broker.
4. Upfront terms and conditions. Reputable hard money lenders will provide initial term sheets that outline the terms of the loan being requested when the application is submitted so that the borrower knows what is being offered upfront. Many will also offer a detailed commitment letter laying out the specific terms that have been agreed upon by both the borrower and the lender so that there will be no surprises at the closing.

If you have any questions about Montegra’s hard money and private capital loan programs and how we can fund your deals quickly and efficiently, contact us at 303-377-4181.