Growing your real estate investment business can be challenging, especially since conventional financing options often can make it difficult to quickly close on your next investment property. For real estate investors, there are a variety of options available outside of conventional ones to fund your real estate business, including private money loans in San Diego, CA.
There are benefits that come with private money loan programs, regardless whether you are looking to improve a property and flip it or hold it as part of the creation of a long-term real estate portfolio.
Getting Fast Approval
One of the first benefits is using a hard money lender, which is the same as a private money lender, is the speed of approval. When you see a property that fits the parameters of your business model, the goal is to put in an offer and close quickly. In fact, that can be a way to make your offer even stronger. Using hard money lenders in San Diego, CA, you can get approved in a matter of days, meaning you can close on a property using cash. A cash offer can also make the closing go even faster, another plus to a prospective seller.
Gives You Time to Make Improvements
A hard money or private money loan is funded by private investors and the loan terms can vary, including potential interest only payments or interest and principal payments that end in a balloon payment.
That means if you are planning on getting long-term conventional financing through a refinance, a hard money lender in San Diego can give you the capital and time to make improvements to your property. Thus, when you apply for traditional financing, your property’s appraisal will likely be more in your favor.
Credit Scores Don’t Count
For many San Diego private money lenders, credit scores are not as critical as the value of the property itself. You might even use a property that you already own as collateral to get the loan to purchase your next property. Even if you are looking to make repairs, the value of the property with those repairs completed can be factored in as well. The point is the equity within the property, instead of your credit score, is going to be the major factor in your funding approval.
Put Yourself in a Better Negotiation Position
For many investors, the idea is to not only purchase properties strategically, but to get them at the best possible price. Imagine if you make an offer, but still have to go through all the hoops of conventional financing. You are in less of a negotiating position, because there are going to be extra hassles for the seller. Having a loan from a San Diego private money lender will allow you to negotiate for a better price, simply because you can close faster and there are less hassles for the seller.
Secure the Funds to Complete Projects
Another benefit of hard money loans is that they allow you to keep purchasing properties at cheaper rates, while also helping you keep enough capital to complete your current projects. When you are purchasing all your properties with cash, you can quickly find yourself limited in the number of deals that you can complete at one time. San Diego private money lenders give you the option to make strategic purchases, while still giving you the capital for necessary repairs or renovations.
Source of Financing When Conventional Lending Is Tapped Out
For those in real estate who are working with a conventional lending source, there may come a time when you reach the limits of what that conventional bank can finance. Suddenly, you find that your ability to grow your real estate business is hampered by the fact that your financing options have been cut off. San Diego hard money lenders do not typically have those limits, simply because they are focused on financing the property, not the person.
Past Mistakes Don’t Put Approval At Risk
A big benefit for real estate investors is that private money lenders are not going to hold past mistakes against them. Recent short-sales, bankruptcies, loan modifications, and foreclosures can sideline a real estate investor for years with conventional lenders. However, a San Diego private money lender is focused on the asset and the down payment, not those past mistakes.
Clearly, there are a variety of benefits to using a private or hard money lender to grow your real estate business. They offer flexibility and investor services that can complement your growth strategy for your real estate investments. If you have a property in mind, contact our experienced team today to learn what type of financing options we can offer you!