If you are looking to grow your real estate business, either by purchasing homes to improve them before sale or by creating a rental portfolio, the truth is that financing capital is key. After all, you cannot purchase the right properties if you do not have a funding source.
However, traditional or conventional lending sources might not be the right fit, especially if your real estate business is in a significant stage of growth. Therefore, you might be considering an alternative financing route, such as a hard money or private lenders in San Diego. Here are some of the types of properties where hard money lenders in San Diego could be the right financing option for your business.
Three Important Aspects to Consider
In order to determine if the property you are interested in purchasing is right for a hard money loan, you need to factor in these three things:
- Type of property
- Amount you need to borrow
- Condition of your investment
Traditional lenders might factor in the condition of the property, thus being willing to finance less if the property needs major repairs. As an investor, you are looking at the potential value of the property once the major repairs are made. That is not how a traditional lender looks at the property. They might also be less inclined to finance rental properties or investment properties, simply because of their concerns regarding the value or location. While there are a variety of financing options available, you might find that your credit is impacting your ability to grow your real estate business.
Now let’s look at how a hard money lender in San Diego would look at those factors and the benefits that they can offer.
Hard Money Lenders Look at the Property
First, hard money lenders are tying their loan to the property itself, so many of them are not even going to look at your credit score. They provide cash, which can make it easier for your offer to be accepted. They are also looking at the value that you will be adding through improvements and may also be willing to fund those them.
The end result is that they are offering funds based on the property’s location and value, not your credit score or payment history. In the end, you might be able to fund your flip or rental purchase through a hard money lender. Refinancing may also be an option, although once the improvements are completed, you might find that traditional financing could be an option for a property that you intend to hold for a long period of time.
They also can work with new real estate investors, who might be starting out and not qualify for traditional lending options.
Other Benefits of Using Hard Money Loans
The truth is that hard money loans could be a great way to finance the growth of your real estate business. They can be used for flip properties or long-term hold rentals. Making improvements to your rentals can also be completed through a hard money loan.
There are many benefits associated with these loans. The application process is faster, and the funds are available in a shorter period of time, sometimes just a few days. That makes it easier to identify a property, put in an offer, and make the purchase without the delays associated with traditional lending options.
Contact our experienced staff today to learn more about the lending options open to you through hard money loans.