Are you an investor in the Fort Myers FLORIDA area, or an investor looking at the 33907 zip code? Then this is for you: here are 4 reasons why you should consider using a hard money lender.
Real estate investors know that investing can tie up your capital. For most investors, that can create challenges when your capital is all tied up: How do you operate your business? How do you deal with unexpected expenses? How do you grow?
You may have some different options to fund the acquisition or repairs but many investors are turning to hard money loans to help them. Here are 4 reasons why you should consider using a hard money lender…
4 Reasons Why You Should Consider Using A Hard Money Lender
Reason #1. Save Your Own Capital
The top reason, which we’ve already hinted at, is that using your own money ties up your capital and prevents you from running and growing your business. A hard money loan uses someone else’s money, which keeps your capital liquid so you can spend it to grow. Some investors with newly freed-up capital realize that they can actually do more deals now!
A hard money loan allows you to preserve your own cash reserves instead of tying them up in a real estate investment. Whether you’re a house flipper, landlord, or developer, keeping your capital available provides flexibility for unexpected expenses, additional investments, or emergencies. Hard money lenders finance a significant portion of the property’s value, enabling you to leverage their funds while keeping your liquidity intact.
Reason #2. Leverage
As an investor, you’re probably familiar with the principle of leverage: getting a loan (such as a mortgage, or, in this case, a hard money loan) to pay for a large project, yet only needing to make small payments over time to pay the loan back. This makes it easier to take on large, costly projects without having to first save up the money.
Hard money loans provide an excellent opportunity to leverage your investment. By using borrowed funds, you can control a larger property or portfolio without having to fully fund the purchase with your own money. This allows you to potentially earn higher returns by investing in multiple projects simultaneously. With a hard money loan, you’re maximizing your potential profit while minimizing the amount of personal capital you have to put at risk. The more you leverage, the greater your ability to scale your real estate investments.
Reason #3. Professional
Another way investors often fund their deals is through private lenders and investors who they know. However, if you do that long enough, you’ll learn that these private investors may require some extra hand-holding, or they might call you up in a panic in the middle of the night to get their money back because they need it quickly.
Bottom line, they’re nice people but they’re not professional investors. Hard money lenders are professionals who put their money to work and expect a return – they require paperwork and due diligence but they won’t be like those friend-and-family investors who fret night and day about their money.
Reason #4. Speed
One of the main advantages of hard money loans is speed. Traditional financing can take weeks or even months to process, but hard money lenders can often provide funding in just a few days. This is especially beneficial in real estate markets where timing is critical. Some investors may try to fund repairs with their own capital, but this can be slow as it requires saving up money before each repair. With a hard money loan, you can make repairs immediately, speeding up the process and generating a return on your investment much sooner.
Additionally, hard money loans allow you to act quickly on time-sensitive opportunities, such as foreclosure auctions or distressed properties. The fast approval process gives you a competitive edge, enabling you to close deals and start working on your investments without unnecessary delays.
Summary
Running your real estate investing business requires capital – capital to run the business, acquire properties, make repairs and so on. Most people need extra capital and are reluctant to tie up all their money in a deal, which is where hard money lenders come in. If you’re trying to figure out whether you should borrow money for your next deal, you’ve just read 4 reasons why you should consider using a hard money lender.