Hard money loans, also known as private money loans, are one of the most advantageous means of investing money these days, especially because there are plenty of borrowers out there who cannot source loans through traditional means. However, while hard money loans, including trust deed investing, are great options for both borrowers and investors, it can be difficult for a real estate or loan broker to find a reputable and dependable hard money or private money lender to work with in the area. Without the right company on your side, it can be next to impossible to facilitate a hard money loan that is beneficial to the borrower.
Hard money loans are primarily meant for borrowers who need short to medium term loans for real estate investments or business purposes. The required collateral is always a piece of real estate which is held in trust by a third party trustee until the loan is paid back. Many hard money loans, or trust deed investments, are offered for a term of a year or less while others can go up to seven years or even longer. This means that the investor or lending company needs to have enough capital to back multiple short and medium term loans simultaneously. You don’t want to work with a lending company that cannot meet your clients’ needs quickly.
Rich Investor Profile
A hard money lending company typically brings in investors or investment companies who act as private lenders to individual borrowers. When choosing a private money lender to work with, it is important to select one that has access to a rich portfolio of investors. Apart from the capital assurance it brings, a diverse investor profile means that the company will have more options available when it comes to loan structuring.
Borrowers who are looking into hard money loans are typically doing so because they need access to funds and they need those funds quickly for a variety of reasons. For instance, a developer might need a one year loan to cover the costs of completing construction and needs the deal to close quickly so no construction time is wasted. Or a real estate investor might need a loan to purchase a “hot” property before anyone else snatches it up and the investor needs these funds in a hurry. As a broker, you need to make sure that the lending company you choose has rapid and efficient turnaround times.
Experience counts for a great deal in the hard money loans market. By their very nature, these are difficult and complex loans to structure and acquire. It is therefore essential to work with a company that has a proven track record of experience and integrity in the hard money lending industry. After all, your clients will be far more comfortable working with a veteran company that is reliable and trustworthy and has longevity in the private money lending area.
As a broker, your first concern is meeting the needs of your clients, and in today’s economic climate, hard money or private money loans are more sought after than ever before. Developing a strong relationship with an established private money lender or hard money lending company is crucial to ensuring that your clients get the funding they need in these fast moving times.