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Assessing the Landscape of California Hard Money


Assessing the Landscape of California Hard Money
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California hard money has become a hot-button topic in the finance industry. With a sprawling city and millions of real estate transactions occurring each year, there is no doubt that the lack of lending by banks is causing many to seek funding elsewhere. From investors interested in offering up their own capital for lending to property owners seeking funding for renovations or future purchases, the real estate landscape in southern California requires monetary injections to sustain the lending needs of the region. This opens the door to a bustling industry that provides those with capital a high-return investment option, and gives those with a need for capital an option that is currently minute in the banking world.
The Emergence of Realtor Involvement
As the real estate industry continues to attempt a recovery from the last decade, realtors are searching for new ways to facilitate closings. Clients, especially in today’s economy, are struggling to find approval for new mortgage loans, which can make closing a sale a frustrating prospect. After all, realtors that aren’t closing aren’t making any money! This is another area in which California hard money loans are helping to finance new home sales. This trend has seen a sharp increase in the last 12 months and further growth is expected. This will further legitimize the use of these secured loans and likely lead to some small semblance of a real estate recovery.
Commercial and Residential Applications
Commercial and residential buyers alike are finding hard money lenders to be a saving grace. While many will point out that the interest rates are a few points higher than standard bank loans, proponents of the practice will remind you that the risk assumed by the lender is much higher. This necessitates the increased interest rate. Further, the closing time on loans such as these are only a fraction of closing times through standard banks, making them more attractive for investors that must act quickly or homeowners facing foreclosure.
Separating the Good from the Bad
When searching for a hard money lender, California can be a great market with several options. However, there are also groups within the industry that are simply interested in claiming fees and then refusing loans. These companies generally require payments up front for incidental fees such as appraisals, only to refuse the prospective borrower and pocket the loan. How does the situation work? It usually goes something like this:
A prospective borrower contacts a hard money lending group to inquire about the possibility of a loan. The group sounds legitimate enough, as they have a solid website and someone responds quickly to the inquiry. They go over all of the steps necessary to process a potential loan, and then ask for a fee up-front. What the borrower doesn’t know is that this organization has no intention of issuing a loan. Instead, they make their money off of scamming prospective buyers into giving up a bit of money up front, and always refuse to issue the loan.
Taking note of the “sharks” in the industry can help you find the right lender for your particular circumstance.

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