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Why You Should Consider Hard Money Loans for Real Estate Investments


Why You Should Consider Hard Money Loans for Real Estate Investments

Hard money loans are popular among real estate investors and if you are interested in real estate investing, here’s why you should consider hard money loans. Since traditional lenders have strict regulations when it comes to lending, hard money lenders provide individuals with financing for their real estate investments. Because the interest rates are higher than traditional loans, hard money loans are used for short-term investments. Though the interest rates are higher, investors who use hard money loans can expect big profits if the investment is structured properly.


Hard money loans are not one-size-fits-all. They can be customized for each deal. If you’re a new investor who is looking to flip houses or an experienced real estate developer, you should be able to find a hard money loan that fits your particular needs.

Less Focus on Your Credit Score

The ability to obtain hard money loans is determined by the value of the property and not the borrower’s credit score. Lenders focus on the “after repair value,” or ARV, which is an estimate of what the property will be worth once the renovation or development phase is complete. The primary focus is on the property’s profitability.

Not every investor has a perfect credit score which is why many consider hard money loans. While traditional lenders focus exclusively on credit scores when it comes to loans, hard money lenders focus on the market value of the property. They’re not concerned with your personal credit. Instead, they are focused on the real estate deal in question. This is how hard money lenders protect themselves in the event of default. Knowing the value of the property helps them limit the amount they loan to the borrower so that they can recoup their investment by taking back the property. This is how hard money lenders are able to provide financing to investors who would not be approved for a loan from a traditional lender.


Traditional lenders are not nearly as fast as hard money lenders. Traditional lenders require excessive paperwork and have strict regulations for their potential borrowers. Even after you jump through all of their hoops, it’s not guaranteed you will get the loan and if you are approved, the process could take months. This is not ideal for investors who are interested in making fast, short-term investments.

With investing, the longer you’re waiting to close on a purchase, the longer your money is effectively tied-up. If you want financing fast, hard money loans are your answer. Loans can be approved in a matter of days. When it comes to investing, time is money.

Work With Real People

Even if you can get approved for a loan from a traditional lender, you’re not going to get personalized service with your financing. Not only do you not have to worry about the strict regulations with hard money loans, you will also be working with people who understand the real estate market.

Unlike traditional lenders, hard money lenders can offer partnership and communication in your investments and projects. When you are investing in real estate, you’re not just looking for financing, you are looking for a lender who values open, two-way communication. Some important Trust Deed Investment Information you’ll need are the basics of finding a great MLB. Communication, integrity, and timeliness is most important. Finding an alternative lender to handle these investments doesn’t have to be difficult. Find out more about HML Investments here.

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