Reason #1: It Can Get You Quick Results!
When you typically walk into a bank seeking a loan to purchase a property it can take too long. There are no same day loan approvals available and funding is usually completed in five to ten days. The process can be even longer if they have to present your request to a committee or board. That means you will lose a bid on the house you are looking to buy with all the time lost. This is not the case with hard money lending as it can take less than a week to alter your situation.
Most properties, especially troubled properties need to be under control and closed quickly so that can also be a difference in a bidding war.
Hard money loans are collateral based and the application focuses less on the borrowers income, issues with recent foreclosures and bankruptcies. It typically comes down to a situation where all the banks are declining your request where a hard money lender can approve in less time it took to apply other places.
Reason #2: Very Flexible With Your Property Type!
In the hard money lending industry you can find access to money for any type of property and it can be financed. That includes family residence, multi-family residence, and industrial/commercial properties. The catch is that most hard money lenders have a specific type of property they focus on.
In recent years with changes in government regulations, many lenders will not accept applications to owner occupied properties. This can be worked around with the proper paper work but typically is a more complicated situation than other loans that are resolved quickly!
Reason #3: You Could Win the Bid War!
The chances of acquiring a property with the help of a hard money loan is sometimes higher than going with a bank. The traditional method of financing through a bank can work for any deal but a experienced seller understands that in a possible last minute changes a hard money lender can be more flexible. There have been cases where banks sometimes stumble upon a detail late in the arrangement and the whole deal falls apart because of something small. It can really help prevent a situation like this if You should do your research a bit and talk to your hard money lender in depth about your situation.
Reason #4: Work Faster to Get the Lower Price!
There have been situations where a property owner needs to get rid of a property quickly and will negotiate for the better price to bidders. You can put yourself in a position with a big advantage in a situation like this if you have hard money as you will have the ability to move your price and fund quicker than another bidder who is with a bank. The person who works with the seller will have the more attractive offer and is more likely to score on the bid.