Because cities like Los Angeles are in a state of flux, properties are being purchased, refinished, and then either used by the purchaser or resold to other investors that may have an interest in the location. However, given the current state of the national economy, lending isn’t quite what it used to be, which is why the hard money Los Angeles marketplace is currently seeing a massive boom. With the property acting as collateral for the secured loan, the property’s owner can get financing for any number of things while the lender enjoys a bit of circumvented risk.
Despite the increased interest rates on these loans, Los Angeles hard money investors are fielding increased calls. While they may not be ideal for every property owner, there are several reasons that may drive an owner to seek out a hard money investor:
1) Avoiding Foreclosure
In many foreclosure situations, the one thing that a homeowner needs is time. But, as the adage goes, time is one of the few things that money can’t buy. However, using one of these secured loans as a means of getting extra time to get affairs in order is fairly close to the mark! Whether the interest is in avoiding foreclosure for long enough to arrange a quick sale or making necessary changes to the property to entice a sale, the end result is the same – property owners can utilize hard money lenders to bridge the gap between the demands of the current lien holder and the time necessary to locate a buyer.
2) Purchasing Assistance
These loan types are also referred to as “bridge loans”, as they can be used for specific purchasing purposes. For example, if a property owner has found a location that provides a great opportunity, yet has not yet sold the previous home or piece of property, they can contact a hard money investor to “bridge the gap” between the purchase of the new property and the sale of the currently owned property. These transactions are quite common and can be quite beneficial for those that use property as an investment.
When it comes to hard money lenders, Los Angeles has quite a few options for those who are interested. Because of the consistent renewal and booming population of the metropolitan area, properties are bought and sold constantly. However, as previously mentioned, the problem arises when the banking industry tightens the proverbial purse strings and refuses to loan out money – this dynamic is especially true for those with poor or non-existent credit. While the interest rates are generally higher than those found with traditional property loans, borrowers can use the “quick” nature of these transactions to their advantage. Buying time is a prospect that we can only dream of, but when utilizing the hard money lenders at your disposal, you can come pretty close to doing it! These transactions can help provide the necessary funding to bridge small time gaps and prevent homes from being foreclosed upon.