Hard money loans are better than conventional financing—and even cash—for many reasons. Real estate investors are looking to hard money lenders for solutions more and more these days to finance their rehab, and even rental investment, projects. Also known as private lenders, hard money lenders can provide investors the financial tools they need to resolve many of the key pain points associated with more traditional financing options. Here are just a few reasons why working with a hard money lender is better.
Hard Money Loans vs Conventional Financing
When you work with a hard money lender rather than a conventional real estate lender, you are almost always able to keep more of your cash in your pocket. This is due to the way the deals are structured. With conventional loans you are required to fund the entire rehab yourself - plus put down 25% of the purchase price! With hard money loans, if you have a solid rehab plan established and buy the deal deep enough, you could in theory only have to bring your closing costs to the table. This arrangement gives you the potential to save tens of thousands of dollars, freeing up more of your cash to go after more deals.
Hard Money Loans vs Cash
While buying property and funding the rehab with cash may save you money in terms of fees, most investors end up regretting going that route in the end. No matter how much money you have saved up, in the real estate investment business it always seems to run out eventually. By choosing to take advantage of hard money loans, it gives you the leverage you need to complete more deals - and when it comes to real estate investing, the more deals you can make, the better it will be for your bottom line!
Another Hard Money Advantage
Another advantage of working with a hard money lender is the fact that these lenders are usually investors themselves. This gives them the expertise and desire to help educate you on the best approaches to take for your rehab projects. The tips and pointers they can provide are invaluable and can be the difference between failure and success. You miss out on this mentorship when you choose to use your own cash to fund everything, and conventional lenders typically don’t have the expertise or manpower to help real estate investors.
Now that you know why working with a hard money lender is better, you should understand that not all hard money lenders are the same. At Catalyst Funding, we make decisions quickly on your investment loans and our application process is fast and easy! We also have many years of experience in real estate investing and would be more than happy to mentor you in your rehab and investment project in the greater Houston, Texas area.