When turning to outside finance supporting options you can generally turn to hard money lenders or banks. Both methods of financing projects are commonly used but procedures run a little differently which could affect the outcome of your project! Time is money on a construction site so the quicker you get your money the better the outcome could be.
Identify and approach your situation.
It is important to identify the situation you are in to be able to choose the best option for your needs. For example, if you are an investor planning on remodeling a owner occupied property then your best option is to not use hard money loans because it will be difficult to find someone to work with you. This is because lenders usually prefer short-term lending where they can close a deal within six months or less.
It is common for hard money lenders not having access to as many people as a bank would. Therefore there are less people to process paperwork and do so much. There is a lot of speculation done on the hard moneylenders side and a big risk is taken as it usually means the bank declined their request as their first option.
There is less paper work needed when turning to hard money loans because the only information generally needed is property value and the investors information. Another reason people turn to hard money lending is because they have poor credit or no credit at all.
The change can be very positive and worth it!
There are cases where investors are looking for money quickly and will not get it in time and will suffer big losses from that. This usually happens when the loan is applied through banks, as they require much more paperwork and time to review a list of factors that determines your qualifications. This is not a very appealing route for many people as they generally assume they will be declined after all the paperwork asked by the bank.
The deciding factors can be the condition on the property and how much risk is going to be taken in working with that company. Hard money loan specialists will work with you further in-depth and be more considerate of your situation for a higher rate in return on their fee due to risk. The most positive impact a hard money loan can have is saving a project!
By Martin Fisher