Hard Money Lenders & The Self Employed Real Estate Investor

Over the past few years, real estate opportunities have been on the rise due to the ever-increasing housing demands. Also, more and more people are choosing professions in real estate due to various reasons, including better yields and autonomy.

The thing is, most real estate agents are independent contractors, some of whom are not so well-established in the business. When starting out as an independent real estate investor, there are financial obligations you’ll need to meet. In addition to this, many real estate deals, some of which are time-restricted, require you to be financially stable.

It’s really tough starting out without having saved enough and even as you gain experience in the business, you will notice that the major challenges will revolve around your finances from time. But one thing to note is that real estate in itself is a business:

You have to use money to make money.

For you to get the best deals in the real estate market, you will want to always have your finances in order. But liquidity is not always readily available. This means that from time to time, you’ll find yourself in the need to borrow, so you can close deals faster before your competition does so.

Well, the first idea would be to consult with conventional financial institutions for loans. While taking a conventional loan is a valid option, it’s important to note that real estate is sometimes associated with a lot of risks, something that banks know all too well. This is why many investors in real estate resort to taking hard money loans instead.

So, as a self-employed real estate investor, why do you need hard money lenders? In this piece, we’ll be shedding more light on hard money lenders and the self-employed real estate investor.

Why you need hard money lenders as a self-employed real estate investor

As earlier mentioned, beginners in real estate are often confronted by a lack of finances. While there are so many funding options for you out there estate career, it turns out that some real estate investment opportunities are marred by so many risks, making it hard for banks to approve loan applications.

For the few that get approved for a loan, they have to meet many requirements, the process is rather lengthy, and comes with stringent terms and conditions.

In addition to this, you may not be a perfect candidate for a conventional bank loan due to bad credit. Hard money loans are increasingly becoming the best financial option for real estate investors in financing property purchases, fix and flip projects, and taking advantage of fleeting real estate investment opportunities.

When strategically used in real estate, hard money loans are a great tool for increasing holdings without having to risk other existing properties. This is why you need a hard money lender-:

1. Less stellar credit

Self-employed real estate investors with bad credit challenges get the most out of hard money loans. When applying for a conventional loan, banks must dig into your credit history to assess your creditworthiness but the case is different with hard money loans. While you may need to prove your creditworthiness in a way, say by producing proof of ownership for your assets, hard money lenders are not interested in your credit scores.

They are more interested in what you plan to invest in terms of property. Self-employed real estate investors who’ve been turned down by banks are still able to move forward with their real estate deals using hard money loans.

2. You can take advantage of quick real estate investment opportunities

The best real estate investment opportunities pop up when you least expect them to and at the least opportune time. This means that you need to be financially stable at all times. But considering that you may still be new to the game and/or low on funds, a hard money loan could be the best option to sort you out.

If you have your eye on a property that looks promising, a hard money loan is the most convenient financial solution compared to conventional loans. With hard money loans, you’re able to take part in quick sales without having to sacrifice too much of your profits.

3. Expanding your holdings

In real estate, the market can at times get hotter than usual. It’s very common for investors to spend the majority of their liquid assets on new properties and other promising assets. But when the market is less favorable, it leaves them dead cold about when other opportunities pop up, especially when it comes to house-flipping.

With a hard money loan, it becomes easier to fund other property purchases and in so doing, it allows you to expand your holdings without having to compromise funds set aside for other projects.

The advantages of hard money loans to the self-employed real estate investors

Contrary to popular belief, hard money loans are not only for broke investors with bad credit. You’ll be surprised that hard money loans are a great financing tool even to the wealthiest of real estate agents. As a self-employed real estate investor, you need as many financial tools at your disposal at all times.

So before you doom hard money loans as expensive and unworthy, here are the benefits of taking out a hard money loan.

  • Allows you the ability to close on multiple deals
  • Allows you the ability to close on deals fast
  • They are easy to qualify
  • Convenient and reliable
  • Hard money loans are consistent
  • Flexible terms
  • No need to prove high credit scores

Tips for Choosing a Hard Money Lender

While hard money loans are unquestionably the best option for financing many real estate projects and opportunities, it’s important to ensure that you’re working with the best lenders. One thing to note is that, unlike conventional loans, hard money loan deals are carried out outside the banking walls.

This is because hard money lenders are private investors, individuals, or companies that issue short term loans to real estate investors buying property, house flipping, and investors who buy and hold property. The thing is, there are so many hard money scams out there, which is why you need to be careful about the lender you choose to work with. Here are tips for choosing the best hard money lenders.

  • Do your research
  • Check the lender’s credibility and reputation
  • Check for licenses
  • Consider the time it takes to process the hard money loan
  • Compare interest rates
  • Compare repayment terms

Hard money loans have become a great source of funding for self-employed real estate investors. But you must use the loans strategically and wisely if you’re to make it big in the real estate business.

Having multiple financial sources will go a long way in expanding your real estate holdings. If you’re still in the trade, don’t worry, because it all gets better with time.

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