Depending on your lender, there are several requirements that you’ll need to fulfill. Most importantly, you need real estate assets to use as collateral. Lenders may also require income documentation, credit score, and debt coverage figures.
Whatever the case, here are reasons why commercial hard money loans make ideal options for real estate investors.
1. They Have Fast Approvals
Unlike traditional loan options, a hard money loan usually has few requirements thus a simple process. In certain cases, you can get a conditional approval after the initial meeting with the lender.
What your lender will be looking at is the value of your property. So, as long as your property value meets the Loan-To Value ratio requirement, you can be sure of a fast closing. Most lenders don’t spend much time reviewing your income report, bank statement, or credit score.
So, if you’re funding a large-scale project, commercial hard money loans allows you to stay on schedule without deviations or risks of losing a property.
2. Commercial Hard Money Loans are Flexible
Commercial hard money lenders, like ARC Capital, do not use the standardized underwriting process of traditional loans. Instead, they assess and review each borrower individually. Plus, you get the entire amount you need to complete your project or deal.
The underwriting guidelines are based off the equity of the assets. They use a common sense approach when evaluating factors such as credit score and income documentation. The rates are based on risk; the more risky the loan the higher the rates.
3. Get Better Real Estate Deals
In the real estate industry, it’s possible to purchase homes at reasonable prices if you pay the whole purchase price at once and on time. With no cash out limits, you can get your purchase offers accepted at better prices, and you can buy a property at all-cash auctions.
So, if your money is tied up in another project, commercial hard money loans allow you to get other deals quite conveniently. With some commercial loan programs you can finance up to 75 percent loan-to-value (LTV) allowing you to take out enough money for other projects.
4. Great for Fix-and-Flip Investors
Being a fix-and-flip investor can be quite challenging. Typically, you need to have several properties to make the most out of your investments. A fix and flip hard money loan helps you to build your portfolio more quickly due to fast approvals and short term financing.
You can purchase homes on the market now and not have to wait lengthy approval times. Risking the chance of the home no longer being available.
When the market value of your fix and flip investment properties rise, you can them sell them and repay your loans. The idea here is that a fix and flip hard money loan allows you to get properties quickly.
Commercial Hard Money Loans – The Takeaway
Hard money loans are beneficial for real estate investors. Due to the common sense underwriting guidelines many people who don’t qualify for a bank loan can get financed.
The terms of the loan are more flexible allowing you to structure deals to expand your real estate portfolio in a more rapid fashion.
With no cash out limits and faster approvals you don’t have to risk that deal slipping out from underneath you because you couldn’t get financed in time.
Do you have a question? Get in touch with us, and we’ll be glad to help.