In today's economy, getting a bank or institutional loan for commercial property or for residential investment properties can be problematic. Banks look at lots of factors when determining whether or not to lend money and loan brokers can take forever to find and establish a loan. Between the reticence of banks to loan funds and the length of time it can take for a loan broker, a residential or commercial hard money loan can be your very best option to take.
There are different types of hard money loans. As a borrower or real estate investor you must have knowledge of all types of loans. You may choose the one which best match your need and suits you. I would like to share these types. First is a hard money acquisition loan. This is used to purchase a specific property, typically improved property or platted land. These loans are perfect when banks can't get the funds to you in time to complete a deal, if the property isn't up to an institutional lender's standards or there's an issue with credit or liquidity. Second is Value added loans. It is a type of hard money loan for properties that have higher than normal vacancy rates and can be used to renovate a property to increase cash flow. This is a great loan when a property has a lot more potential income that it's currently generating.
Third one is hard money land acquisition loans. It is a way to buy land to improve. Banks and other lenders, including other private lenders, aren't financing many land deals at all so finding a hard money loan for property is going to be your best bet. Fourth is Bridge loan. These are a great way to get from point A to point B in a financial situation. These are short term loans that can be used to purchase a property while waiting on bank financing to come together. These loans typically close in a few weeks instead of the months it can take for a bank loan which could lose you the property. Another type is Construction pay off loans. They are designed to help contractors who have finished a property but it hasn't sold yet. This loan is used to pay off the existing construction loan so the developer avoids losses and doesn't have to short sell the property.
At last I would say, as you can see, this variety of options available can help borrowers and contractors alike to leverage a situation that can't be leveraged any other way. While traditional lenders may not be able to work with you on a standard loan, a hard money loan is much easier to get and a lot quicker to get as well. If you're in need of a loan for a real estate deal, take a look at a hard money loan and the hard money loan rates. It may make the entire deal come together.