There is a fairly reasonable chance that you have never even heard of a California hard money loan, much less found one. It is a pretty low-key lending alternative, and for good reason. With the potential millions that can be made through hard money lending, and the massive real estate empires to be had, it is no wonder savvy investors want to keep it secret.
Today, we are going to let the proverbial cat out of the bag... Get ready to discover the fastest, simplest way to translate lucrative real estate opportunities into an actual real estate empire!
The Core of Hard Money Lending...
In the simplest of terms, hard money loans are a "creative" lending alternative that offers borrowers a wider variety of many options, with less financial scrutiny. In exchange for these concessions and the increased "permissiveness" in the credit history and financial areas, California hard money lenders are rewarded with higher interest rates and returns than conventional lenders typically earn.
This means that even those of you who had NEVER qualify for a traditional loan now can have a realistic, ethical opportunity to build a multi-million dollar real estate empire one deal at a time. However, aside from the higher interest rates and the lower levels of financial scrutiny, hard money loans are remarkably similar to traditional secured loans.
There are a few other differences that must be taken into account as well:
1. When borrowing against real estate, hard money loans typically have lower loan-to values than conventional loans
2. Hard money loans are not backed by the FDIC, and
3. The terms of hard money loans are generally paid off much sooner than conventional loans are.
If you are looking for big money fast and you do not have time (or the ability) to jump through the hoops or cut through the red tape of bank financing, there's no other solution that has as much to offer.
Now that you know the basics of WHAT hard money lending is, now you need to figure out if you can put one to work for you.
Will A Hard Money Loan Work For Me?
Once you discover the option of hard money lending, it is a natural way to wonder if it could make a difference in your own situation.
- Are you a victim of a marred (or non-existent) credit history?
- Have a few mistakes in your past wrecked your ability to qualify for conventional financing?
- Has a recent divorce or bankruptcy made you a leper in the lending community?
- Have you stumbled across once-in-a-lifetime real estate investment opportunity, but you have to act fast and have no idea where you can get the money?
- Have you come to the conclusion that you will NEVER find the financing your hopes and dreams demand?
If the answer is yes to any of these questions, then you have already qualified yourself as an ideal candidate for a hard money loan.
However, you may have a few legitimate concerns. Fortunately, we are here to lay your concerns at rest. The most prevalent concern raised in the discussion about hard money loans is actually based on a misconception. Because hard money lenders put their money at a much higher risk than banks EVER will, and they charge higher rates to compensate, the uninformed often jump to the conclusion that there's something shady going on. Conventional lenders and people who are missing pretty essential facts don't work too hard to correct those misguided notions either.
Fortunately, "The truth is out there..."
Hard money loans follow the same basic protocols that traditional options do. Because financing is complicated under even the best circumstances, your hard money lender will encourage (perhaps even require) that you retain the services of a lawyer from the onset. Its advice you should take advantage of ANYTIME you sign a deal for a high ticket item.
There are several other parallels you can plan on as well:
· Paperwork and
· A "closing"
...just to name a few.
One of the essential tenets of successful real estate investing is learning to apply the principles of leverage. Leveraging is about more than just putting other people's money to work for you – it is about putting other people to work for you as well. When you are up against a "big deal", if someone else out there can do it better and faster than you can on your own, you'd be silly NOT to hire them!
Their expertise is almost always worth the fees entailed. With them, you can avoid time-wasting mistakes and potentially devastating errors you might have otherwise missed.
Finding a hard money lender you can trust is the first step in the journey.