Going with a California Hard Money lender may not always be the best option to take, but there are certain situations where they can be exactly what you need.
One of the hardest things about starting a new business in the Golden State has to be securing whatever financing you need to get your project off the ground and running. In the beginning, you are going to need as much as you can get but don’t want to take too much if doing so can be avoided—you will have to pay it back with interest after all!
However, one of the sad truths about business ownership is that there is always going to be something that will come up that will require you to spend more money on than you have to deal with. You can’t ignore it; it has to be addressed.
When you need money in a pinch, traditional loans are typically not going to be approved fast enough for business operations not to be hampered—which makes it nice to have California Hard Money lenders available.
When Should You Call Your California Hard Money Lender Before Your Bank
Hard money loans are typically paid back sooner with terms of a few months to a few years. Since credit scores are not weighed too heavily, interest rates tend to be higher along with whatever fees may be required. However, with how they are structured and processed, for certain situations they are the best option for a borrower to take:
Renovations/Flipping a property: It is not unusual for a property to be for sale at a low price because of the state the property is in. But an astute investor can see past the dirt, grime, and disrepair and visualize how the diamond in the rough will look once its cleaned up and a few fixes are made. However, while your bank loan allowed you to buy the property, you don’t have enough to make the necessary upgrades.
Hard money lenders, unlike most traditional ones, will look past the immediate appearance and see the diamond you see. Since the approval process is quicker, you will not have to sit on the property for long before getting to work.
Construction: traditional lenders like to see for properties to be ready and not require much work, but sometimes construction is necessary for a property’s value to be realized. Traditional lenders will not necessarily say no, but they will have a number of hoops for borrowers to jump through. Miss one, and you could very well be out of luck. Traditional lenders may also only be willing to finance part of a project, requiring you to come up with the rest.
While the same hoops are important to California Hard Money lenders, they are not as important. They are more apt to look for compensating factors that can make a developer look more appealing.
Time-Sensitive Property Purchases: one of the most frustrating things to a real estate investor has to be finding a tremendous deal on a great property and losing it because you had to wait on your bank to close on your loan. A traditional loan backed by Fannie Mae will take at least 120 days before it can be refinanced. A hard money loan can be just the thing to help you secure the property without having to wait 120 days.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.