For instance, starting out with the benefits, you will find
out early on that these particular loans are approved and funded quickly, which
is often the main reason people choose to use
hard
money lenders in California in the first place. The
next benefit you will find is that hard money financing options have fewer
requirements. This means that unlike traditional financing options or bank
lending you will not have to deal with an exorbitant amount of red tape.
Consequently, common red flags such as bad credit, a previous foreclosure or
bankruptcies are less likely to harm your chances of getting approved.
Another
major benefit to Hard Money loan California is the
ability to get a project funded that you were unable to get funded or rather
financed anywhere else. One common example is a fix and flip project. Often,
banks are not interested in short-term lending. This is not to say that banks
do not offer short-term options but rather that banks are in the business of
making money and the easiest way to do that is to approve long-term loans more
often. Furthermore, banks look at these kinds of projects such as a fix
and flip as high-risk which only make getting financing harder.
So now that we’ve covered the major benefits of all things
hard money, let’s talk about those pesky pitfalls and disadvantages. The top
disadvantage when dealing with hard money financing is of course that higher
than average interest rate. But, in reality, just as banks need to make a
profit and are concerned about high-risk borrowers, non-bank lenders need to
see some return on their investment hence the higher rates. Disadvantage number
2 is the fact that
hard
money financing is only available for short-term use. This means if
you are looking for financing for a project that others have deemed high-risk
for more than 1-5 years you may have to look elsewhere.
Lastly, hard money loans require either a minimum amount of
equity i.e. at least 25% or a significant down payment. In the world of
California Commercial Hard Money, that
minimum amount becomes 40% and the down payment is much larger. This increase
is ultimately due to the fact that if there is a default, selling the
commercial property is much harder to do and often requires a discounted sale
price in order to recoup what the non-bank lender lost.
Private California Hard Money Lender Requirements and
Regulations
When
dealing with a California
private hard money lender there are several things you need to
know to ensure that you are not falling victim to predatory lending. Moreover,
let’s go over a few tips so you are not just borrowing blindly.
As you are probably already aware, hard
money lenders, in essence, are still private money lenders. This means that
your potential
California
private hard money lender is a non-bank lender. Historically, non-bank
lenders have been able to lend money with limited regulations. Originally, this
flexibility with
California private hard
money lender requirements made sense as the government shouldn’t be able to
tell your father that he cannot lend you some cash for your start-up.
But, now financial reforms which were
absolutely necessary after the real estate collapse means that there are some
requirements when it comes to non-bank lending. For instance, the issue of
mortgage licensing was not applicable to non-banker lenders i.e. individuals,
companies and so on. Moreover, due to the almost overwhelming number of
non-bank lenders in California, these new requirements have a lot of weight.
So what exactly do new regulations and
requirements for potential borrowers and you? Well, for starters, there is now
a fixed interest rate (the Usury law ensure that you will not be charge
excessively high rates) that applies to these particular types of loans. In
California, that “usury rate” is a maximum of ten percent per year. In addition
to making sure that you aren’t financially drowning due to a commercial
purchase or business purpose loan, etc., as previously mentioned, the issue of
mortgage licensing now affects what type of property you can use hard money
financing for. You also now need more documentation in order to properly secure
your hard money loan than you once did.
The Benefits of Hard
Money Loans California
Considering
a hard
money loan in California loan
for your next commercial project or business plan? If that’s where your
financing search is headed then it’s important to know the pros and cons.)
By know you know
Hard
Money Lenders California are some of the most readily available hard
money financing options, which is great for shopping around for the best rates
and terms. But, in general, you may be wondering what exactly the benefits or
rather advantages of
hard money Lenders
in California loans are? Moreover, you may also want to know exactly what
the disadvantages are of these particular kinds of loans. Well, the good news
is the benefits outweigh the disadvantages by far.
For instance, starting out with the
benefits, you will find out early on that these particular loans are approved
and funded quickly, which is often the main reason people choose to use hard
money in the first place. The next benefit you will find is that hard money
financing options have fewer requirements. This means that unlike traditional
financing options or bank lending you will not have to deal with an exorbitant
amount of red tape. Consequently, common red flags such as bad credit, a
previous foreclosure or bankruptcies are less likely to harm your chances of
getting approved.
Another major benefit to hard money is
the ability to get a project funded that you were unable to get funded or
rather financed anywhere else. One
common example is a fix and flip project. Often, banks are not interested in
short-term lending. This is not to say that banks do not offer short-term
options but rather that banks are in the business of making money and the
easiest way to do that is to approve long-term loans more often. Furthermore,
banks look at these kinds of projects such as a fix and flip as high-risk which
only make getting financing harder.
How to find a California Private Hard Money Lender
(When
it comes to finding a California
private hard money lender, you probably don’t even know where to begin
or rather how to start a viable search and that is okay. In California, there
are so many lender options that you will more than likely need a helping hand.)
Generally, when you are trying to a
reputable
California
private hard money lender the first place you should start is by
checking the nationwide lender directory online. This particular directory
allows you or anyone to search by loan type, loan size, location or keyword
such as construction loan, etc. Moreover, this directory will provide you with
direct access to your potential lenders in general or specific private non-bank
lenders. In addition to searching for a
private
hard money lender California via
the nationwide lender directory, you can also ask for references from your
business associates.
Regardless, of which search method you
choose to take advantage of, finding a few good names doesn’t mean you are
done. Clearly, you need to contact at least your top 10 lenders and present
each of them or the majority of them your loan scenario. Remember, it is
important to find a lender that is likely to approve your loan request, but it
is also important to work with someone that you feel comfortable working with.
Once you have set your sights on your
future lender, the next step is clearly the application process. Nevertheless,
it is still important to highlight that you make sure your future lender offers
the commercial real estate loan type that is right for your business venture or
project. By taking the time to make sure you have chosen your best option as
well as the most compatible private lender you will ultimately save yourself a
lot of time and money.
This is simple, do what you do best, lend people money. You may be a little apprehensive about loaning money to someone who is involved with this market, but you may make a lot off your investment. Medical marijuana has been taking off like a rocket over that last few years and is estimated to be worth billions of dollars. Most of this comes from merchandise and of course the plant, but production is key when you are getting in the business. Since it is considered a part of the “gray market,” you have to be vigilant when choosing a piece of property that you want to use. 
Dennis Dahlberg Broker/RI/CEO/MLO 
![Level-4-Funding-Dennis-Dahlberg-Mort[1]](https://lh3.googleusercontent.com/-aF-ke_K6CG4/V4Z0vHp_19I/AAAAAAAAJ30/J3B2tNpVP3o/Level-4-Funding-Dennis-Dahlberg-Mort.jpg?imgmax=800 "Level-4-Funding-Dennis-Dahlberg-Mort[1]")
