The benefits of using a direct hard money lender
The benefits of using a direct hard money lender
- Reliable source of funding – A direct hard money lender lends their own funds and is closing hard money loans during the Covid-19 pandemic.
- Fast Approval/Closing Process – A direct hard money lender can commit to loans in hours, close loans in days, without having to go to a 3rd party for approval.
- Flexible Underwriting criteria – A direct hard money can apply a common sense underwriting approach with minimal paperwork required.
Reliable source of funding – The Covid-19 pandemic has brought to light what I’ve been saying for quite some time. Balance sheet hard money lenders are the only reliable source of funding for real estate investors because the lend their own funds. Following the Great Recession, a countless amount of lenders entered the market saying that they were “direct” hard money lenders when they really weren’t. These lenders found themselves with the ability to make hard money loans because they could sell their paper immediately post-closing to private equity shops. They’d say they have “investors”, but that is sort of misleading. We have investors, but our investors commit and invest their capital with us prior to making a hard money loan or funding construction draws, not after. These so called “direct” hard money lenders were really just glorified brokers, and they were dramatically under-capitalized. Most only had a line of credit to bridge the funding gap between the loan closing and the loan being purchased by the private equity shop. There are several lenders I know of that not only failed to close loans they committed to, but they can’t fund construction draws either. Some borrower’s lost their deposits, and some now have stalled construction projects at no fault of their own. To make matters worse, the borrower’s now have a group behind the scenes that they don’t have a relationship with dictating how the lender needs to handle their workout. With a balance sheet hard money lender like us, you will always deal with our team from closing to repayment.
Fast Approval/Closing Process – When it comes to underwriting hard money loans, our program is built for speed. We can approve your loan and issue a Term Sheet in less than 24 hours from receiving the required information. In addition, we can close loans in days. Our record is 3 days!
Flexible Underwriting criteria – We have the ability to use a common sense underwriting approach. We don’t have a private equity shop putting us in a box in order for the loan to be qualified for purchase. Our programs allow us to cross collateralize properties, and we can go up to 18 month terms at no additional cost. We don’t require tax returns, employment or income verification, we only care about liquidity and credit. In fact, we mostly care about your investment experience. We ask that you complete an experience worksheet (found here).
When economic conditions shift, you learn who your trusted partners are. We never stopped lending during Covid. In fact, we grew market share and are now setting production records thanks to our loyal customers.
