For many years now, hard money lenders have been portrayed in negative light. While some people accuse them of being illegitimate, others have flatly referred to them as swindlers. Well, each industry has its fair share of crooked practitioners.

However, most hard money lenders operate legally and are genuine. Today, almost all hard money lenders sincerely want to assist you grow your portfolio as opposed to taking advantage of you. The following are six top things you perhaps didn’t know about private lenders.

1. Hard money lenders are legal

The private money lending industry has been criticized for being illegal. However, the law provides for their existence and operation. They are therefore just as well recognized as banks, microfinance companies and other financial institutions.

Hard money lenders near you trade as LLC, corporations or sole proprietorships. The law requires them to define their business structure. The only difference between these organizations is that banks have a whole deal of bureaucracy and legislation to follow.

2. Don’t let the name turn you off

Many people misconstrue the name “hard money”. Contrary to popular belief, it is not hard to secure loans from hard money lenders. The name simply means that you will secure your loan against an asset, such as a real estate property.

These lenders require some sort of security that you will pay the loan, just as banks use your credit score and borrowing history. Private lenders usually overlook your credit score and throw more weight around the value of your real estate property.

3. There are valid reasons why interest rates are higher

It is not a secret that the interest rates on hard money loans are higher than bank rates. But you understand this considering the enormity of the risk that these lenders face. You are taking a loan to invest and hopefully make handsome returns. The lender is left in trouble should your investment fail.

4. You can still make returns after hard money loans

You can secure a hard money loan faster than traditional bank loans. This sets you ready to invest while profitable conditions in the market prevail. Even with high interest rates, you can rack up handsome profits when you buy, remodel and sell properties in lucrative locations in your city.

5. There is room for negotiation

The typical duration of hard money loans for investing in real estate is 6 months to 1 year. However, you can talk to your lender to extend this duration if your real estate business is large. Similarly, your lender can listen to you if unforeseen circumstances delay your investment. This is unheard of when it comes to borrowing from banks and other traditional lenders.

Experienced investors and those with a past relationship with certain lenders have the ability to negotiate better rates and lower fees prior to signing on a loan.

Using technology to find a hard money lender, such as our platform, increases your chances at finding the lowest possible rates and fees and also saves you a lot of time. Simply answer a few quick questions about your real estate investment and you will be matched to lenders across the country that fit your exact needs. This enables you to quickly compare all available hard money loan offers to choose which is best for you.

6. Hard money lending is great for house flipping

Have you identified a viable house flipping opportunity in a lucrative area near you? Why not borrow a hard money loan to flip the real estate property? Real estate flipping is perhaps the best type of real estate investment for hard money loans.

The duration of repairing and fixing old houses is shorter than building from scratch. It is easy to find suitable buyers and make handsome profits while at it. If they are in high demand, you should make good returns to repay your loan fully and still reserve finances for your business.

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