A Summary of Hard Money Lending in 4 Points

The internet is a treasure trove of information about hard money lending. Some of it is true, some of it is not. Some of the information is produced by people who are genuine experts in the field. Other information, not so much. The long and short of it is that you cannot always believe what you read online.

As Salt Lake City hard money lenders, we are experts in this particular field. We can tell you everything you need to know about our industry. Assuming you do not have the time to sit through a long presentation, we can summarize hard money lending in four salient points:

Real Estate Is the Main Target

There are no hard and fast rules determining what hard money loans can be used for. However, it is no secret that real estate is hard money’s main target. A large percentage of the loans hard money lenders make go toward completing real estate transactions in one form or another.

In the past, we have made loans to investors looking to invest in commercial property. We have helped other investors acquire multi-family rental units. Real estate is a major target for hard money because acquired properties act as their own collateral.

Speed Is the Primary Benefit

Among the many reasons clients apply for hard money loans is the need for speed. This makes a lot of sense when you consider our focus on real estate investment. In the investment game, timing is everything. Often times, deals rest on how quickly buyers can come up with financing.

Hard money excels in this regard because loans can be funded much more quickly compared to traditional financing. Funding within 4 to 7 business days is about average, but we can close faster than that. Banks can’t close that quickly; it’s not in their DNA.

Speed can be the determining factor in getting real estate deals done. We have had the occasion to help numerous clients who would have lost out on great deals had we not stepped in with fast cash. We consider speed one of our best qualities as a private lender.

Less Documentation Is Required

Hard money loans are faster to process, in part, because lenders require significantly less documentation. We do not require reams of paperwork. We do not look at every little detail of a borrower’s financial history. Our document needs are fairly simple.

Fewer documentation requirements mean you spend less time producing data that turns out to be irrelevant to your loan. It means spending less time faxing things, creating PDFs, and sending emails. Meanwhile, we can get your application reviewed, approved, and processed quickly.

Collateral Is the Most Important Factor

Nearly all loan decisions in the hard money arena rest on the value of the collateral being offered by the borrower. If the collateral doesn’t support the amount being requested, it is very difficult for a lender to approve a loan. On the other hand, collateral with sufficient value puts lenders in a better position to say yes.

This last point cannot be stressed enough. Often times, borrowers offer the property being acquired as collateral on the loan. Due diligence requires that we look closely at the property’s current value and projected future value. We have to see enough value to cover the cost of the loan.

You should now have a basic understanding of what makes hard money work. If you are considering a hard money loan for your next project, contact us at our Salt Lake City office. We fund projects throughout Utah and several other states.