An Example of How Hard Money Can Help Real Estate Investors

An Example of How Hard Money Can Real Estate Investors

Actium Partners is thrilled to be able to work with clients in Salt Lake City and throughout Utah. Our hard money and bridge loans have helped countless clients fund projects over the years. We have worked with developers, small business owners, and other organizations. One of our favorite types of clients to work with is the real estate investor.

Real estate investments are generally wise investments. In fact, real estate has been one of the safest investments in the U.S. for the better part of 50 years. Knowing that, we look for opportunities to help investors do what they do. Below is a fictional example of how hard money can help an investor reach their goals.

Developing Land in Salt Lake City

As you know, the greater Salt Lake City area is a hotbed for both residential and commercial construction. Companies have been moving here for more than a decade. They have been attracting highly skilled workers with above average incomes. It has all led to a very lucrative market for real estate investors.

Imagine an investor buying a piece of land just outside the city limits. He wants to develop it into commercial space. To realize his goals, his priority is to obtain the land. He contacts us with his proposal. We want to know:

  • the location of the property
  • his plans for development
  • the property’s future sale potential
  • the borrower’s exit plan.

It turns out that the investor has other sources of funding to cover land improvements and construction. He is looking for us to fund the acquisition so that he does not lose the property to another investor. He comes to us because he wants to get the deal done as quickly as possible.

We Appraise and Approve

We are intrigued by the investor’s proposal. The piece of land he is looking at is in a prime location. Furthermore, he has done his homework. He can demonstrate interest among potential clients looking to rent commercial space in that area. We can see value in the project right away.

Our first task is to appraise the land. We look at it, along with all the aspects of the investor’s proposal. We are satisfied that the property is a strong enough asset to warrant funding the project. All that is left is drawing up the documents and closing the deal.

The Investor Is Off and Running

By funding the property acquisition in a timely manner, we allow the investor to secure the property before other investors even have their financing in order. He is now off and running. He taps into his own cash reserves to improve the land before securing traditional financing for construction costs.

As part of his traditional financing package, he also secures funding to pay off the loan we made. He will settle with us within a year. Meanwhile, he will concentrate on getting his buildings built and leased out. Just a couple of years from now, the property will be returning a healthy amount of monthly rental income.

In this particular case, the most important contribution we made to the project was funding land acquisition on a short schedule. Our ability to move quickly is what allowed the client to beat the competition for that particular property. Had he been forced to go to a bank, he likely would have lost out to another investor.

Hard money has a lot to offer real estate investors. We hope this fictional case study gives you a better idea of how we might be able to help you.