Hard Money vs. Cash: Things to Consider

A real estate investor not wanting to run to the bank to finance a new investment basically has two options: hard money and cash assets. Both represent a way to invest without having to entangle oneself with bank financing. But which one is better? Actually, neither one. Each case has to be evaluated on its own merits.


This post will consider three facets of financing a new investment via both hard money and cash. If you have enough cash on hand to have to face this sort of dilemma, you are probably in a fairly strong financial position. Yet it still pays to think long and hard about how you intend to fund your next investment.




One of the biggest knocks against banks is the time factor. A real estate investor looking to close on a very attractive deal does not necessarily want to wait the weeks necessary to satisfy bank requirements. Both hard money and cash significantly reduce the amount of time it takes to close.


Obviously, if you are looking at a property you want to secure right now, cash assets are your best bet. Even though hard money lenders do not take nearly as long as banks to complete the loan process, you can still write a check on your own bank account faster than you can get a hard money loan. That is just reality. The good news is that your typical hard money lender can grant pre-approval quickly and then have the loan ready to go as soon as the next day.


Other Investment Opportunities


Last but not least is the consideration of other investment opportunities. Even if you have enough cash lying around to cover the purchase, how much cash will you have left over after closing the deal? You may not be left with enough to fund other investments already on the table. You also might not have enough to make a down payment on another property down the road.


Cash assets represent a fast and efficient way to buy property. But using cash means tying up your liquidity until such time as the property in question starts turning a real profit. Even then, you are paying yourself back over time and potentially losing out on other investment opportunities as a result. Hard money might be the better option.


If you are looking to invest here in Salt Lake City, we invite you to contact Actium Partners to learn more about our Bridge Loans and Hard Money Lending. Give us a call at 801-983-6701 if you have any questions!