Real Estate Investing: 3 Reasons to Utilize Hard Money

Real estate investors essentially have three choices for financing new properties: bank loans, hard money, and cash. Here at Actium Partners, we specialize in the hard money category. We loan to all sorts of clients who need fast cash to get real estate deals done.

We recognize there are legitimate reasons for seeking out bank loans or using cash normally held in reserve. But from our perspective, hard money proves to be the best option in most cases when a quick close is needed. The unique aspects of hard money make it ideal for time-sensitive real estate investing. When you need fast cash to keep a deal from slipping away, hard money is the way to go.

Here are the top three reasons to utilize hard money for real estate investing:

1. Much Faster Approval

Apply for a hard money loan from Actium and you will get an answer in short order. Hearing from us in 48 hours or less is standard. On the other hand, it could take weeks just to get a loan application into the hands of a bank loan officer. While you are sitting around waiting, your real estate deal could be slipping away.

We understand that time is of the essence in real estate investing. You need to be able to compete with other investors who want the most desirable properties just as much as you do. And if your competitors are ready to close a deal, you cannot afford to wait on a loan officer.

2. Lender Flexibility

Since hard money lenders are not banks, we don’t need to do things the way banks do them. This affords us the opportunity to be flexible in every deal we make. We try work closely with each and every client to come up with a hard money loan that works best for both parties.

That flexibility includes our lending requirements. We do not ask for tons of information so that we can conduct endless credit checks and financial investigations. We focus primarily on collateral to make our lending decisions.

3. Cash Resource Preservation

The three issues discussed above pertain to hard money vs. traditional bank loans. This third reason for choosing hard money loans pertains to cash purchases. When a real estate investor funds a new transaction with cash, two things happen. First, cash reserves are drawn lower than they otherwise would be. This could be problematic if the investor runs into cash flow problems down the road.

Second, it ties up cash that could otherwise be used to support the operational needs of the investor’s business. We believe cash should be dedicated to day-to-day operations rather than funding new investments. Why? Because an investor’s cash position plays a more significant role in financial stability than the amount of existing debt being carried. Debt is an issue, but you cannot pay it off if you don’t have cash.

From our perspective, hard money is almost always the right answer. If you are looking to make a new real estate investment, we invite you to contact us to learn more about how Actium Partners can help.