Things Real Estate Experts Don’t Want You to Know about Hard Money Lending
Things Real Estate Experts Don't Want You to Know about Hard Money Lending
House flipping is a huge part of the real estate market and is a life-long dream for many people. It also costs money- no two ways about it. A hard money loan helps make projects a reality, but most people don't even know it is an option.
Never heard of it? You are not alone. Heard of it but thought it meant shady deals with shadier people? Yep, that is another common misconception. The reason for that is the lack of transparent information shared by the industry about the benefits of this type of loan.
Here is some insight into what exactly hard money loans are all about, including the things that retail experts won’t tell you.
What Is Hard Money Lending?
Even flipping on the cheap can set you back a fair amount of cash. Most people don't have that kind of spare money lying around. That is where a hard money loan comes in.
In a nutshell, hard money is a loan based on collateral rather than the financial position of the person. Rather than securing a long-term repayment plan based on a stable income, the property is used as collateral and the loan is repaid out of the sale.
It is a quick way to get the cash you need to flip a property in a short time frame without going through the banks. Instead, the money comes from an individual or specialist company like GoKapital.
Five Things Real Estate Experts Won't Tell You About Hard Money
If you have heard of hard money lending, the chances are you have a few negative connotations floating around in your head. They are not entirely unfounded, as some try to take advantage. Please, do not confuse the extreme minority with the well-meaning genuine investors that make up the industry.
Here are five of the things that real estate experts don’t tell you about hard money that could help to realign your impression and understanding of what it is that we do.
1: Hard money is a legitimate business for serious investors.
Hard money is far from the shady under-table deals some real estate experts make it out to be. It is a genuine business with real investors and serious players. These loans help businesses, entrepreneurs, house flippers, first-time buyers, and more to realize their dreams sooner. They pay higher rates in a shorter time, but it is all contracted and agreed upon in acute detail before any deal is done.
Lending is a serious profession for many investors who make it their entire livelihood, and they do so legitimately.
2: The high rates of hard money lending are justifiable and fair.
It is a simple fact that interest rates are higher with hard money than bank loans, but it has to be. Real estate experts do not explain why the rates are higher, which puts a lot of people off. A loan like this is considered very high risk, so the lender needs to protect themselves. In any other type of trade with a high risk involved, the interest would be expected, so why not now?
3: You do not need good credit or savings to get a hard money loan.
One of the main things that hold people back from getting a loan is bad credit. You may think any type of loan is impossible if you don’t have the regular income to support it. That is not true. Hard money loans are available to almost anyone with something to put up as collateral.
Speaking to an expert advisor at GoKapital can help you understand more about how that works.
4: Plenty of businesses use hard money to get started, and not only in real estate.
If you think these loans are only for people desperate to get a house flipped, you are very wrong. Many legitimate businesses use hard money loans to get quick cash injections when they need them the most, using property and physical assets as the leverage to secure the loan.
Startups that need to kit out their new office premises and self-employed entrepreneurs that need cash flow to get off the group and start making profits are perfect examples. Even established, successful businesses sometimes choose a hard money loan over a bank loan for speed and convenience.
5: The word hard in hard money simply means there is a collateral asset involved.
Collateral assets, usually mean the property being purchased, make a loan hard money. It simply means something tangible is connected to the contract rather than a long-term repayment.
Why Choose GoKapital?
GoKapital is a trusted and long-standing hard money company with a reputation for making high-quality investments. Our terms are fair and our rates competitive because we want the people we work with to succeed.
Unfortunately, there are a few bad apples in the industry that tarnish the reputation of hard money lending, but they are truly the minority. That said, they do exist, and people can get caught out. Sticking with a reliable and well-known hard money investment company such as GoKapital is the best way to keep yourself right.
When you take out a hard money loan with GoKapital, you know exactly what to expect. We are transparent, honest, and willing to work together for mutual benefit.
Is Hard Money Lending Worth It?
Hard money lending is worth it for anyone who wants to flip a property to sell but doesn't have the money to get the project started. As long as you intend to sell the property quickly and are confident you can do so within the loan's timeframe, it is a great option.
What Should you Look for in a Hard Money Lender?
The essential criteria to look for in any hard money lender are:
A trusted and well-established reputation
Competitive interest rates
Reasonably time expectations on returns
Transparency throughout the inspection and contract signing process
Willingness to discuss the process openly
Inspectors near your local area
It is best to go with a company specializing in hard money investments since they have a smooth system and follow best practice operations.
Hard money gets a bad rep, but it is mainly down to a lack of information. It is one of the best ways to fuel a property flip for those without the means to get it off the ground alone.
Real estate experts won't tell you much about hard money lending, which leads to many people missing out on the perfect properties. If you have any further questions about how hard money works and how to get a loan for your dream project, contact GoKapital today to speak to the professionals.
We help make things possible, and we do it with integrity.