It’s funny how people can easily turn to something that a few years back is considered a big no-no. At the height of the housing boom, hard money loans are ignored by most real estate investors. There are two reasons for this; first is banks’ propensity to readily approve real estate loans and secondly, because of misconceptions that placed hard money in a bad light.

The situation is completely different today. In fact, it is the complete opposite. Most real estate investors are turning to hard money loans as banks tighten their lending policies to avoid further losses. Hard money has resumed its status as an integral component in a market that is largely blamed for the worst economic crisis since the Great Depression in the 1930s.

In fact, many analysts credit hard money lending as a big factor in providing liquidity in a badly-damaged but steadily recovering industry. Nowadays, more and more investors are realizing the importance and advantages of hard money loans. This resulted in huge demands for hard money loans across the country, which also prompted many investors to enter the lucrative business of hard money lending.

As a lot of real estate investors would attest, hard money loans have a lot of advantages over traditional bank loans. Fast approvals, larger amounts, flexible terms. These are just some of the most common reasons why investors now prefer loans provided by hard money lenders.

While critics would argue that hard money has high interest rates, there is no denying the fact that these kinds of loans are dominating the real estate market today. And by the looks of things, it seems that hard money loans will be here to stay this time.

When the time comes that your body can no longer do numerous rehabs a year, you must consider doing hard money lending instead. Let’s admit it, if age is catching up with you, personally rehabbing houses will be harder. You can hire contractors but you will need to check on their work every now and then so that’s a hassle as well. What you can do is to slow down and leave that toilet job to younger rehabbers. You can also lessen the number of fix and flip jobs you take.

But if you think that you’ll stop getting your share of real estate riches, you’re wrong! You will still earn money from real estate investing although indirectly this time. Instead of doing the projects yourself, you can just extend money to investors. Hard money lending is actually a very lucrative industry. It’s mostly fuelled by real estate investors. You probably won’t get as much as you used to when you personally did all the rehabbing work but this financing business is still relatively rewarding.

Of course, this slight shift in career is possible only if you’ve amassed enough fortune. For example, if you have at least $200,000 in the bank, you might split it into three loans of six months each. That means you can offer six hard money loans in a year. If you use a 15% interest in each loan, that’s equivalent to around $60,000 in interests. $60,000 for doing nothing isn’t so bad, is it?

Best thing of all, you help neophyte real estate investors through hard money lending. Just think of it as paying back the industry that has given you the opportunity to live the life you’ve always wanted.

Hard money lenders deserve all the love in the world. Sure, they may charge you with eye-popping interest rates and origination fees but if not for them, you wouldn’t be able finish rehabbing that ugly house along Main Street and get insane profits from it.

Despite their significant contributions to the success of a real estate investor and their willingness to take on risky loans, hard money lenders are not receiving the amount of respect they deserve. Certain people portray them as money-grabbing opportunists, while some investors treat them like bubblegum – discarded once they lost their sweetness.

Obtaining funds from these people should not be like this because borrowing hard money is all about respect. If you want to quickly find out the results of your loan application and get the amount of courtesy you are receiving, then you should treat hard money lenders nicely.

If they don’t respond immediately after you have e-mailed them your loan summary, don’t annoy them with your persistent whining. Who knows, they might still be doing an appraisal on the property you want to borrow money for, which is why they were unable to get back to you the soonest possible time. Instead of complaining about their inaction, call them up and politely ask about the status of your loan application.

See to it that you pay your dues on time. Don’t make promises that you can’t keep. If you tell lenders that you will repay the hard money that you borrowed every first Mondays of the month, see to it that you will make the payments as scheduled.

Just like when making friends, building good relations with lenders of hard money can help you grow as a real estate investor. Therefore, you shouldn’t disregard proper etiquette when borrowing hard money because being friends with hard money lenders can get you to places.

When you invest in real estate, you have to ensure that you have enough investment capital. Having a stable source of funds is important in the real estate investing business because it allows you to easily buy the property that you want.

One of the best ways to obtain financing for your real estate projects is to seek the help of hard money lenders. These non-traditional financers provide a type of financing that is mostly suited for real estate investors. And unlike banks, credit unions, and mortgage companies, lenders of hard money do not care if you have a bad credit score or not.

You might be wondering why hard money lenders are willing to make a gamble by funding an investment made by someone who has no creditworthiness. Here’s a simple explanation. A hard money loan is a type of asset-based financing wherein a loan application is approved or rejected depending on the after repair value of the property for which you are borrowing money for.

If you want hard money lenders to approve your loan application, then ensure that you present to them a good deal. These creative financiers would surely allow you to use their funds if they think that both of you will make huge profits from the collateralized property.

I’ve mentioned earlier that hard money loans are mostly suited for real estate investors. The reason for this is that hard money lending provides coverage for the repair costs of an investment property. So if you rehab houses for profits, you don’t have to spend money up front to generate income.

If you want to make investing in real estate much easier for you, use hard money for your real estate projects.

Call it an irony but when we talk of hard money, we mean easy money. Compared to other sources of funding for deals, this line is the best. It’s simply classic. No kidding included.

You know what makes it effective? It’s the lenders themselves. These are basically people who need money (who doesn’t anyway) like you do. They’re looking for ways to grow their cash. If only their greenback can grow in a pot, they would have done that a long time ago. But hey, money is green but it doesn’t have leaves and roots. It does, however, bear fruits if you plant it in the right “soil.”
Lenders of hard money, after years of hibernation, finally realized this and figured that indeed, it is literally soil they need to grow their money. They need lots. And houses. Make that lots of lots and houses and houses and lots. Hard money lenders know the profitability of real estate nowadays but because they’re too busy counting their own money, they choose to leave all the work to investors. All they do is sign checks and tell investors, “Here’s the funding you need. Give me my money after you flip that house, and I’d also appreciate some points and then call me again if you need funding again.”
Funding found. Deal done. Checks cashed. Loans paid. What a life.