Whether it’s opportunity or disaster striking, sometimes you need more cash than you have on hand. Although you can sometimes borrow from friends or family, getting a loan from a professional lender is often a better path. The question then becomes, should you work with a conventional lender or a hard money lender?
People need quick cash for a lot of reasons. These are some common examples.
One of the most common real estate loan types is a mortgage to purchase a primary residence that you intend to live in the majority of the time. Other types of property purchases include:
Business owners occasionally encounter unexpected expenses or are presented with growth opportunities that require cash. Some reasons you might need a loan for your business include:
Certain types of businesses have extra hurdles when trying to secure loans. For example, cannabis companies or other alternative business types are often not able to get a conventional loan from a bank.
Having immediate access to cash ensures that you are always prepared to jump on investment opportunities when they arise.
Conventional banks are great for getting the best interest rates for your home mortgage. However, if you need a loan for something else, you might encounter some hurdles.
Most loans take at least 30 days to close with a conventional lender. For complicated deals, it can take even longer. This might be fine for your personal mortgage, but if you need to act quickly as an investor to secure a real estate loan, a conventional lender is often too slow.
Traditional banks have borrower qualifications that you might not be able to meet, such as:
Banking regulations also have requirements for the properties that get financed, including:
If you run into the stumbling blocks of borrowing with a conventional bank, working with a hard money lender is an alternative that comes with several advantages.
Hard money lenders can close in days—sometimes as fast as five days—not weeks or months. This gives you a competitive advantage in the real estate market and can make you the most appealing buyer, especially for sellers who want to move fast.
Hard money lenders can be much more flexible than conventional lenders when it comes to qualifying borrowers. Most hard money lenders don’t care about financials or credit. If you have equity, you can often get a hard money loan, even if you have a poor credit score.
Hard money lenders can also be more flexible with the deal because they care about equity. If you can demonstrate that your investment is likely to yield a return that allows you to repay the loan, a hard money lender may be able to help you when a conventional bank won’t.
Socotra Capital offers hard money loans for a broad range of investment opportunities and life situations. Whether you need a bridge loan for your business or just found the perfect fix-and-flip, we can help you get cash fast. The approval process is quick and easy, and with our Turbo Close service, you may be able to get funds in as fast as five days.
If you would like to learn more about securing a hard money loan for your project, read The Borrower's Guide To: Process, Preparedness, and Timeline.