Commercial Real Estate Advisor

Myths vs. Facts: Hard Money Lenders are Unregulated

Hard money loans are a great resource, but they are also one that is often misunderstood. One of the bigger misconceptions about this type of lending is that hard money lenders are unregulated or under-regulated, which increases the level of inherent risk for borrowers. The truth of the matter is that legitimate lenders are regulated, and they provide a reputable financial solution for alternative real estate investments that can’t benefit from traditional funding and home loans.

Who Regulates and Monitors Hard Money Lenders?

They must have a member of the organization that has a valid and current Real Estate Broker License to function as a lender within the guidelines of the law. Any businesses claiming to offer these loans that aren’t registered with the state are not operating within the law and should be avoided at all costs.

In addition to the Department of Real Estate, hard money providers may also be registered or involved with other industry groups and professional organizations. Most lenders understand that they are in a higher risk industry, and therefore may need to offer their potential borrowers more incentive and assurances. They may belong to organizations like the National Hard Money Association or the American Association of Private Lenders, for example.

What are the Benefits of Working with Hard Money Lenders?

When you find a licensed, reputable lender that can finance your real estate investment with hard money loans, you’ll find several advantages, including:

  • Quicker approvals because there are no credit checks or lengthy processing periods
  • More flexible loan agreements
  • Convenient financing solutions for real estate investments
  • Faster access to the funds you need to invest in properties
  • More opportunities for projects you might not otherwise be able to finance

The Hard Money Business Model

The business model for hard money lending is simple. These regulated organizations are formed by a group of investors that have access to liquid capital. They function (and profit) by offering short-term and quick-approval financing for real estate investors who need alternatives to traditional mortgages and loans. They form their business, register with the state, and any professional organizations they desire, and then they open up their doors to borrowers who need something different. It’s a win-win for everyone, and since these lenders are regulated, you can trust that it’s a safe financial move in that regard.

H&O Capital Funding has helped countless real estate buyers, sellers, lessees and lessors achieve their goals. Our legacy is unwavering commitment to the communities we serve. Houlihan & O’Malley Commercial Real Estate Services specializes in four distinct, yet overlapping, areas of business: Commercial Brokerage services, Private Mortgage services, Appraisal Services and Advisory services.

For more information on loans that we offer, visit our website.

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