Commercial Real Estate Market

When is it best to go to a Private/Hard Money Lender for your real estate investment?

You Need Immediate Financing/Quick Turnaround

Private Lenders (Hard Money and Bridge) can close deals within 3-4 weeks as opposed to the 90-120 days it takes conventional lenders. Some private lenders, like H&O Capital Funding, have even closed deals in a week or less.

Cash, no contingencies, 30-days to close purchases are perfect deals for a Private Lender to step in and provide bridge financing until the borrower can arrange for permanent financing. Or perhaps you just need to take some equity out of the property for another business opportunity, a private/hard money lender may be the answer.

For private lending customers, speed and flexible financing make up for the typically higher rates/terms that are charged.

Poor Credit

After the financial collapse of 2008, conventional lenders began to take a serious look at borrower’s credit worthiness, no matter how risky or non-risky they thought the loan was. Now some of that has scaled back a bit, but credit worthiness is still a major factor for conventional lenders and even some private lenders, especially the private lenders offering rates similar to conventional lenders. However, there are many private lenders, H&O Capital Funding included, that are strictly asset-based lenders who do not look at, nor take into consideration, a borrower’s credit history and/or credit score. The loan is strictly based on the value of the asset and the ability of that asset to service the debt.

Conventional Lenders Pull Back

As we have all been reading for at least the past few months, the economy has started to turn and a recession is looming. Historically, when this happens, conventional lenders tighten up their lending criteria and scale back the total dollar amount of loans they will do. This is music to the ears of some private lenders like H&O Capital Funding, who never tighten their purse strings. As long as the asset has a solid cash flow and the LTV is right, private lenders will continue to lend through a downturn in the economy.

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