New Trends In California Hard Money Loans | Make Your Dreams Come True Easier
Hard money loans have been a viable alternative to banks when it comes to funding a variety of different real estate projects for a long time. Whether you are looking to buy a home and obtaining a bank loan is not an option, or are in the real estate business and need to get the funding fast in order to close deals, hard money loans are an option you should definitely consider.
This article will cover some of the ways hard money loans can help you make your real estate dreams a reality, as well as some new trends in the business, which are making hard money lending even more appealing and cost-effective than ever before.
Why Opt for A Hard Money Loan?
Most people need a loan when looking to buy real estate, whether it’s their first home or a business investment, and many of them are turning to hard money lenders in California for funding. While turning to a bank for a loan is traditionally the cheapest option, in some cases obtaining the funds through a bank loan is simply not possible.
This can be either due to a bad credit rating, limiting the amount you can borrow, or due to long loan approval processing times, which can cause you to miss out on a good deal. Either way, hard money loans are probably your best alternative, thanks to their flexible loan terms and fast application approval.
Hard money lenders care less about your credit history and base their decision to lend you money more on the merit of your business plan and the value of the property you provide as collateral. Consequently, they are likely to offer you a loan in situations where a bank would not.
As these types of loans are gaining popularity and the lenders are striving to remain competitive, hard money lending business is evolving. Below are some of the most pronounced trends you should know about if you are considering applying for a loan:
International Lenders Are Flooding the Market
Since hard money lending is a good and relatively quick source of income, an increasing number of international investors are taking the opportunity to expand to the US loan market. While some of them are content to invest their capital into an established firm, others are taking a more direct approach as independent lenders.
This trend is causing hard money lending to become an even more competitive field, which inevitably leads to lenders offering better and more flexible loan terms, in order to retain a client.
Interest Rates Are Decreasing
The higher interest rates, compared to bank loans, are the number one concern for people considering a hard money loan. However, due to an increasing number of competitors, as well as the stabilization of the housing market, hard money loan interest rates are gradually decreasing.
Although they will always be higher than bank loan interest rates, this trend is good news for real estate investors who tend to rely on hard money loans to fund their projects. If you dismissed the option of hard money loans due to high-interest rates in the past, now is the time to consider this type of funding again.
Commercial Loans Are Becoming More Attractive To Investors
While hard money lending has proven to be one of the best ways to make significant returns on the investor’s capital, commercial loans are promising even bigger profits. Thanks to the possibility of making even better returns, many hard money lenders are beginning to specialize in commercial loans, or at least add them to their list of services.
Although commercial projects require more funding, which translates into larger loans, the most competitive hard money lenders are willing to take a higher risk and offer favorable terms for commercial loans. Thanks to this trend, commercial loans have become more available and easier to repay than ever, making owning a commercial property a more attainable goal for many people.
Crowdfunding Is Gaining Popularity As A Way of Funding Projects
While it is somewhat different than hard money lending, crowdfunding has become yet another option when it comes to funding real estate ventures. When unable to provide enough funds, some real estate investors will turn to crowdfunding to raise the necessary capital in order not to miss an opportunity.
The basic idea behind real estate crowdfunding is that several investors fund a business opportunity identified and executed by a real estate professional, in exchange for equity in the project. This relationship is facilitated through online crowdfunding platforms, which have provided a convenient way for both investors and real estate professionals to seek out new opportunities.
Don’t pass on opportunities when you don’t have to. Considering the availability of hard money loans and the latest trends in their development, making your real estate dreams come true has become easier than ever.