Hard Money Lenders – What you need to know

If you want to invest in real estate and you have found it hard to get a traditional mortgage you have 2 other options.You can get a business line of credit or you can try to get a commercial hard money loan.

Business credit is one of the cheapest and easiest ways to get money for any purpose. And it has none of the restrictions
Commercial hard money loans typically have.

An unsecured business line of credit is simply a loan you get in the name of a business without having to hand over any collateral.

These business lines of credit are cash. That means they are real money you can use for anything.

The money available from these business line of credit can be accessed as a multi-year loan with a fixed rate, from regular check writing privileges at low interest rates or like any other credit card with cash advances and through purchases with an interest free grace period.

Commercial hard money loans on the other hand are much more restrictive if you can even get approved.

A commercial hard money loan is not like a normal mortgage and
a loan of this type does not fall under the traditional rules that many conventional lenders tend to follow. The amount of money that you can borrow may differ according to what type of property you are looking at purchasing, but most lenders typically lend no more than 70 percent of what a particular property is worth.

Among the various vehicles in which one can invest in using
commercial hard money loans are storage facilities, apartment complexes, and buildings that contain both living units and stores.

Another common way to use commercial hard money loans involves the utilization of gap loans. Gap loans are a great way to bridge the gap between real estate investments that have not been able to obtain notes over a longer period of time. This is why gap loans are also known as bridge loans.

Additionally, you must determine what your plan of exit is for each property that you own if you plan to use hard money to accomplish your specific real estate goals.

In the end, most investors will find business lines of credit to be superior to commercial hard money loans because of the advantages it offers and ease of acquiring.

Commercial hard money loans verses Business Lines of Credit.

By Thomas Kish, the founder of CashflowExperts.