Are you an investor in the Fort Myers FLORIDA area, or an investor looking at the 33907 zip code? Then this is for you: here are 4 reasons why you should consider using a hard money lender.
Real estate investors know that investing can tie up your capital. For most investors, that can create challenges when your capital is all tied up: How do you operate your business? How do you deal with unexpected expenses? How do you grow?
You may have some different options to fund the acquisition or repairs but many investors are turning to hard money loans to help them. Here are 4 reasons why you should consider using a hard money lender…
4 Reasons Why You Should Consider Using A Hard Money Lender
Reason #1. Save Your Own Capital
The primary reason, as we’ve already implied, is that using your own money ties up your capital and hampers your ability to operate and expand your business. A hard money loan utilizes someone else’s funds, thereby keeping your capital fluid and available for investment in growth opportunities. Some investors, upon liberating their capital, recognize that they can now undertake more deals than before!
Reason #2. Leverage
As an investor, you’re probably familiar with the principle of leverage: getting a loan (such as a mortgage, or, in this case, a hard money loan) to pay for a large project, yet only needing to make small payments over time to pay the loan back. This makes it easier to take on large, costly projects without having to first save up the money.
Reason #3. Professional
Another common method investors use to finance their deals is through private lenders and investors they have connections with. However, with this approach, you may find that these private investors sometimes require additional support or may unexpectedly demand their money back, even in the middle of the night, due to urgent financial needs.
Bottom line, they’re nice people but they’re not professional investors. Hard money lenders are professionals who put their money to work and expect a return – they require paperwork and due diligence but they won’t be like those friend-and-family investors who fret night and day about their money.
Reason #4. Speed
Some investors just try to do it alone, using their own capital. When a repair comes up, they save up their money and when they have money they make the repair. But this can take a long time. It doesn’t make sense to delay generating a return on your deal; instead, borrow the money, make your repairs and generate a return on your deal sooner.
Summary
Running your real estate investing business necessitates capital—funds for operating expenses, property acquisitions, repairs, and more. Many individuals require additional capital and are hesitant to fully invest their own funds in a deal. This is where hard money lenders can be invaluable. If you’re deliberating whether to borrow money for your next deal, you’ve just read four compelling reasons why utilizing a hard money lender is worth considering.