3 Reasons Hard Money Lenders Are Making More Loans

Private money lenders, also called hard money lenders, are making more loans than banks on investment properties right now. But why? Here are 3 reasons that shouldn’t surprise you.


Banks Cautious About Lending

With banks cautious about issuing new commercial paper through 2015, bank financing on investment properties is scarce. The private money lending industry has grown in leaps and bounds since the bank meltdown of 2008 and 2009. In fact, banks are still tanking left and right. And for those banks that are back on track, issuing new commercial debt is only against the best properties. For this reason, more and more real estate investors have turned to private money or hard money lenders for financing.


Borrower Credit Problems

Another reason that hard money lenders are making more loans is due to borrower credit problems. Because so many people were financially affected by the real estate meltdown, those with bad credit cannot obtain bank financing. Seeking out viable, private money alternatives has been the only option for some.


Cash Deals Close Quickly

With so much competition among real estate investors in many U.S. markets, cash usually talks. This segways into the third reason that hard money lenders are making more loans. This is related to their ability to fund a loan very quickly. Because a private loan is weighted more in favor of the asset versus the strength of the borrower, private money loans can fund much faster than a bank loan. Because hard money lenders can fund a loan quickly as compared with a bank, these loans are often viewed as being similar to having cash on hand. Not the same as cash on hand, but close enough to facilitate a real estate transaction quickly enough to allow a real estate investor to take advantage of a fleeting opportunity. Give California Private Money Lenders a call or fill out our contact form and one of our experts will get back to you promptly about how hard money loans can help you secure the properties you wish to buy in 2015.


Because the private money lending industry is largely unregulated, make sure you do your own due diligence on the hard money lenders you may find out there. It is often difficult to identify the real lenders from those who are just out to take an upfront fee and never perform on a loan.

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