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Why Experienced Investors Aren’t Buying Into The Hard Money Craze

by blogger1
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on Thursday, 25 September 2014
BestTransactionFunding

There now seem to be dozens of hard money lenders trying to force their cash on real estate investors every day. So why aren’t the most experienced investors biting on the offers?

Whether it is email, social media sites like LinkedIn, or online real estate forums like Bigger Pockets hard money guys seem to be everywhere, aggressively offering their cash. More and more are popping up, and are offering higher LTVs, with fewer requirements.

This is great for the overall market, and hard money has been a crucial crutch for investors for several decades. Even though many left, or essentially turned to conventional underwriting practices when wholesalers and rehabbers needed them most, there are good hard money lenders out there, and those that can add value, and be invaluable in the process.

Five reasons veteran real estate investors aren’t buying in:

Unattractive terms

Trouble separating the opportunists looking to skim deals versus real lenders

Investment strategies have changed

Access to cheaper long term money elsewhere

They’ve discovered transactional funding

Choosing the right type of funding for your real estate investment strategy

Wholesaling with the best transactional funding means just getting in out and paid for sure versus being locked into high rates, with high exit costs, high risk, and no guarantees.

On the other end, buy and hold investors are flush with cash, or have access to far cheaper private money form investors looking for long term yields. In markets like Miami, cash buyers accounted for over 40% of transaction in mid-2014, with almost 70% of foreign buyers paying all cash.

For those simply looking to flip instantly for fast cash and wholesale properties in 1-3 days keep Best Transaction Funding bookmarked in your internet browser and ask about our Proof of Funds to facilitate making more offers.

However, hard money still has its place and uses.

When to use hard money lenders

When refinancing to access and release pent up equity

For rehab projects and fixing and flipping houses

To capitalize on attractive investment opportunities when an end buyer is not yet in place

For taking non-performing assets to performing before resale for maximum profits, or securing lower rate long term financing

How hard money lenders can better serve the investment community

By providing faster approvals

Offering streamlined processes with less hassle and hoops

Developing a reputation for actually funding deals

Working relationships for scaling repeat and referral business

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