Viewing entries tagged real estate investor financing Subscribe to feed

Hard Money Loans Vs. Transactional Funding, Which is Better?

by blogger1
blogger1
Guest has not set their biography yet
User is currently offline
on Thursday, 09 October 2014
BestTransactionFunding

Which is the better type of financing for real estate investors today; transactional funding or hard money loans?

Are hard money lenders still relevant? Why might some property wholesalers opt for hard money loans even though they have been using transactional funding successfully day in and out for years?

New Hard Money Loans, New Applications

Hard money has changed a bit over the last two decades. The application process is a little different, and new regulations have made hard money loans slightly more challenging than they used to be. However, hard money mortgages are still the easiest mortgage loans to obtain and continue to be an essential tool for all types of real estate investors.

It was recently revealed that former fed chairman Ben Bernanke hasn’t even been able to refinance his own home despite being able to earn $250k in less than an hour for speaking engagements, and has a signed book deal. So clearly equity based lending like hard money remains absolutely invaluable in the market, for an even wider base of borrowers and buyers, and will continue to.

While hard money can still be used for flipping houses as in the early 2000s and before, prior to transactional funding making it to the mainstream, there are also new applications and reasons to use these loans.

This includes:

  • Fixing and flipping houses
  • Releasing pent up equity
  • Speeding up property acquisitions
  • Less paperwork
  • When investors can’t pass up on a great deal but don’t have enough liquid cash or an end buyer in place yet
  • Buying time to get properties performing again, to obtain better long term financing or resell at even higher prices and profit margins

The Advantages of Transactional Funding

When hard money lenders exited the industry as the market began to fall apart in 2006 lenders like Best Transaction Funding stepped up, and into the market to serve real estate investors in their greatest time of need.

Previously this type of financing was only available to a few very privileged real estate investors. Yet, instead of shrinking or tightening up guidelines transactional funding became one of the best, and virtually only ways to fund wholesale property deals.

Transactional funding does a lot of what hard money used to do, and private money has done with, but with organized transactional lenders offering ease, systematization, and scale for real estate wholesalers serious about scaling to substantial volumes of business.

It couldn’t be easier to use. Find your property, circulate the deal to your list, close with 100% of someone else’ cash, get paid, and repeat.

Transactional funding offers far easier qualifying, lower overall borrowing costs, and is great when you don’t want to deal with the additional paperwork and time of hard money.

Still, both forms of real estate investor financing are absolutely critical, essential and beneficial for investors at different times.

Rate this blog entry
0 votes