With Interest Rates So Low, Why Use Hard Money?
A lot of people wonder why they should use a hard money loan when interest rates are so low. Here’s the answer: if you’re looking to buy a real estate investment property – it’s super hard to use traditional bank financing. The crash of 2008 occurred in part due to a lot of money being used for real estate investment. When the crash occurred, a lot of banks were stuck holding this “bad debt.” Banks have so much business from traditional lending, such as home loans, etc, they don’t want the risk from commercial business. As a result, even though interest rate are low – it doesn’t REALLY help real estate investors who need funding for their next purchase. In addition, even if traditional lenders decide to help you – it takes too long. Most real estate investors cant wait 60-90 days for a deal to close. Most deals go to investors who can close in 10-12 days. As a result, many real estate investors turn to hard money lenders who can close fast. In todays market, you need to be nimble and quick. Opportunities are few. You need to be able to capitalize on them ASAP, and that means you need a partner who can assess your potential opportunity quickly, and fund it.