Delancey Street is a premier, and reputable, San Jose hard money lender. We believe that everyone deserves the chance to achieve greatness. For us, that means providing entrepreneurs with funding. We provide you with the funding you need, and deserve, so that you can purchase the investment property you have your eyes on. As a premier hard money lender, we don’t focus on your credit score, or other irrelevant factors. The only thing we care about is your opportunity, and how realistic it is. When we extend you a loan, or a line of credit, we focus on whether you have a solid business plan – and frankly, whether it’ll succeed or not.
Many real estate investors turn to us when traditional lenders refuse to give them funding. Many traditional lenders will refuse to fund investment properties, whether they be residential or commercial. After the crash of 2008, many banks now have more stringent guidelines and don’t offer funding on real estate investment properties. In order to get around this, real estate investors turn to San Jose hard money lenders like Delancey Street to help them. We fund millions in loans every month for residential and commercial properties.
What Does Delancey Street Look For?
Delancey Street cares about one thing: whether the project will succeed or not. We look for a business plan, and “hard,” numbers we can look at rooted in data. For example, if you plan on doing a fix and flip – tell us the purchase price, the cost of repair, and the expected after repair value. Show us data from comparables in the area that have a similar structure to yours.
Hard money loans are one of the many ways to get funding for your next project. With hard money loans, investors or individuals lend the real estate investor money. They do this – because they take an asset, such as real estate, as collateral for the loan. Hard money loans are the best bet if you need quick cash and cannot secure a loan from another source.
While most loans require some type of proof that they can be repaid, this isn’t the case with hard money loans. Traditional lenders require a good credit scores, and sometimes they can still be painfully slow even when you’re approved.
Hard money loans are based on the collateral pledged to the loan. In the event you don’t pay back your loan, the lender will simply take your collateral and sell it. The loans have a quick approval rate, and terms can be from one to five years.
There are many pros and cons of hard money loans. Some of the pros:
Speed: Because the loans only need collateral, hard money loans are often closed a lot quicker than traditional loans. Because income verification and credit history isn’t necessary, the process tends to move a lot faster. In many cases, you could be approved within 24-48 hours due to the lack of paperwork needed for the process.
Flexibility: The agreements are more flexible because there is no standard underwriting process. Each deal is evaluated on an individual basis. Depending on the situation, certain terms can be tweaked to the benefit of the loan recipient. The ability to negotiate and renegotiate if needed makes it easier to fit your needs. Remember, with hard money loans, you aren’t dealing with strict lenders with stringent terms.
Approval: The most important component of the hard money loan process is having collateral. Above all, the lender cares about the value of your collateral. Your credit score is unimportant. With hard money lending, loan to value ratio can be 50% to 70%. So your collateral has to be significant in order for the lender to have a good shot of recouping their money if the loan is defaulted.
These are the drawbacks of hard money loans:
High Interest: One of the biggest cons of hard money loans is the interest, which is considerably higher than regular loans. In some cases, the interest can be double-digit. High interest is due to the hard money borrowers are considered high risk. Before you get a hard money loan, make sure the “numbers,” make sense financially.
Short Term Only: Hard money loans are generally for 6 months to 3 years. The loans are private and they are generally used only for real estate investment properties. The borrower should also be aware that the lender may want the entire balance of the loan paid in full at the end of the loan’s term. That means the lender will expect a lump sum payment at the end of the loan.