Hard Money For Real Estate Investing

Using hard money for real estate investing is a viable option

. Top education site REIwired even recommends using this kind of financing. But why exactly are investors tapping hard money lenders when they know it has a high interest rate? Why do they prefer this over other forms of funding?

Also known as private money, this kind of financing is basically cash from private individuals and not from traditional lending institutions. They call it had money because its terms are stricter compared to soft loans offered by banks and other traditional lenders. You can learn more about this and other forms of real estate financing at REIwired.com.

A lot of real estate investors use this because they actually dont care about the high interest rate. Many neophyte investors are appalled by the rate. Smarter ones, however, know that investing is not about the interest rate; its the rate of return that matters.

If you have to pay a 20% interest but will take home $30,000 from a single, short-term real estate investing project nevertheless, would you still care about the interest? Some say yes, because that interest should have been profit. But come to think of it, is a $30,000 profit better than nothing or what? If you will be able to close a deal and take home that much money, whats there to lose? What is important is that hard money is readily available. It is easy to access and will allow you to earn money.

This is why real estate investors opt for hard money. They see the high interest rate as a necessary evil. You couldnt exactly blame them. The pros of this kind of financing beat the cons. Unlike traditional loans, private money can be accessed in just a matter of days. This swiftness allows investors to close deals on time and beat competition. If they relied on traditional loans, they would have to wait for at least a month for the processing of their loan applications.
Speaking of applications, it is also more convenient to borrow hard money. All you need to do is present a good deal, which as an investor you naturally look for. If lenders see that the deal you want to close has a potential, then you will get the financing. As for traditional lenders, you would have to secure a lot of documents to prove your creditworthiness.

Interested in hard money? Learn more about it at REIwired first. REIwired is your complete guide to real estate investing, or REI.

by: Daniel Mc Grey

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