A hard money lender’s ability to be flexible and adapt is a selling point among certain types of borrowers. Real estate investors are at the top of the list. Real estate is a complex market and one that can be problematic when it comes to traditional financing. But even the most unique borrower circumstances can be accommodated by a good hard money lender.
One such lender is Actium Partners. Based in Salt Lake City, the firm writes hard money and bridge loans in Utah, Idaho, and Colorado. They explain that hard money lenders are well equipped to handle unique borrower situations due to their direct lending model, a streamlined underwriting process, and asset-based approval.
Asset Value Is a Big Deal
Asset value is a big deal to your typical hard money lender. Why? Because it backs up the loan a borrower is requesting. Let us say a real estate investor has his eye on a suburban retail strip mall. He needs a hard money loan to finance its acquisition. The property itself is collateral on the loan. And in fact, the lender will base its approval decision on the property’s value.
What does this have to do with unique situations? A traditional lender might look at the borrower’s circumstances and refuse to write a loan because it is too complicated. On the other hand, a hard money lender looks strictly at the property’s value. Writing the loan is less complex because hard money lenders are not subject to the same regulations that govern banks.
Loan Customization Helps
Unique borrower circumstances can derail traditional financing because banks are limited in the amount of customization they can offer. Hard money lenders face no such limits. They can structure each loan on a case-by-case basis, customizing:
- Interest rates and fees
- Collateral requirements
- Loan structures and terms
- Repayment schedules
Virtually everything is up for grabs when circumstances dictate. There are no guarantees that the most unique circumstances can be met via hard money. But hard money lenders are a lot more amenable to unique situations than their traditional counterparts.
Working Directly With Borrowers
Hard money lenders help borrowers in unique situations by working directly with them. They do not force borrowers to go through brokers or third-party intermediaries. As such, lender and borrower communicate directly. Borrowers have direct access to the people making decisions about their loans.
A more direct relationship between lender and borrower minimizes misunderstandings. It streamlines communication and allows both parties to work more quickly. Eliminate intermediaries and a lot of friction goes away. Borrowers appreciate that.
Specialized Expertise and Focus
Unique circumstances can leave a real estate investor struggling to plot a path forward. Herein lies another strength of the hard money lender: specialized expertise and focus. Consider Actium Partners. Their specialty is commercial property, particularly income-generating property. They assist with the acquisition of office buildings, multi-family properties, etc.
Another lender might specialize in residential fix-and-flip. Down the road, there may be a lender whose specialty is debt service coverage ratio (DSCR) loans. Here is the point: working with a hard money lender who specializes in the borrower’s particular area gives the borrower access to expertise and guidance he would otherwise lack.
There Is No Comparison
It should be apparent that there really is no comparison between hard money and traditional lenders when it comes to meeting unique borrower circumstances. Indeed, meeting such circumstances is one of the big reasons hard money exists to begin with. Hard money can do what traditional financing cannot. When borrowers offer unique circumstances that banks typically scoff at, hard money lenders are waiting to help.
