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The Significance Of Hard Money Commercial Loans For Real Estate Business

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By Author: Chris Goulart
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When you’re in the real estate business, there are different requirements depending on your lender. Most importantly, you will need real estate assets to use as collateral. In addition, your lender may need income documentation, a personal credit score and debt coverage figures.

There are a few reasons why hard money commercial lending in California can be a good source of funding for real estate business:

Quick Approval

Unlike traditional loan varieties, a hard money loan has fewer requirements, which means a simple process. In some situations, you can get an approval shortly after your initial meeting with the lender.

The main thing your lender will look at is the value of your asset. If the value of your property meets the loan to value ratio requirements, it is very likely the loan can be made. Most commercial hard money lenders don’t underwrite based your income, property income or credit score.


Commercial hard money lenders don’t utilize the standardized traditional loan underwriting process. Rather, they invest their time in assessing and reviewing each deal individually. Making sure that the funding amount is enough to ensure future success is one of the cornerstones of this underwriting process.

The underwriting guidelines are most concerned about the equity of the assets. Commercial hard money lenders use common sense while evaluating factors like income related documents and credit score. Rates can vary widely, and typically the more risk factors involved with a deal, the higher the rates may be. A low loan to value can typically overcome most other risk factors, however.

Better Real Estate Deals

It’s possible to buy homes at competitive prices in the real estate industry if you are able to make offers that can close quickly. In addition, you can take advantage of as complete or after repair values, obtaining upfront funding for money needed to improve the value of the property. In this manner you can leverage hard money lenders to your advantage.

Benefits for Fix and Flip Investors

A fix and flip investor these days can face many challenges. Generally, you should have several properties to make the most out of your investments. A good hard money lender can help you build your portfolio quickly due to quick approvals and short term financing.

This means you can buy homes on the market right now without the need to wait long for approval. Most of these loans have no prepayment penalty, so when the work is done and you sell the home, you can pay these hard money loans off and move on to the next real estate investment.

The Final Takeaway

It’s clear that hard money loans are an important tool for real estate investors. Because of the common-sense underwriting guidelines, many people who cannot qualify for a bank loan can get financed through private hard money.

In addition, the terms of this type of commercial lending in California are more flexible, allowing you to structure deals to build your real estate portfolio with maximum leverage. As a result, you won’t have no cash out limits and can get quicker approvals so that you won’t have the risk of losing out on a deal just because you couldn’t get financed on-time.

Author Information

This article is written by All California Lending, specializing in commercial lending in California and helping clients with commercial loan requests of all types.

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