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Why Real Estate Investors Would Consider A Land Loan In California?
One of the most common ways of financing for real estate investors is the hard money loan. But what makes California land loans so highly sought after for real estate investors? There are several reasons why real estate investors may want to utilize a land loan in California; perhaps most important being that this loan is fast, flexible and can be structured creatively. Here are a few reasons why real estate investors may use hard money land loans in California:
It’s very simple to apply for hard money loans in California. Usually a brief conversation with California hard money lenders can give you a good idea of whether your loan will be able to get funded.
Hard money loans usually have very streamlined documentation, while most banks need an endless amount of documentation and paperwork for the borrower. This process could take weeks just to get an initial response.
Not only can most hard money lenders tell you pretty quickly whether a loan is likely to be funded, but when you get approved with a hard money lender, the loan can be usually funded in a matter of weeks.
Makes for a Stronger Offer
As compared to the bank financing, California hard money lenders provide stronger offers. It’s quite common to have financing by the bank during the escrow, especially for land transactions; this can negatively impact the deal. Hard money lenders, however, are not typically going to approve a deal upfront, only at add conditions or cancel funding later.
Okay with Not-So-Perfect Credit Scores
Generally, a bank will use income and credit score of a borrower as the main criteria for loan approval. If there’s anything that raises a red flag, the loan likely won’t get approved. But hard money lenders focus more on the equity in the property and collateral available to secure their loan.
Oftentimes, real estate investors hold and are buying more than just one property. Most banks will cap the number of properties to a single borrower. But hard money lenders are more concerned about the equity and love working with repeat investors on multiple properties. They can even make cross collateralization of investment properties for added leverage options.
A real estate investor counts on a California hard money lender to create a partnership. Both investor and lender want to have a smooth deal. The last thing either of them wants is the missed payments.
A California hard money lender will make a proper analysis of the project and can be a second set of eyes on a project. As the goal for the investor and lender is the same, issues raised should be considered.
Usually, hard money lenders take very little time to make a decision for real estate investors. Again, if the real estate investor wants to leverage equity or cash, there may not be a lot of options to choose from – especially on land loans. In these scenarios, a hard money lender could also provide short term cash-out refinance loans to borrowers.
These types of loans can be done by the California hard money lenders quickly, allowing for fast access to equity for the real estate investor looking for leverage.
Traditional banks are known for following what seems like arbitrary regulations and being rigid for loan approval. These strict rules and regulations can prevent real estate investors from getting a loan on-time. Using a hard money lender can ease this issue, as most transactions and approvals are equity based.
Bottom Line –
These are just a few reasons why real estate investors count on hard money lenders for a land loan in California. If you want a smooth and hassle-free transaction to leverage your real estate investments, it’s a good idea to find a reliable source for California land loans.
Author Information –
This article is written by All California Lending, your go-to-source for hard money lending and commercial loans including land loans in California.
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