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Why Would I Use A Hard Money Investor?
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Why Would I Use A Hard Money Investor?

That is a question that cross the minds of many real estate investors. Many, however, do not know much about hard money investors, or how they operate. We are going to try to clear up some of the confusion on this type of lending, and go over some of the advantages of using this type of investor.

Who is a Hard Money Investor?

A hard money investor is usually a single person, although it can be 2 or 3 individuals, who lend on real estate investments to you and I. These investors have the cash readily available, and can usually get the money within hours of approval. These investors do not take out loans to loan to the buyer. These investors normally have real estate investments of their own, and lend on good investments that they know they can see a return should the borrower default on the loan.

These investors usually do not widely advertise their services, rather they normally advertise in smaller circles and rely greatly on word of mouth references. These investors can be prominent businessmen in your community, or they can be your next door neighbor who keeps to him or herself.

What are some advantages of a Hard Money Investor?

There are quite a few advantages of going through a hard money investor instead of going the traditional route of visiting a bank or a lending center. Some of the advantages are:

  • You have less than perfect credit
  • You are unable to qualify for a traditional home mortgage
  • You are starting to invest in real estate
  • You do not have any money

If you have less than perfect credit, or you have too many loans on your credit report, a hard money investor may be a good fit for you. If you are able to find a local investor to work with, a simple drive by or walk though of the property is all that is needed to qualify. These investors have usually lent enough money and invested in enough real estate to get a good feel for what a good investment on real estate is.

Additionally, if you are either just starting to invest in real estate, or you have no money to put down on a mortgage loan at the bank, a hard money investor may be a good fit for you. Although you usually cannot get the full amount of what the property is worth, if it is a good deal that isn't going to last, this might be another option to consider.

These are a few of the reasons to look into a hard money investor vice a traditional mortar and brick lending location. If you are unable to locate a hard money investor in your area, check with real estate investors, real estate lenders, and realtors, they are usually able to point you in the right direction.


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