Building a real estate portfolio is historically a smart investment strategy. You can generate passive income with rental properties and benefit in the long term from an investment that is likely to increase in value over time.
But unless you have sufficient cash on hand—which many don’t when they’re first getting started—you’ll need to secure financing for investment properties. This is where hard money loans come in.
When purchasing an investment property, consider a hard money loan for:
Scooping up an investment property often requires quick decision-making and a compelling offer. If you can’t close fast, you might not be able to seal the deal. Hard money loans allow you to move more quickly than a conventional bank, which often takes at least a month to go through the approval and closing process. You can shrink that time to a matter of days with options like Socotra Capital’s Turbo Close®.
This gives you an edge over the competition and might even allow you to get a better deal. It’s also common for a hard money lender to be called upon last minute after a bank has denied a loan to save the deposit on a property. No matter where you are in the process, a hard money lender may be able to help you get the funding you need to secure a property.
Whether it’s a short sale, distressed property, or foreclosure, investment properties are not always suitable for a typical mortgage. Hard money loans offer more flexibility because lenders are not subject to the same regulations. It’s not the Wild West—hard money lenders must be licensed and follow certain guidelines—but you have a lot more freedom to wheel and deal when you have a hard money lender behind you.
If your investment property is a fix-and-flip, getting a traditional loan is almost impossible, especially if you need to move fast. By nature, short-term investment strategies require you to move quickly when an opportunity arises. Once you have secured the property, renovations have a tight timeline if you want to maximize profit.
Hard money helps you cover the cost of both the purchase and the renovation, so you can take advantage of market opportunities in both commercial and residential real estate. Interest-only payments also help with short-term cash flow and allow you to stay liquid for the project.
Yes, hard money loans are an excellent alternative to conventional lending. Traditional banks have certain requirements for both the borrower and the property.
Borrowers must have a minimum credit score and meet other standards for creditworthiness and income history. Hard money lenders can look at the big picture and be more flexible.
When it comes to the property, what you see as a diamond in the rough might be too high a risk for a conventional lender. Because hard money lenders are not subject to the same regulations, they have the freedom to provide funding on distressed properties, homes that are not your primary residence, vacant commercial spaces, and more.
Socotra Capital offers a range of hard money loan types for residential and commercial properties, fix-and-flips, buy-and-hold scenarios, and more. With our innovative Turbo Close® process, you can even secure funding in as few as five days. We even make the application process as easy as possible, starting with a quick form. We’ll gather only the information we need to get you pre-approved so you can get a response as quickly as possible. Get started today.