Is Hard Money Lending for You?
By Larry D. Hudson
 
Hard money lenders are seldom the first resource for real estate investors. Their terms are strict and costs higher than other sources. But when it comes down to the wire, borrowers turn to hard money because it solves problems other lenders can’t.
 
Todd Ball of Lake Mary, Florida-based Security Investment Lending talked about some of hard money’s advantages during his visit to Greater Dayton REIA’s First Wednesday meeting for June (6/7/17).
 
First among the advantages is this: hard money lenders, Ball said, are not focused on the borrower’s credit report. Instead, hard-money lenders base their decisions on collateral and the potential value of an investment property. They make loans that include funding for both purchase and rehab of residential and commercial properties. The loans are short term – Ball said his company offers one with a term of just three months – with additional fees and interest for borrowers who take longer than 90 days to repay.
 
The upside, Ball said, is that hard money lenders like Secured Investment Lending can move fast, typically taking just seven to ten days from application to funding.
 
As with any lending situation, Ball said, the numbers must add up. An investor needs a purchase well below the after-repaired value of a property to make the numbers work for a hard money lender. But Ball urged investors at the meeting to bring him proposals, even if they are unsure of the potential of the deal.
 
“Let me look at acquisition cost, rehab cost and after-repaired value figures. You never know,” he said -- things may actually work out better than you expect.