Hard money is ideal for certain situations. Borrowers favor these loans when they need to act fast on a deal, when they desire a short-term loan, when they’ve had a foreclosure, or when they’ve been turned down by a traditional lender. Hard money loans also make sense for bare-land development projects, fix-and-flips, and buildings in poor condition that might not qualify for conventional financing. All loans are business purpose loans on residential properties.

Conventional loans from a bank or credit union depend, in large part, on a borrower’s credit history and strict income requirements. And as anyone who owns a home can tell you, the financing process is long and requires many steps. In comparison, hard money loans are funded by private investors who use the value of the property as the primary consideration in a funding request. Given the property can be used as collateral and has enough equity, the funder will likely grant the loan. Another huge plus? Hard money loans are fast. Often issued in under a week, these loans are ideal when a borrower needs to act quickly, particularly on fix-and-flip projects. 

• Fast approvals: When you find a promising property, there’s often no time to waste, especially in a seller’s market. Unlike conventional bankers, hard money lenders can act quickly to secure funding when you need it so you can start working on your project ASAP. This gives hard money borrowers a competitive edge, which is especially useful when time is of the essence.  
• Fewer restrictions = more flexibility: Traditional lenders are required to follow numerous regulations that private lenders don’t have to adhere to. This lets private lenders tailor loans to specific projects, providing a personalized touch. This flexibility also lets private lenders respond quickly and nimbly to the needs of borrowers. Plus, while banks prefer a down payment of 20%, hard money lenders may permit 100% of the purchase price so long as the lender has a hold back to complete construction or remodeling. This results in a borrower paying just the origination fee and monthly interest until the loan is paid off.
  
• Negotiating power: With a hard money loan, borrowers are  more likely to negotiate a better purchase price because they have available cash and can provide a fast closing. Hard money also helps create positive relationships between borrower and lender. Lenders seek out projects with borrowers who honor contract terms. At AIC, for example, we may offer more preferable terms as our trust develops with each partner, which can lead to lower origination fees or loaning a higher percentage of the purchase price.  

As a hard money lender, when we consider taking on a new project, we always weigh the ability to make money while minimizing risk. We need secure investments that will give us a strong return on investment. Additionally, AIC tends to follow the 5 C’s of lending:

• Capacity: We want to know that borrowers will be able to complete the terms of the loan. Prior experience, results, and partnerships all play a role here.
• Character: We take the character of a borrower into account since we consider our clients to be partners.
  
• Collateral: We need to know what kind of equity cushion your property has in its loan-to-value, so we’ll consider the property’s condition and marketability, among other factors. In a worst-case scenario where we have to foreclose, we need to know what we’ll have.
  
• Conditions: We always try to minimize our risk so we’ll examine the conditions around a property, such as the market in the neighborhood, demand, and inventory
• Credit: With hard money loans, credit isn’t as important as it is with a traditional lender. However, depending on all the other factors, credit score can play into our decisions. 

No surprise – WE do!

When it comes to finding a hard money lender, investors need to choose the right partner. Many institutions offer hard money loans but they don’t all provide the hands-on, personalized solutions that contribute to a successful project and profitable outcome. That’s where we come in. As a small, local lender, our team knows more about trends and market conditions, as well as zoning and ordinance info. These are vital details that will enhance your success.

Advanced Investment Corp. has been bringing together hard money and real estate opportunities since 1984! Our customized approach has led to thousands of successful projects throughout Oregon, from the Portland area to the Oregon coast to Medford. Fast, knowledgeable, and reputable, we are always seeking new projects. Contact us at 971.224.5145 or use our form and we’ll get back to you soon!