Hi and welcome back. I appreciate you joining us again. Today we’re going to continue discussing our three part series on hard money lending- myths vs fact. Today we’re going to talk about how to increase your profits significantly using a hard money loan compared to a traditional bank financing.
What are the different financing options borrowers have and what are the benefits of a hard money loan vs. a traditional loan?
There are two options a borrower typically has in the fix and flip industry for financing. Hard money loan or traditional loan. With a traditional loan it takes much longer to get approval and typically they offer less actual loan to cost. With a hard money, we can get approved within a matter of days, typically around ten, and we offer a higher loan to cost and in some cases up to a hundred percent of total cost.
Why do hard money loans typically have shorter approval timelines?
Hard money lenders primarily value the collateral behind the loan and not necessarily the strength of the sponsor. It takes a lot less time for us to figure out what the value of that piece of property is than the sponsor’s ability to pay the loan back.
Why does this benefit the borrower?
The age-old story in real estate is that time kills all deals. Every day that a project is not on the market is a day less of profits. The quicker you can get approved and close your loan, the quicker you can start and the quicker you can get your project finished and to market.
What’s the benefit of less money up-front with a hard money loan?
Traditionally hard money lenders off a higher loan to cost and in some cases a hundred percent of loan to cost including purchase and rehab versus a traditional bank. This means that a borrower can come to the table with less money in order to get a project completed.
How can a borrower best prepare to take advantage of a hard money loan?
A borrower can best prepare to take advantage of a hard money loan and the timing of it by being prepared in the very beginning- understanding his market, knowing his scope, understanding his budget, so that when he closes day one he hits the ground running, and thus takes less time on completing the project and getting to market sooner.
Thank you for watching our second video blog here at Bay Mountain Capital. We definitely look forward to bringing you the third part of this series, myths vs fact. And if there’s anything you want to hear us talk about please don’t hesitate to write in and let us know. We want to hear from you and we want to answer your questions. Thank you and have a good day.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 3,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.