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Why Real Estate Investors Use Hard Money Loans In California

Lender Meeting with Clients

Speed and flexibility are the main reasons why real estate investors use hard money loans in California, but there are many other reasons, too. Let’s take a look at some of the other reasons.

Straightforward Process

Applying for California hard money loans is a simple process. Often, a brief conversation with California hard money lenders and a standard application will get the job done. On the flip side, banks require an almost endless amount of paperwork for the borrower. And it can take weeks to get a response. During the interim, the property just might get snatched up by another investor. Plus, once you’re approved with a hard money lender, the loan can usually be funded within two weeks.

Makes the Offer Stronger

In comparison to attaining financing from a bank, an offer from California money lenders is stronger. It’s not uncommon to hear that the bank pulled financing during escrow. This can kill the deal. California hard money lenders are not known to reject funding for arbitrary reasons.

Negotiate a Lower Price

California hard money loans are considered a cash offer. This gives the buyer an upper edge to negotiate a lower purchase price. There’s a shorter escrow time period and a quicker close. A motivated seller always likes these factors. Cash can always be leveraged for a lower price.

Not-So-Perfect Credit Score Are OK

Typically, a bank will use the borrower’s income and credit as criteria for approving a loan. If there is anything that raises a red flag, most likely the loan will not be approved. Hard money lenders are so focused on the borrower’s credit rating and income. They primarily focus on the collateral and equity.

Reinvest Equity

When a real estate investment opportunity crops us, there’s usually little time to make a decision. If the investor needs to raise money, there may not be that many options. Cash-out refinance loans from a hard money lender are available to borrowers. A cash-out refinance loan can be done by California hard money lenders quickly. This way, the investor can take advantage of a good opportunity.


Traditional banks are very well-known for having arbitrary regulations and being rigid. These characteristics can prevent the real estate investor from obtaining a loan. Less is required from a hard money lender, and many California hard money lenders offer creative solutions to any problems that arise.

It’s a Partnership

When a real estate investor goes to a California hard money lender, it’s a partnership. Both the investor and the lender want a smooth deal. The last thing either wants is missed payments. A California hard money lender will analyze the project and address any concerns that maybe the investor did not think of. With California hard money lenders, you’ll get good advice.

No Limitations

Often, real estate investors purchase and have more than one property. Many banks will cap the amount of loans to a single borrower. Hard money lenders do not do this. They are more concerned with the equity, and view working with an investor on more than one property as positive. They will sometimes even cross-collateralize investment properties.

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