A hard money loan is an alternative type of financial product that’s typically offered by individuals and not banks. Since a hard money loan is secured by real property, this type of loan is generally used in real estate transactions. Below we look at the top reasons why anyone might get a hard money loan if they qualify.

1. Secure Real Estate Property

The top reason for taking out a hard money loan is the acquisition of real estate. There are many benefits that come from taking out a hard money loan from a private lender vs. a traditional financial institution. According to Investopedia, hard money loans can be approved in as little as 24 hours. Another significant benefit of using a hard money loan to purchase property is that it’s easier to apply and get approved compared to getting a mortgage at the bank. Since you can obtain funding quickly from a private investor, this makes it easier to capitalize on many lucrative investment opportunities, such as buying a home that’s in foreclosure or which is considered non-conventionally financeable. A hard money loan can be disbursed so quickly that it’s considered as good as cash, so it’s the best loan option for foreclosures and bank-owned properties, which can be acquired at a discount.

2. House Flipping

As mentioned, a hard money loan can be used to secure real estate property that you can hold long-term as a rental or primary residence. In some instances, a hard money loan can also be used to purchase real estate property for a practice known as house flipping. This process essentially involves buying a property and then holding it for a short time before selling it at a higher price. Hard money loans make it easier to generate revenue by buying and selling properties because of how easy and quick they are to obtain.

3. Property Development

The trend of using hard money loans for real estate transactions continues with their use for property development. That means you can obtain funding to purchase bare land for the purpose of new construction. You can then make a profit by selling the finished property at a significantly higher price.

These are the top reasons for taking out a hard money loan. Truth be told, a hard money loan can be used for so much more due to its numerous benefits. Ready to take out a hard money loan? Don’t hesitate to reach out to find out more.