Private money loans are a darling to budding real estate investors. Traditional mortgage options may be out-of-reach to most investors with low credit ratings. Additionally, the slow bureaucratic approval process at the bank may require you to present your tax filings, credit scores, appraisals, among other documents, before approving the loan. Sadly, you may lose out on the remarkable fix and flip deal that you were hoping to cash in on before the money ever hits your account.

Hard money lending is often presented as a silver bullet to solving an investor’s cash crunch problems. But is taking out a private money loan the right option for you? Read on to find out three circumstances in which you should consider a hard money lender.

1. You are Running Out of Time

The fast-paced nature of the real estate market dictates that you have access to cash to avoid losing out on a potentially good deal. Traditional money lenders are infuriatingly stringent, with a lengthy approval process. On average, traditional mortgage loans take up 30 to 45 days before approval. The waiting period can be disastrous for your upcoming real estate business.

If you cannot afford to wait, you should consider a primary money loan. Hard money lenders provide quicker loan approvals with the cash deposited in your account within less than a week. For returning clients, the period may be shorter, taking less than 48 hours. You can secure funding for your next fix and flip deal in a matter of days rather than weeks.

2. You Need a Fresh Start

Bad FICO scores are the bane for most investors seeking credit to finance their businesses. Approximately 68 million Americans have poor credit scores. Traditional lending may not give you a second look after going through your credit history. Bouncing back from tough financial times or bad investment decisions may become a tall order.

Hard money lenders in California may be more lenient than your banks. There is less focus on your credit score and more on the property value. A private money loan is typically asset-based. With the lender being less risk-averse, they may provide you with a credit lifeline that helps grow your real estate portfolio.

3. You Have a Plan in Place

Investment in real estate can be risky, especially when focusing on the fix and flip deals. Traditional lending institutions may give your business plan a huge pass. A private money loan may provide you with the capital necessary to fund the deal. The application and approval processes are straightforward and less stressful to navigate.

You may need to have an exit strategy in place that can convince the lender that they won’t lose their money by loaning you. If you have experience with several properties or a solid plan in place, it may be easier to convince a private money lender for a loan. Your investment growth rate can remain steady with a secure lending source.

A private money loan is an excellent credit option for budding home investors. You can enjoy faster approvals, a less stringent process, and secure funding to grow your portfolio. To discover if our lending options are right for you, reach out to ARC Private Lending at (707) 543-1588.