Why Hard Money Is Good for Distressed Property Deals

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Sometimes, lenders sell properties at a lower price because of a foreclosure or bank’s liquidation. These distressed properties can be an attractive investment option for real estate investors, but it’s important to close the deal quickly. While traditional bank loans and mortgages can help you buy distressed properties, getting a hard money loan might give you an edge.

Let’s explore five reasons why hard money loans are the best option for purchasing distressed properties.

1. Faster Funding and Repayment

Since the approval process for traditional loans might take weeks or months, you might lose out to other investors. Hard money loans are short-term loans provided by private lenders based on an asset’s value, so they are generally approved within days. The faster process will let you buy properties faster in a competitive market. As you’re dealing with private lenders, you can also negotiate flexible repayment options.

2. Faster Approval

Hard money loans are approved based on the asset’s value and not on the borrower’s credit history, so the process is faster. You also need not worry about the pre-approval process, since lenders approve the loans based on the property’s value. Hard money loans can be the best option for new investors with limited funding or experienced investors who’ve suffered financial setbacks.

3. Higher Flexibility

Hard money loans can offer you more loan structure flexibility. For example, private lenders may be willing to provide interest-only payments during the initial period or allow balloon payments at the end of the loan term. In addition, they would not be concerned about the purpose of the loan, so you can hold on to the distressed property or renovate it based on your needs. With this level of flexibility, you could avoid various internal and external risks that might arise during the loan’s tenure.

4. Potential for Higher Returns

Even though hard money loans typically have higher interest rates, they have the potential for better returns. For example, an investor who purchases a distressed property with a hard money loan can earn a substantial profit if they renovate and sell it quickly. You can even purchase two or more properties based on the property value to earn more profits.

5. Convenient Process

Unlike traditional financing options that involve lengthy paperwork and strict regulations, the loan application process for hard money loans is generally simpler and more convenient. Most private lenders offer online application and approval processes that make getting a loan that much more convenient and easier to receive.

Hard money loans provide excellent benefits, but can also be risky if you don’t choose a reputed lender. If you’re looking for hard money loans in Georgia with no upfront fees and pre-payment, you can connect with Hard Money Georgia. Once we have the property details, our team will respond quickly with a no-obligation loan proposal. Contact us today!