Is It Better to Work With a Local Hard Money Lender?
Hard money lenders offer real estate investors a valuable service in the way of fast and efficient funding for projects that banks and credit unions are known to avoid. An investor confined hard money lenders in just about every major city in America. Even some of your mid-sized cities have one or two hard money lenders. So does it matter whether or not an investor uses a local lender?
Technically, no. Any licensed hard money lender with a good reputation and a willingness to do things right can provide the funding a real estate investor needs to purchase a new property. But there are advantages to staying local when possible. If local lenders are available, why not check them out first?
A Little Bit About Hard Money
Perhaps you are reading this post but are not familiar with hard money as a form of funding. Hard money loans are asset-based loans, meaning approvals are given primarily based on the value of the real estate being acquired. The real estate acts as backing for the loan.
Because hard money lenders are not banks or credit unions, they can follow a different approval and underwriting process. There is no need for them to look into every aspect of a borrower’s credit history before approving a loan. They also don’t have to follow a month’s-long underwriting process. As a result, hard money loans can generally be approved in a couple of days. They can be funded in days or weeks.
Local Market Expertise
Moving on to the advantages of staying local, the starting point is local market expertise. Consider Actium Partners in Salt Lake City, UT. Although Actium Partners writes loans throughout the state of Utah as well as in Idaho and Colorado, they are based in Salt Lake City. They got their start there as well. They know the local market inside and out.
Their expertise can prove helpful to a commercial investor who might be new to the area. They can advise on properties, market conditions, and even money-making opportunities. Remember that hard money lenders make money when their customers make money. They have a vested interest in either offering sound advice or no advice at all.
Everyone Is on the Same Page
Another benefit of using a local hard money lender is having everyone on the same page. Both investor and lender are in the same time zone. They have access to the same appraisers and title companies. They are dealing with the same local government employees. Being in the same place at the same time simply makes doing business easier.
When an investor’s lender is located half-way across the country, things get more difficult. The two are working on slightly different schedules. Communication becomes more challenging. Moreover, the lender needs to arrange for property appraisal at a distance. That creates more complications.
It’s a Better Deal
There is no requirement to use a local lender to arrange a hard money loan for commercial real estate. But staying local is a better deal when it is possible. Everybody in the same place and the same time eliminates most of the headaches of trying to do business across state lines. But what if a local lender can’t be found? Then an investor needs to look elsewhere.
Hard money lenders make financing commercial real estate easier and faster. Using a local lender makes things even better. Whether you are new to property investing or you have been at it for years, you now know why some investors will always choose a local lender if there is one available.
