5 Reasons Investors Should Have Hard Money Loans in Their Portfolio

Private individuals and companies will find it difficult to obtain su5 Reasons Investors Should Have Hard Money Loans in Their Portfolioperior returns without an unacceptable degree of risk in the traditional financial world. Traditional banks, stock brokerages and financial investment companies provide a “range” of investment vehicles but all rely on the same basic tenet that to obtain superior results, an investor must accept a greater degree of risk to his capital.

Superior Returns

Banks borrow money and then re-loan it at the prevailing market rate. Thus, to make money themselves, they must pay the substandard investment rates. Anyone with a CD or savings account knows this fact without being told. Quite simply, trust deed investments eliminate the middle man, the bank, and allow the investor to reap a greater rate of return on the money he invests.


Finding a worthwhile borrower and deal might seem like a daunting process. It would be without the use of a reputable third party private money lender. These companies bring investors and borrowers together. They protect both parties as they scrutinize both the lender and the borrower. In addition, they examine the deals for risk and security. For the investor, private money lenders are an excellent venue for identifying potential deals within their financial parameters and risk tolerance.


There is a “menu” of loans available. While most fit the traditional mold of monthly payments, many can be customized to fit the needs of an individual investor. From short term with balloon payments to long term guaranteed rates, trust deed investments perform like most traditional real estate loans.

Asset Backed Security

The benefit of making a loan on a “real” asset at a substantially discounted valuation makes these hard money loans an extremely attractive option. While there can be occasional defaults, the investor obtains a real estate property that can be sold and still provide a sizable gain. In addition, all insurance, title search and legal documents required in bank-sponsored loans are also required on these deals.


The same private money lending companies that bring investors and borrowers together for hard money loans can also provide access to a wide variety of investment services. You can be as involved as you like or can simply wait for your monthly payment.


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6 Reasons Borrowers Should use Hard Money to Fund Deals

Private money lending or “private hard money loans” are an Why Use Hard Money to Fond Dealsexcellent investment choice for established and experienced real estate investors. The process offers a far better platform for the explanation of complicated deals to accredited investors.


There are thousands of accredited investors willing to invest in real-estate secured deals that ordinary banks will not or cannot back. Not having access to traditional bank funds is not an end for a complicated but other-wise sound deal. In other words, there is a significant amount of capital in active search of excellent, real estate secured deals.


Institutional or government requirements are often the reason that many traditional banks decline to fund an otherwise excellent real estate deal. Individual investors do not have to adhere to the same protocols and can make informed decisions based solely on the merits of the deal.


Interest rates are comparable to many traditional bank loans when all the fees and points are considered. In addition, terms are not set in stone and the details can be customized to meet the needs of either the borrower or the investor.


Accredited investors have usually been involved in their own business or in a firm at an executive level. As such, they understand the need for making decisions in a timely manner. Borrowers can trust that they will have a response in the shortest possible time without the need for the investor to confer with committees or oversight boards.


Borrowers know that they are obtaining funds from legal, reliable sources. Contracts are binding and the borrower can rely on the fact that the requirements of the deal will be honored. All traditional safeguards in a real estate deal are observed so that both the investor and the borrower can make informed decisions and act accordingly.

Ease of Use

There are highly reputable third party brokers who bring interested parties and private hard money loans together. These firms vet the deals, the investors and the borrowers. In addition, they can add value to your business part by providing access to a broad range of borrowers, brokers, realtors, and investors.

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