Private money loans, also called hard money loans or bridge loans, are still the top choice for real estate investors in the wake of the bank meltdown of 2008 and 2009. Many real estate investors have marks on their credit after the real estate crisis and can no longer qualify at the bank. Hard money loans have allowed these investors to get back into the real estate game again and start hitting.
And when it comes to real estate deals, the best real estate investors are able to jump on new opportunities quickly using hard money loans. Because hard money loans are sometimes viewed to be similar to “all cash offers,” real estate investors have been able to scoop up real estate deals in recent years using these loans.
And because the requirements of hard money loans are primarily based on the real estate being used as collateral, bad credit is usually not a factor. Depending on which hard money lender you talk to, many times credit is not even pulled prior to giving hard money loans. Proof of income is another big requirement of bank loans, but not for hard money loans. In most cases, you don’t have to show income to qualify for a hard money loan.
With all U.S. banks being forced to comply with new banking standards by 2015, most of them won’t be lending on investment properties. If you’ve never looked into hard money loans to finance your own real estate deals, now may be a good time to start.