Sometimes it can be very hard to find a trustworthy and reliable financing option, especially when you are trying to purchase or refinance investment property. Despite the availability of the traditional sources of financing via banks, venture capitalists, among others, it might still not work in your favor. Most of these traditional lending institutions tend to take a long time to approve the loan and usually require you to undergo a very stringent evaluation process. They also take lots of factors into consideration, such as your credit score, and your repayment capacity which leaves for a very little chance for loan approval. On the other hand, soft money lenders don’t rely entirely on such factors.
Unlike the traditional lending institutions, soft money lenders basically offer investors the opportunity of borrowing short term loans; usually anywhere between 6 to 24 months, depending on the situation and individual lending company. This makes a trusted soft money lender essential for any real estate investment team. Whether you are new in real estate investment, or you are a seasoned veteran, it is very important to have a trustworthy soft money lender on your team. Actually, there’s nothing more advantageous to any real estate investor, than fostering good relationships with the soft money lenders.
The best real estate investment opportunities are normally captured by the investors who are well prepared. The best deals usually present themselves sporadically, and most times, there are usually many other interested parties. As a real estate investor, you need to move swiftly, and you can do this by obtaining short term financing from a soft money lender. That being said, lets now take a look at some of the other reasons why it is great to have a soft money lender you can trust.
6 Reasons To Have a Soft Money Lender You Can Trust
- Faster Approval
As aforementioned, most real estate deals are usually time sensitive, and using soft money lenders is the best way of ensuring that you get quick funding whenever necessary. Unlike most traditional financial institutions, applications for soft money loans involve much less paperwork. Soft money loan applications are usually only about two pages of basic information and can be approved very quickly once they have been filed and then returned to the lender. This allows real estate investors to take advantage of opportunities which might come up at any given time. A trusted and reliable soft money lender will provide you with quick assistance and help you obtain soft money loans to purchase that property or even refinance investment property.
- More Versatile
One of the main reasons you should have a soft money lender on your team is their versatility. With soft money lenders, it is possible for an investor to have a lot more negotiation room of the loans terms. You are able to tailor a repayment schedule to fit your particular needs; this gives you the chance of investing in a variety of different deals and commit to deals which you find most lucrative. This increased versatility, combined with the fast approval, allows you to take full advantage of the opportunities which would have otherwise passed you by.
- No Need For Perfect Credit Scores
Soft money lenders are usually equity based lenders, meaning that they are mainly concerned with the real estate value which will secure that loan, and less concerned with the borrower’s credit scores; When it comes to obtaining loans from soft money lenders, the collateral, and the business plan is much more important than the credit scores.
Applying for a mortgage is time-consuming. It can take many months to close on loans, which can put you at risk of losing out on that particular investment property. Fortunately, with soft money loans, it is possible to get the much-needed funding in a couple of days or weeks. This is important especially if you are funding a large scale development project, and you do not want any deviations whatsoever, from the set timeline to completion.
- Less Stringent Terms
Unlike most traditional financing institutions, soft money lenders normally have their very own sets of rules and regulations which make it easy and quick to approve the soft money loans for the borrowers. In addition, the soft money lenders are much more open-ended in nature, which means you can talk to them and discuss the terms which will best fit your particular needs. This can include varying the loan amount based on the investment property or the renovations which the property needs.
- No Prepayment Penalties
Well, in life even the best-laid plans are subject to change. If your deal happens to go well, the very last thing you want is getting penalized for the success. Unfortunately, most traditional financial institutions usually tend to charge hefty prepayment penalties when circumstances change, and the loan is partially or fully repaid before the set date. Soft money lenders are always fully invested in your success, and they typically structure the loans without any prepayment penalties. This is another great reason to have a trusted soft money lender on your team.