Hard Money: The Best Choice for Commercial Real Estate Loans

Men shaking hands over paperwork

In the realm of commercial real estate, time is of the essence. When opportunity knocks, a savvy real estate investor must be able to seize it by having money to push a transaction through before another investor can pounce on it. That’s one reason that hard money lending in Houston, TX, has recently come into vogue for those who make a living from commercial real estate investments.

Hard money loans are approved and executed on a fast timeline because they are not secured by the borrower’s credit, but by the value of the property to be purchased. That makes them a nimble lending tool for those who must capitalize on the dynamic commercial real estate market. Continue reading to learn more about how you can use hard money lending in Houston to give you greater financial fluidity for closing commercial real estate transactions.

Negates Importance of Credit History

Those who are getting started in commercial real estate investment may not have a long loan history that can be used to satisfy the demands of traditional lenders. Also, some investment groups may be newly-formed LLC organizations that have absolutely no borrowing history at all. Hard money loans can help overcome those traditional obstacles to becoming a player in the commercial real estate game.

The money loaned in a hard money transaction is not contingent on the credit history of the borrower, but the value of the property to be purchased with the loan. Therefore, hard money loans provide the perfect option for those who want to get involved in commercial real estate who may have a checkered or inadequate credit history.

Makes Your Deal More Powerful

Countless commercial real estate deals fall through once under contract because the loans fall through at the last minute. Banks and other traditional lending organizations must meet stringent guidelines when loaning capital for commercial projects, and sometimes, those demands simply can’t be met. In those cases, the seller wastes time and loses a sale in the process.

A hard money loan can make your offer more attractive amongst a sea of offers based on traditional lending because it’s less likely to fall through. Because hard money loans streamline the lending and approval process, you can quickly be ready to close with funding in hand. A seller will appreciate that increased confidence in the sale, and your odds of completing the transaction are enhanced.

Provides Buyer Leverage

In a competitive commercial real estate environment, the seller may have the upper hand. The property on the market may be in a prime location, for example, so offers on it come from many angles. That allows the seller to pick from any number of attractive offers. However, use of a hard money loan can provide the buyer with additional leverage. A hard money buyer is attractive to a seller because of the reduced risk of loan denial and a faster escrow and closing timeline.

Therefore, among a sea of offers, the buyer with the hard money will be the seller’s preference. That gives the buyer some leverage to negotiate in some cases, as a hard money loan sale benefits both parties.

Businessperson showing model of condo complex

Speedy Approval Timeline

Maybe the biggest benefit of using hard money loans for commercial real estate transactions is the fast application timeline and quick availability of funds. With a traditional loan, you may not have the confidence to make a binding offer until the loan is approved. In those cases, you may miss out on a chance to put in an offer on a prime piece of commercial real estate. However, because the timeline for a hard money loan is much shorter, you can get involved with an offer more quickly, thus enhancing your chances of closing on the property and beating out other suitors.

If you want to increase negotiating power and enhance your chances of closing on commercial real estate in Houston, TX, hard money lending can provide you with an advantage over other potential buyers. It’s quick, streamlined, and increases your likelihood of successfully completing commercial transactions. For more information on hard money lending for commercial real estate, contact Investor Loan Source.

Leave a Comment