Timing can be everything when it comes to securing a profitable real estate investment. The hard money loans could allow the investors to take advantage of a deal that needs quick funding or to finance properties in unique conditions that a traditional bank will not touch. Whether you’re a financial advisor or mortgage broker, offering hard money as part of your client’s investment toolset can unlock the doors toward high-return deals. Here is a look at how to properly present investment opportunities to the clients using hard money loans to help them grow their portfolios.
- Emphasize the Speed of Funding
The best benefits of hard money loans, by far, relate to time. While traditional loans underwrite in weeks or months, most hard money loans fund in a week. This could be crucial in competitive markets where you’ll be fighting to get a jump on highly lucrative opportunities.
How to Pitch This to Clients:
Let clients know that hard money loans can often fund in as little as 5-7 days. If they’re in a property that’s gaining lots of interest or one that could lose value with delays-like a distressed property-this quick access to funds could be their edge. Explain this kind of funding is ideal to secure deals at a moment’s notice, especially in competitive real estate markets.
- Highlight Flexibility and Simplicity
Hard money loans do not have the strict requirements that traditional banks do. They are typically asset-based, meaning they rely more on the value of the property rather than the credit score of the borrower. This flexibility may be of particular appeal to those clients who perhaps have been turned down by conventional lenders due to a problematic credit history or some type of property that is unconventional.
How to Pitch This to Clients:
Describe hard money loans as flexible financing options that can meet the demands of unusual or unconventional investments. For example, a commercial or mixed-use property that your client may be looking at might be one too big of a risk for the bank; hard money lenders like Lending Bee look into the after-repair value of the property-not where it stands today and definitely not at their credit history. The flexibility in hard money deals basically means this option works best for clients who have complex investment strategies.
- Explain the Magic of Short-Term Profits
Hard money loans have shorter loan terms. This is quite favorable for those fix-and-flip investors and those who would want to resell the property at a faster rate. Investors in such property can take a loan for the same, leverage it, and make a profit out of it within several months to a year. This model enables investors to maximize returns without long-term commitments.
How to Pitch This to Clients:
Hard money loans can be pitched to clients as a means to finance short-term projects with fast, sizeable profits. For example, if they are going to renovate and resell the property in under 12 months, the hard money loan gives them the capital to buy, rehab, and sell without being locked into a multi-year mortgage. This is actually how the loan structure is designed-to accommodate those short-term, high-return investments.
- Explain How Hard Money Loans Can Increase Buying Power
Hard money loans are based, in large part, on the value of the property rather than solely on the borrower’s financial history. This can enable hard money loans to grant higher loan-to-value (LTV) ratios. This increased buying power can make a big difference in competitive markets, where that little bit of extra money can mean the difference between clients’ being able to purchase and improve properties they mightn’t otherwise afford.
How to Pitch This to Clients:
Demonstrate to clients how hard money loans can maximize their buying power. When a property is heavy rehab or commandingly priced due to location, access to hard money loans can cover acquisition and improvement costs. Greater access to capital enables clients to take on more ambitious projects that can yield higher returns.
- Explain in detail how the process of approval is so much easier as compared to traditional lending.
The process of approval for a hard money loan is way simpler and quicker as compared to traditional lending. Primarily, hard money lenders concern themselves with the potential value of the property and less with cumbersome documentation or even verification of income, which can make all the difference for an investor looking to secure funds as soon as possible.
How to Pitch This to Clients:
Explain to the client that in hard money, the pre-approval is strictly based on the potential of the property itself and not on delving deep into their full financial history. For serious investors who may be dealing with multiple projects at one time, this ease in application is spot on. Let clients know this simplicity allows them to take care of the investment itself, rather than endless paperwork.
- Present Hard Money as a Solution for Unique Properties
Properties requiring major rehab or having specialized zoning rarely meet the criteria for traditional loans. Hard money loans, however, are flexible enough to underwrite those special investments-whether it’s a historic property being restored to its old glory or a warehouse conversion to apartments.
How to Pitch This to Clients:
For hard money, position it as the ideal solution for properties that may not fit neatly into the traditional lending box. Let clients know that for conversion or revitalization of a property that requires imagination, hard money loans can provide financial backing for those types of ventures. In this way, they could take advantage of an opportunity outside the constraints of conventional financing.
- Address Rate Concerns by Focusing on Overall Returns
Most hard money loans are approved with higher interest rates than what is usually expected with other types of loans. This might raise eyebrows among potential clients. In the event that the investor uses hard money in a strategic manner on a high-ROI project, these will be offset against very substantial profits.
How to Pitch This to Clients:
Emphasize that while hard money loans have higher rates, the ability to close quickly, finish renovations, and sell at a profit can more than offset the added cost. Help the client understand that it’s the overall return on investment that matters, not the interest rate, if the project yields substantial gains in a very short amount of time.
Why Partner with Lending Bee?
Because Lending Bee is a lender that manages our own funds, we can maintain a high level of reliability and efficiency that brokers and investors appreciate. By partnering with us, you will feel confident to tell clients their funding will be taken care of quickly and transparently.
- Fast Approvals: Get your clients the funding they need in days-not weeks-to keep their investments on track.
- Flexible Terms: We craft loans to suit your clients’ particular properties and financial objectives.
- Reliable Partner: We have experience in the handling of funds and assure you that we are capable of handling your clients’ hard money needs with professionalism, while efficiently and promptly completing this important transaction.
Hard money loans are game-changing propositions for clients needing to expand their portfolios or needing entry into new markets, or simply as a way to gain the competitive advantage. Framing hard money loans within the context of your client’s needs will make this financing option far more appealing and show how it can add value to their investment strategies and yield profits.
This will be your clients’ cue to come to Lending Bee with funding needs that match their ambitions and timelines. Let’s rise together to turn real estate visions into lucrative realities.