Hard Money Loan Benefits: Top 3 Real Estate Podcast Episodes
If you want first-hand proof that hard money loans can help real estate investors succeed, look no further. Three of the biggest real estate podcasts have shown what exactly makes hard money loans an excellent option. In a saturated market, these podcasts specifically singled out hard money loans to be fast and convenient.
If you don’t know much about hard money loans but want to learn more, this is a good place to start. Also, if you’re already actively looking for reputable hard money lenders in Maryland, these podcasters’ tips can help you find the perfect fit. Let’s learn the top takeaways from the episodes below.
Table of Contents
- BiggerPockets Real Estate Podcast
- Renter’s Warehouse Rent Estate™ Podcast
- Real Estate 101 by The Investor’s Podcast Network
- Sean Pan’s Cautionary Lender Tale
BiggerPockets Real Estate Podcast
In a BiggerPockets podcast episode, guest Will Heaton from Heaton Dainard Real Estate revealed his preference for hard money loans. He drew from his own experience as a borrower to pin down why he turns to hard money loans again and again.
Cost-Efficiency and Time-Efficiency
Heaton remarked that he was able to fund projects within a week with hard money loans. He also found that hard money loans are sometimes the most cost-efficient solution possible.
Traditional loans make borrowers pay loans off very slowly. This means that their debt will hang over their head for years. However, hard money lenders know that their most common customers, home flippers, want to put their loans behind them quickly. Overall, real estate investors choose hard money loans over traditional ones because of this sped-up time frame and the property’s condition.
Renovation Funds Built-In
Heaton found that hard money loans had renovation funds already built in. This is unlike traditional loans, where investors must shell out investment funds out of pocket. This can burden investors who are already cost-conscious.
Requirement Flexibility
Compared to traditional loans, hard money loans allow for more flexibility. They don’t need underwriting. The hard money lender directly handles the lending process without third-party approvals or general bureaucracy. There is less red tape and fewer federal regulations to bog the process down.
While hard money lenders do have some requirements for approval, they are less rigid and more customized. Even though the borrower’s credit score matters, they can also use criteria like asset ownership to determine eligibility. For example, if someone wants to get properties appraised and closed without renovations, a bank may not fund the process. However, a hard money lender might. All in all, money lenders are a little more self-governing than banks, so they can give you more freedom and leeway in the lending process.
Construction Costs Included
Another advantage Heaton noted is that hard money lenders factor in the construction costs, so lenders will reimburse those costs through construction draws. This gives borrowers more leverage. Meanwhile, borrowers would have to pay these costs out of pocket.
Convenience
Finally, while hard money loans may have a higher interest rate than traditional loans, Heaton simply viewed this as a convenience fee. After all, hard money lenders can deliver the loans to you many times faster than you would otherwise.
Renter’s Warehouse Rent Estate™ Podcast
Renter’s Warehouse CEO Kevin Ortner and loan officer Sean Blomquist spent an entire episode of their real estate podcast deep-diving into hard money loans. They particularly focused their energy on house flippers.
Boosts Investment Value of Flipped Houses
Ortner and Blomquist felt that for fix-and-flippers, specifically, hard money loans may pay for themselves. Many people use them to fund renovations that add value to their investment. Because of this, investors can view hard money loans as a tool in their arsenal that lets them stretch those dollars more and leverage their money. For example, investors can close multiple deals at once, instead of just one at a time. They can multiply their earnings and subtract all the years they’d spend on other types of loans.
They emphasized that although hard money loans are stereotyped as an option for people with few financial options, that archaic image is rooted in the distant past. Nowadays, average house flippers might choose them for a real estate project they want to streamline efficiently.
Investor-Friendly Companies Are an Asset
Ortner and Blomquist emphasized that actively investor-friendly companies with experience, savviness, and set refinancing processes would prove especially beneficial to borrowers. They recommended people use hard money lenders that can connect well with other team members, like realtors.
Real Estate 101 by The Investor’s Podcast Network
Sean Pan, a San Francisco hard money lender and real estate investor, reiterated in this real estate podcast how versatile hard money loans can be. He witnessed that for many people, hard money loans fit into their plans regardless of where they are in their property investment journey.
Good for First-Time Investors
Pan observed that hard money loans are especially useful for, and popular with, first-time investors. He has witnessed first-time investors who have faced almost insurmountable barriers when they aren’t eligible for traditional loans. Their projects were on the verge of grinding to a halt. However, their plans didn’t go down the drain because hard money lenders would accept them as borrowers.
A Prime Pick for Experienced Investors
Pan also revealed that other, more experienced, million-dollar-raking investors also use hard money loans. They know they can use these loans to juggle multiple deals at the same time. Meanwhile, if they had used traditional loans, they would wait over 30 days to cement a deal or two. This would have restricted their ability to work on even more properties. To investors under tight deadlines, hard money loans just make sense.
Sean Pan’s Cautionary Lender Tale
Pan demonstrated just how critical it is to find a trustworthy hard money lender through his own nightmare experience with an unreliable one.
In essence, the company Pan used dropped off the face of the earth and never contacted him again after a snag. When he faced a payment issue with a contractor, the lending company wrestled with the contractor to solve the issue. Then, when the lender found they couldn’t achieve a solution, they stopped responding to his calls. This almost stopped the entire deal just before it was completed, right at the finish line.
Because of this, Pan wished he had used a lender with a solid reputation, a sense of responsibility, and a penchant for teamwork. He regretted that he didn’t choose a transparent company, one who worked with him to solve problems, even when it wasn’t easy or convenient. His experience illustrates why it’s so crucial to choose your hard money lender wisely.
Use a Tried-and-True Hard Money Lender
The proof speaks for itself: real estate investors love hard money loans. They value these loans for their convenience, renovation profit potential, flexible requirements, and usefulness for investors with various levels of experience. Influencers who develop real estate podcasts know that their listeners’ trust is everything. They wouldn’t back hard money loans if they didn’t stand by them.
At the same time, one recurring pattern in these episodes was how all hard money lenders are not created equally. Some do not have their borrowers’ best interests in mind or the professionalism to get things done. That’s why the guests cautioned listeners to stick with lenders that have integrity. At Maryland Hard Money Lenders, we know what it’s like to be on the other side of the table as borrowers. We understand you’re betting your hard-earned money and hopes on a lender you hardly know. Because of that, we don’t take our customers’ trust for granted. We would be honored to help bring your vision to fruition. Contact us now to make “someday” happen today.
