At Juniper Capital, it is our goal to change the perception of hard money in Seattle, Tacoma, and across the Pacific Northwest. We specialize in commercial real estate loans, private construction loans, fix and flip loans, and more. Give us a call to start the conversation today.
Why hard money might be the easiest solution to your real estate financing dilemma.
As veterans of the alternative financing industry, we are well aware of the negative connotation often associated with the term “hard money lender.” For some, it may stir up images of loan-shark like lenders, astronomical interest rates, or thugs sent to collect payments. But in reality, these couldn’t be further from the truth – as banks have continued to tighten their lending criteria, hard money lenders have emerged as a solution to fill the gap and offer valuable financing alternatives that simply aren’t available elsewhere.
It is a common misconception that a lack of borrower creditworthiness is the main factor that would cause someone to turn to a hard money lender. Instead, it is generally one of the following reasons that lead borrowers to seek a private lender to solve their financing dilemma:
In real estate, timing is everything, and opportunity can be fleeting. Oftentimes real estate investors find themselves up against a tight deadline and need a lending partner who can act fast. While banks may take multiple months to close on a typical commercial loan transaction, private lenders frequently close within a few weeks, and sometimes in even a few days. In a tight real estate market, the ability to close so quickly may create a significant competitive advantage for a real estate investor.
In some cases, a real estate investor may only need capital that lasts a few months. In such cases, bank financing may be overly burdensome due to bank approval process, and the likelihood of a prepayment penalty. Private money lenders can offer more flexible short-term financing options to bridge an investor to the sale of a particular property. For those looking to flip houses, hard money lenders are also a great asset to fix and flip investors seeking a short-term loan to turn a residential property.
When Banks Are Not Lending on a Particular Asset Class
Due to bank regulations, some bank’s “buckets” for lending on particular property types may fill up from time-to-time. Depending on the market, this could happen to several banks across a given region simultaneously. When this occurs, traditional financing for that asset class, such as hospitality or new construction, may become next to impossible. When banks stop lending on a particular asset class, private money lenders can fill the gap, allowing investors to continue with such projects.
When a Property is Not Quite Bankable
The requirements for bank financing can be exhaustive. Whether it is the filling of a vacancy, the seasoning of a tenant, or the filing of a guarantor’s tax return, a property may occasionally fall just short of being bankable. In such circumstances, a private lender that can structure a reasonable bridge loan can be a huge benefit to a real estate investor.
We are a creative, trustworthy, and integrity-driven private lending partner that comes through for our clients when banks simply can’t. Our experienced management team provides immense value to our borrowers throughout the loan process. Contact us to learn more about private capital today.