How to win in a tough market? Real estate investments with hard money loans are a smart hedge against inflation. A key for winning in tough markets is to secure these short-term loans from a trusted lender who understands local real estate markets and can help investors structure transactions for improving and reselling real estate properties.
Hard money loans are a terrific capital source for real estate investment transactions, with the lender being private investors and not banks or commercial lending institutions. We understand that rising inflation rates stresses the economy, however, we also appreciate that real estate is historically a tangible asset that increases in value over time.
Always remember that a hard money loan is used for real estate investment transactions and in tough markets, is a way in which to raise capital quickly. Since hard money loans rely on real property as collateral, rising interest rates may be annoying, but smart real estate investors don’t overleverage and fully utilize hard money loans to win in tough markets.
Experienced property flippers are disciplined in using hard money loans in tough markets to as collateral for their financing before they resell. While hard money loans are higher that commercial lending, the rates, and fees are affordable for borrowers because the costs are offset by the loan’s short duration and the resale value of the improved real estate property.
How to win in a tough market when everyone is panicking
Real estate investors win because they understand markets move and real estate stays. Smart real estate investors do not panic with today’s rising interest rates because they know that while bank borrowing from the Federal Reserve controls inflation, hard money borrowing is rocket fuel for real estate investment opportunities.
Panicking is unnecessary for liquid real estate investors who understand hard money loans are backed by individuals, investment firms, and other private entities backing these loans to real estate investors. Similarly, nonbanking institutions provide hard money loans. There is no need to panic knowing that real estate is the most typical type of collateral for a hard money loan.
The comparable real estate value of the collateral (single family and multifamily residences, commercial properties, and land) often determine the value of a hard money loan. Panicking is irrelevant for borrowers who understand their loans are primarily secured by real estate and largely not their own creditworthiness.
Why panic when as a savvy real estate investor, you can borrow money with lower leverage secured by your real estate. You can secure your hard money loan using real estate as collateral and keep your financial profile in good standing. With hard money lending, real estate investors can win when everyone else is panicking.
How to win when interest rates are rising
As interest rates rise, asset prices fall, and experienced real estate investors get to work and use hard money loans for real estate investments as a hedge against inflation. It is true that while inflation might cause real estate values to settle slightly, millions of people across the country want in on real estate for no other reason than needing a place to live, especially in a desirable location like Florida. Real estate investors win by focusing on buying right, borrowing smart, and focusing on the increasing demand for residential housing that is in limited supply.
Smart real estate investors win by being aggressive in moving out of higher inflationary risk asset classes like stocks and bonds into real estate which has historically acted as a hedge against inflation. Shrewd real estate investors are conservative when underwriting their investment properties and they financially structure their deals for multiple reselling opportunities like sales, short-term and long-term rentals. Over the long term, investment properties have been shown to keep pace with inflation as an appreciating asset.
How to win with hard money lending
Since hard money loans are collateralized by the investment property and not the creditworthiness of a borrower, borrowers with lower credit ratings can secure hard money loans. Hard money loans are widely used by real estate dealers and investors who buy, repair, and resell properties in a short amount of time.
Hard money loans have a straightforward collateral-based underwriting process, making them suitable for completing the transaction in just a few days as opposed to traditional mortgage financing. Purchasing a property with a mortgage can frequently take more than a month, from application to closing.
How to win with hard money instead of conventional loans
Hard money loans differ from conventional loans in many respects. The rules and terms of these loans might vary depending on the lender and the agreement. Hard money loans differ substantially from conventional loans in terms of the loan term, speed of financing, interest rate, and credit requirements. Hard money loans can be obtained in a matter of days and have short payback terms ranging from six months to a year.
Why DKC Lending?
DKC Lending offers hard money lending services to real estate investors in Tampa, Jacksonville, other Florida cities, and select cities throughout the United States. We provide borrowers with personalized loan origination services and funding. DKC is direct to lender, which allows us to match the borrowers’ hard money loan needs with the best source of funding for their deal. Our real estate development experience allows us to offer our borrowers a unique collaboration on every loan. We offer a high level of individual consulting, including review of deal analytics, rehab budgets, and deal viability. DKC has a proven track record of successful underwriting and closing deals and brings an extensive real estate development background and expertise to help guide borrowers on each unique transaction.
