Can I Get a Hard Money Loan Without Real Estate?
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Hard money loans are secured by real estate, so it can be a valid question whether a hard money loan could be secured without real estate involved. The best answer is “maybe.”
The key to getting investors to offer a hard money loan will be a clear understanding that the borrower has the ability to repay the loan before a piece of property is purchased. Normally hard money loan investors take a look at the finances of the borrower to some extent, but perhaps less rigorously than a commercial bank. In the event, a borrower came to them asking for a hard money loan in advance of the property purchase, that financial scrutiny will likely be more intense because there is no real estate equity for the investors to secure at that time.
Hard money loans are not intended to be personal loans. The assumption is that the borrower is a commercial entity with existing commercial real estate or the intent to own the same. The investors will need to understand the income potential of that real estate relative to the loan amount. Borrowers must understand that hard money loans are designed to be shorter term than a consumer loan or mortgage, with payback times of 10 years or less. Interest rates are also higher than commercial bank loans because the investors are less concerned with the borrower’s credit rating and willing to accept a higher risk for the greater return over time.
If you are a commercial business entity looking for real estate and want a hard money loan in advance of that purchase, contact AHL Hard Money Network and discuss the situation with us. We can issue a letter of funds to help you secure a property. Keep in mind that the actual funds may be different as our investors are looking for opportunities now and may not wish to wait for your property to close. AHL Hard Money Network can discuss these particulars with you, so contact us today.