With the Salt Lake City market as hot as it is right now, hard money for real estate transactions is in high demand. Organizations like Actium Partners exist to make that money available with as few hitches as possible. What we do is considered alternative lending by the traditional banking sector, but ‘alternative’ does not mean less desirable or lower quality.
Unfortunately, there are a number of myths that pervade our industry. Many of our clients are pleasantly surprised to learn that much of what they believed about alternative lending is not true. They have discovered that bridge loans and hard money lending are accessible, appropriate, and an excellent tool for meeting short-term financial obligations.
Here are three of the top alternative lending myths that we are busting with every deal:
1. Alternative Lending is a Last Resort
You might be operating under the assumption that only people who cannot borrow any other way turn to alternative lenders for hard money or bridge loans. Nothing could be further from the truth. Alternative lending is not the method of last resort so many people believe it is. In fact, many of our repeat clients come to us first.
One of the things that leads people to alternative lending is speed. Again, let’s talk about the Salt Lake City real estate market. It is so tight that buyers are often working on a contracted timeline. They need to close as quickly as possible or risk losing the deal. They come to us because we can usually have an answer within 48 hours or less. Banks take days, even weeks, to reach a decision.
2. Alternative Lending is Inflexible
Another myth is that alternative lending is less flexible than traditional bank lending. This myth is easily put to rest. A good alternative lender approaches each transaction on a case-by-case basis. That’s what we do here at Actium.
No two loan applications are identical. No two borrowers are working under the same circumstances. One client might need a bridge loan to facilitate business expansion while another is looking for hard money to close on a real estate deal. Both deserve to have their financial needs looked at based on their own merits.
We strive to be as flexible as we can with each and every transaction. We look at every possible way to get a deal done. Not only that, we want every deal to benefit both us and the borrower. Therefore, we do not have any arbitrary limits. We work with each client to come up with a package that benefits everyone.
3. Alternative Lending Works with Any Collateral
Since hard money and bridge loans are offered based on collateral put forth by the borrower, it is commonly believed that just about any collateral will do. Unfortunately for clients, that is not the case. Alternative lenders have to look very carefully at collateral in terms of its value.
We will publish another blog post with a bit more detail into how we look at loan-to-value (LTV) ratios, but for now it is enough to know that we have to look at more than just market value when analyzing collateral. We have to assess how valuable collateral is to us in terms of what it will cost to sell that property, how much time and effort would go into selling it, and so forth.
Alternative lending appears to be this mysterious entity in the minds of a lot of people. It really is not as complicated or mysterious as you might think. Have questions? Give us a call and let’s talk.
