A lot of people believe plenty of inaccurate things about the hard money industry. Thanks to the omnipresent internet, the world is awash with misinformation about what we hard money lenders do. That is unfortunate because hard money proves itself a valuable tool time and again. It is too bad more people don’t know the truth.
How much do you know about hard money and the lenders that provide it? If you don’t have any first-hand experience, the truth about hard money lending just might surprise you. Perhaps we should dispel some of the myths you may have heard by revealing truth. That would drive home the point nicely.
We Are Not All Loan Sharks
Hard money lenders are frequently accused of being loan sharks. We are accused of being predatory lenders interested in doing nothing more than charging exorbitantly high interest rates on very expensive loans. But it’s not true. Hard money lenders are legitimate businesses operated by people with extensive experience in finance. Our goal is to help clients, not ‘get’ them.
It is true that hard money and bridge loans are more expensive than conventional loans. But there are legitimate reasons for this. First, hard money loans are riskier. Lenders have to charge more to cover that risk. Likewise, hard money and bridge loans are short-term instruments. All short-term loans require higher interest rates to generate an adequate return.
We Don’t Want to Foreclose
Another common myth about our industry says that hard money lenders want their clients to default so that they can foreclose on their properties. Such thinking maybe great material for Hollywood films or streaming TV series, but it makes no sense in the real world.
Foreclosing on and selling properties takes time. It costs money. It distracts from what we do as a legitimate financial services provider. Hard money lenders go to great lengths to ensure that the deals they fund are at very low risk for default. We do not want lenders to default because we do not want to go through the hassle of foreclosing.
Hard Money Is Not a Last Resort Option
The idea that hard money lending is a lending option of last resort has been attached to our industry for decades. But any statement to that effect is false. It is no truer than saying public buses are a transportation option of last resort.
Public buses are not a last resort, they are but one option for getting from point A to point B. In some cases, they are the best possible option. In other cases, they are the worst. People looking to get from one point to another will generally look at all their options before deciding which is most appropriate for the current circumstances.
Hard money lending is similar in that regard. Some circumstances dictate that traditional bank funding is the most appropriate choice. Other circumstances dictate that hard money is the better way to go. It is not a matter of one option being preferred and the other being a last resort. It is a matter of determining which funding source is most appropriate for the current need.
If you are new to the concept of hard money lending, do not believe everything you read or hear. The internet has given a lot of people a lot of opportunities to paint an inaccurate picture of our industry. You can get the real scoop by sitting down and talking with us. Perhaps we can provide the hard money or bridge loan you need to complete whatever project you are working on.
