It is safe to say that the majority of the hard money loans we make go to real estate investors. Our clients invest in all sorts of property, from multi-family rental units to commercial office buildings. They find real estate lucrative for a variety of reasons as well. As to our part, we are just pleased to be able to provide funding.

If you are new to real estate investing and hard money lending, this post is for you. It will attempt to explain why people invest in real estate, based on the comments we hear from clients. Note that this post is not an endorsement of real estate investing in any way.

Income Generation

Property investors can purchase properties they will hold on to or flip. We will not talk about flipping because we do not service that particular market. That being said, many of our clients invest in properties they intend to hold and rent. It might be an office complex for one client or a campus of multi-family apartment buildings for another.

The benefit here is income generation. Both types of investments generate what is known as passive income. A hard money loan can help the investors secure the property, while the promise of passive income makes it possible for him to secure traditional lending later on. And once financing is completely paid off, the property continues generating passive income month after month.

Leveraging Opportunities

Real estate is also attractive to investors because of its leveraging opportunities. In other words, investing in real estate should generate equity – the difference between the value of a given property and the remaining amount on its mortgage. That amount can be leveraged to invest in new opportunities.

The unique leveraging aspects of real estate make it possible to gradually build a very strong portfolio over time. The more properties in an investor’s portfolio, the more equity there should be. Theoretically, equity could reach the point where a property investor no longer needs third-party funding. The combination of equity and passive income funds future investments.

Real Estate as an Inflation Hedge

A less talked about benefit of real estate investment is the ability to use it as a hedge against inflation. Investments considered inflation hedges more or less protect against decreased purchasing power during times of inflation. In order for investment to be an effective hedge, its value has to remain stable or increase even during inflationary periods.

Because real estate historically increases in value over time, it is considered an inflationary hedge. This is not to say that property values don’t go up and down in response to market conditions; we know they do. But the history of real estate is such that investors need only hold on to their properties through difficult times and wait for prices to go back up. Meanwhile, any rental income derived from his properties remains stable. Thus, hedging against inflation is achieved.

Timely Funding Is Key

Regardless of the reasons an investor chooses real estate, timely funding is key. It is the name of the game in real estate. Investors look to us to fund their projects as quickly as we can, thus reducing the risk of losing out on a deal. We are proud to say that we can fund in as little as 24 hours when the need is there and the circumstances are right.

If you are looking to fund your next real estate investment, we would be thrilled to speak with you. Let’s talk about how a hard money loan can help you achieve your investment goals.