06/14/2013 09:18
In Southern California real estate is king, and as a real estate developer you know that there is an absolute sea of money to be made out there. The problem is, so do a lot of other people, and that has increasingly driven up the price of doing business in the field of real estate across the region.
That's why more and more real estate developers have to turn to loans for real estate investors. Orange County, for example, has become a hotbed of money changing hands as investors strive to get a piece of the skyrocketing real estate market there. Unfortunately, when it comes to real estate investor loans, Orange County is also increasingly difficult to get reasonable loans out of banks for. For this reason, Orange County real estate investment capital firms have taken a larger interest in development in the region.
Capital real estate investment money has increasingly come in the form of hard money loans. In Los Angeles, hard money opportunities are increasingly available for the cash-strapped investor and developer. Hard money loans for real estate investors can be had at, yes, larger interest rates than loans from banks, but on the other hand, they can be had more easily.
Sometimes, you've got too much money in the air, and banks are skittish about loaning to you. Yet that single loan could be the difference of quite a bite of money on an investment's return, and as a result, it may be cost-effective for you to pay the additional interest on a hard money loan if you think the investment will pay off. It comes down to your intelligence and experience as a real estate investor: will the investment be worth it?
If you take out a hard money loan, you need to be certain that it is, because a hard money loan interest rate can sometimes be quite high. The expectation is that you will be able to pay the loan back, because it is not a reasonable long-term loan. Paying it off on interest alone is just not a good strategy!
It isn't hard to find a reliable hard money lender for real estate investors in Los Angeles and Orange County, though. Look around online and you'll be able to find lenders who offer relatively reasonable interest rates; look into client reviews of their dealings with those lenders. Remember, working with a lender is about more than just the interest rate. If it turns out there on the shady side, avoid doing business with them!
