3 Potential Disadvantages Of Using A Hard Money Lender in CA

Should you get hard money loans for your real estate investing? In this blog post we’ll answer that question for you by sharing 3 potential disadvantages of using a hard money lender in CA to help you decide whether hard money loans are right for you.

Real estate investors prefer not to tie up their own capital in a real estate deal but instead they’ll use other money sources to help them do deals. There are many money sources, and hard money lenders are one such source.

There are good hard money lenders out there and hard money loans are a common way to invest. However, every investor needs to decide for themselves if a hard money loan is right for them. To provide you with a balanced view, consider these 3 potential disadvantages of using a hard money lender in CA.

3 Potential Disadvantages Of Using A Hard Money Lender in CA

Disadvantage #1. Pay Back With Interest

A hard money loan is just that – a loan. And loans come with interest, which is the lender’s way of making money for the service they provide. There’s nothing wrong with them charging interest for the loan but you need to be aware that the interest exists and you need to factor it into your accounting. Are you prepared to make principal plus interest payments?

Disadvantage #2. Need More Money

Another disadvantage of hard money loans is that it’s not a bottomless pit of money. You need to figure out ahead of time how much money you need and then you need to borrow that amount of money. Problem is, what if you counted wrong and need more? Either you go back and apply for more or you look somewhere for the extra money.

Disadvantage #3. Return On Investment

When you borrow money and have to pay it back with interest, this could potentially delay or reduce your return on investment. For example, if you borrow money to fix up a rental property and then rent it out at $500 a month, any hard money loan repayment of $500 a month will prevent you from seeing any return until the loan is paid off. (These are just example numbers and of course you should structure every loan in a way that makes sense for you.)

Summary

Hard money loans are one of many investment tools. They have many advantages to help real estate investors run and grow their business by doing more deals. And just so you know – we actually like hard money loans and believe in them. However, it’s important for every investors to know all the facts up-front, and this information about 3 potential disadvantages of using a hard money lender in CA will help you figure out if they’re right for you.

Need hard money for your real estate investment? We make hard money loans. Click here now and fill out the form or call our team at 949-625-4533

Joe

Broker/Realtor/Investor/Mentor (41 years experience) Specialties: Buyer's Agent, Listing Agent, Foreclosure, Short-Sale, Property Management, Landlord I'm a Full Time Real Estate Professional, house flipper and mentor to many of my clients. I am here to help you get top dollar for your home or get you the best price for a home that you are going to live in. I have over 40 years of real estate experience for you to draw on and actively list and sell over 20 homes a year. I have sold over 600+ homes in the last ten years alone. I am a very skillful negotiator and will work diligently to help you realize the best possible price when buying or selling your home. With my Exclusive Home Acquisition & Sales System, I can find the Right Home for You! I have access to homes no other Realtor will show you. I can show you how to save an average of $10,000.00 on the purchase price. We will find a home that fits your needs, in a neighborhood that suits your style. If you are selling your home then I can bring all the professionals to you. I always include professional photos in ALL my listings. I have contractors standing by to assist with those upgrades if needed. I can also quickly get you ALL CASH offers for your home if you desire. My marketing surpasses all other agents. It begins with extensive internet advertising to hundreds of websites throughout the world. I do direct mail marketing for you home and also knock on doors in your neighborhood when I am holding an open house. I hold you home open to expose it to as many buyers as possible. My Exclusive program is designed to sell your home for Top Dollar in Any market. I am an experienced flipper here in Orange County and therefore can offer you my over 40 years of real estate experience. The information is available to you at no charge! If you like what you see, please call me and setup Your Free Consultation.

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