INVESTOR RESOURCES
PRIVATE LENDING
Hard Money Isn’t Cheap
HOW WE COMPETE AND HELP REAL ESTATE INVESTORS OVERCOME OBSTACLES
Content Provided by Ignite Funding
t doesn’t matter if you are looking to finance a home loan
be borrower focused, which makes them notoriously slow. They are also restrictive on the phases of real estate development they will lend on and are extremely averse to increased liability, even at the expense of a credit worthy borrower with a proven track record. Below we go into greater detail on how private lenders like Ignite Funding help real estate developers overcome these obstacles by strategically imple- menting hard money lending into their best business practices. BANKS HAVEAVERYLOW THRESHOLD FOR LIABILITY. As we all know, banks are juggling a portfolio of loans on all different types
of assets, not just real estate develop - ment. Banks also rely on their ability to generate loans that are qualified to sell in the secondary market. This means that if the borrower defaults and it is beyond the bank’s ability to achieve recourse on the loan, they can remove that liability from their book of business. However, due to federal regulations, banks are restricted in the amount of defaulted loans they can have on the books which affects their ability to sell loans in the sec- ondary market and originate new loans. Juggling all of these different variables has greatly influenced the amount of liability that banks are able and/or willing to take on. While this summation does not cov- er the entire scope of variables and
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or a commercial real estate devel- opment, everyone wants to pay the lowest rate possible on borrowed money. It’s no secret that traditional institutions, such as small, medium, and large banks, are typically able to offer much lower rates than private lenders like Ignite Funding; so how is it that we remain an integral cog in the wheel of the lending industry? Unless you work in the real estate development industry as a develop- er or a lender, you would not realize how many hurdles and caveats that borrowers can face when seeking or utilizing traditional financing. Banks have to be meticulous with their lending practices and tend to
76 | think realty magazine :: june 2021
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