If you are looking to invest in commercial real estate or in your own home, you might consider taking a look at how money lending works. Many people don’t realize that there is a difference between hard money lending and hard money loaning. And you should understand both types before making a commitment.
Hard money lending refers to private moneylenders who provide short-term financing, usually for less than $100, to investors. A close call with a private investor may attract interested borrowers and cause the sale of your property to move much faster than other buyers with more traditional, more conventional financing. The advantages of this kind of financing include a rapid turnaround time and often a lower interest rate on the total amount lent. There have been new regulations recently regarding this type of lending, however, and it’s important for the borrower to understand how they affect their investment.
New regulations implemented in 2021 require money lenders to take extra measures to protect the borrowers from unscrupulous money lenders who will charge excessive fees, take too long to repay the loans, skip payments, or otherwise not meet the terms of the agreement made between the borrower and the lender. These laws were designed to prevent predatory lending practices. Because new regulations are in effect, it is likely that this type of lending will become even more competitive. If you are interested in a private hard money lending business, you may want to get in touch with local professionals who know how to find prospective buyers for your properties. There are also plenty of resources online to learn more about this exciting business.