As the world’s largest asset class, the value of all the homes in the United States was estimated to be $31.8 trillion, according to a Forbes analysis earlier in 2018. This fact, of course, means that the country’s lending environment is among the most competitive in the world as well. Staying relevant means offering alternative sources of funding such as hard money loans or private lending options. Not only can doing so provide the quick money a lender often needs to close on a prime property quickly, but it can also help those properties that don’t otherwise fit into the confines of a conventional loan.
Implement These 3 Things to Stay Relevant
Even within the hard money lending industry, competition is heating up. You can win in spite of the stiff competition by implementing the following three key elements:
Today, technology is such an expected part of everyday life that lenders rely on automated products to streamline their loans. Not only does technology provide a way for lenders to organize the vast amounts of information they must have, but it also allows borrowers to input their own loan data, make payments and more.
It’s true that interest rates are slowly rising after having been low for close to a decade. That being said, hard money lenders tend to charge borrowers a high interest rate to offset the increased risk that they personally take on. In order to offset that, such a lender could decrease the number of points they charge.
Because hard money lenders aren’t bound by the same rules as traditional lenders, they can take into account other factors. This includes a more flexible loan-to-value (LTV) ratio that takes into account the borrower’s experience with a particular project.
The private lending industry continues to innovate and create a winning environment for borrowers to fund properties of all types.