Real Estate investing is one of the primary economic engines in America. With scrutinizing and stringent underwriting of conventional loans now prevalent, Hard Money loans have become a real estate investors financing preference. This Blog discusses the 7 ways that Hard Money Loans boost the economy. To fully grasp the realm of economic benefits from Hard Money Loans (HML) a view from the Investors and Lenders perspective will be highlighted.
Real Estate Investor Stimulants:
- Business Purpose Loans: When the HML is for a business or investment purpose, the new money puts borrowers to work in the recipient business and provides working capital that is used for hiring or new equipment. We recently made a business purpose 2nd loan to a Couple that owned a local performing arts theater. The loan was used to purchase theater lights, sound and stage equipment. My children and I visited the theater and we and the entire audience saw a wonderful Play. The loan boosted the local economy with the purchases and also provided a stimulant to the Arts and Education.
- Fix and Rent Loans: These loans enable an investor to fix up and then rent a property for income. This rental income provides much needed cash flow for investors to live and make payments.
- Fix and Flip Loans: Fix and Flip loans create construction jobs, increase sales at housing supply stores like Home Depot and Lowes and improve neighborhoods. When an Investor/Rehabber is finished with a Fix and Flip interior, exterior and landscaping, the entire community around that house benefits from the upgrade and the new owner’s viability.
- Housing Market Liquidity: Most traditional buyers don’t want to hassle with dilapidated properties and the work needed to bring those properties to livable conditions. Investor HML’s provide liquidity to the real estate market and facilitate the renovation of undesirable properties.
- Foreign National Loans: A Foreign National loan provides a mechanism for foreign investment in U.S. Real Estate. These investments reinforce demand and buffer wild price swings.
Real Estate Lender Stimulants:
- Trust Deed Investments: Trust Deed Investments offer 9%-12% current income returns to Lenders. This cash flow stimulates spending, further investment and travel that keep the local economy humming. Many retirees are searching for replacement and dependable income that can help them enjoy their retirement. Trust Deed Investments fill this need for a secured high yield income.
- Portfolio Diversification: A Non-Correlated to the Stock Market Trust Deed Investment helps lenders survive the volatile and wild swings of Wall Street instruments. A Trust Deed’s monthly cash flow pays the bills and allows for a better night’s sleep. A Lender’s portfolio is truly diversified and better positioned for long term success with Alternative Investments like Trust Deeds that have less correlation to the Stock Market.
Hard Money Loans keep the economy humming. Please let us know your own story of how a Hard Money Loan has helped you boost the economy.