Why Hard Money Lenders love to lend to contractors?
November 30, 2020
Hard Money Loans are short term, going often for just 5- 7 months. Each new month means new property taxes, insurance payments, and interest rates to other lenders. Building a financial relationship with the contractors means that they are getting the most up to date timetables on repairs and renovations and ensure that they are only working with contractors that they approve of.
Hard Money borrowers looking to rush their project might decide to proceed with contractors who are subpar or make promises they can’t keep. If lenders can choose the contractors that they work with they can ensure that the timeline that they have set for the renovation is one that they can trust.
By lending directly to a contractor, a hard money lender doesn’t have to worry about how their borrowers are ensuring their contractors finish on time. They can simply offer cheaper rates for loans that are completed on time and offer even better rates for contractors that have completed projects on time before. This gives the contractors autonomy to incentivize their employees the way they see fit.
Hard Money lenders are starting to lend money to contractors because it saves them time and gives them more control over the renovation process. While some hard money lenders might want to leave the headache of speaking to contractors to others, some are seeing this as a golden opportunity to speed up their projects and maximize their returns.
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