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Hard Money Lending is Helping the Economy For real estate investors access to conventional funding through banks for real estate projects has become difficult to obtain. Banks have tightened up their requirements for lending, and any blemish on your record can disqualify you for a loan. Additionally the amount of paperwork required to obtain a conventional loan has become paramount, taking weeks to months to complete the process. Many time critical investment deals are missed due to the length of the funding process. Many of these real estate investors have turned to hard money lenders to fund their real estate projects. Since hard money loans are secured based on the value of the property, credit scores are not as critical. Although credit scores are part of the assessment, the entire credit portfolio of an investor is considered when making a decision. A blemish or two will not hurt your chances, if you are still deemed credit worthy. The major decision factor for lending is in the assessment of the property. Good levels of equity in the property will result in a positive financing decision. As banks crack down on their lending practices, hard money lenders are filling the void for real estate investors, and local economies are benefiting from their involvement.

The continued flow of money for flips as well as new construction projects has kept the local economies moving. Real estate investors are still investing in properties and obtaining construction loans. This in turn has kept construction workers, building supply shops, plumbers, painters, etc. employed in this tough economy. This also trickles down to retail, grocery stores, and restaurants, keeping these establishments in business as well. All of this continued business activity results in a healthier local economy and adds to the local tax revenue. The buying and selling of houses keeps the real estate market active, and provides a new supply of renovated houses for homeowners. More homeowners in the community means more dollars spent locally as well as additional tax revenue. These are all good things for the local economy. Hard money lenders are changing the real estate investment landscape from credit based financing to equity based financing. Many projects that were not financed previously due to credit decisions are seeing new light. Also, equity based financing helps parse out the good deals from the bad resulting in better financing decisions overall. With new money being invested in profitable projects, everyone from the real estate investor to the local restaurant owner are benefiting from a stronger local economy.

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Jason Balin www.hardmoneybankers.com