Although hard money lenders can lend for all sorts of reasons, many of them specialize in real estate investments. That being the case, a question they hear most frequently is this: how fast can I get a hard money loan for property investing?
There is no simple answer. Hard money lenders typically approve and fund loans much quicker than banks. But there is no hard-and-fast timeline lenders adhere to. A few days is about average. Yet in some cases, approval and funding could take a week or more.
Why They Are Faster
The good news about timing a hard money loan is that lenders are faster than banks and credit unions. Because hard money lenders are private lenders rather than financial institutions, they do not have to play by the same time-consuming rules. They can move more quickly.
A typical hard money lender doesn’t utilize multiple layers of approval and underwriting. Paperwork isn’t shuffled from desk to desk waiting for each person to do their thing. In addition, hard money lenders do not have to run exhaustive credit tracks or verify income. Most of what slows banks down does not apply to private lending.
Things That Can Impact the Process
The speed at which a hard money lender works is intrinsically tied to its approval and funding process. That process can be impacted by many different things. Here are just a few examples:
- Lack of Details – Hard money lenders like to see complete proposals with all the details laid out. A lack of details could require a second effort from the borrower. The process ceases until the proposal is updated or replaced.
- Questionable Collateral – Hard money lenders make their approval decisions based largely on collateral. If a borrower offers a questionable property as collateral, it could slow down the process.
- No Exit Plan – Hard money lenders expect to see exit plans included in a borrower’s proposal. It is hard for lenders to see their way to approval without one. So no exit plan slows things down.
Funding in 24 Hour Is Possible
As previously stated, there is no hard-and-fast timeline hard money lenders adhere to. That being said, getting a loan funded in 24 hours is entirely possible. Salt Lake City’s Actium Partners has done it more than once. Funding in one business day isn’t the norm for them. However, they can pull it off when necessary.
A couple of years ago, Actium got a call from a desperate client scheduled to close on a multi-family apartment property on the coming Monday. It was Friday morning when he called. The problem was that his bank had backed out of the deal at the last minute. If he wasn’t able to close on time, he risked losing the deal.
Actium sent an appraiser to look at the property later that day. He gave his approval and loan documents were drawn up at the office that afternoon. Actium sent both the documents and funding to the title company on Monday morning.
Performance Will Vary
It goes without saying that performance will vary from one hard money lender to the next. Not every lender is capable of doing what Actium does. Still, all hard money lenders can work faster than banks because of the way their businesses are structured.
How fast can you get a hard money loan for a property investment? That depends on the lender you choose to work with. Unless you choose a terrible firm, you’ll get your loan funded a lot more quickly than you would through a bank.
