Why Phoenix is the epicenter of hard money lending

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Photo Credit: OlegDoroshin

Hard money loans are increasingly gaining popularity, especially among real estate developers and homeowners alike. Most of these property owners are looking to add value to their homes for resale purposes but have bad credit.

This is the case in most parts of the world and Phoenix, AZ is no exception.

Over the past few years, the metropolitan Phoenix has been in the grid for all the right reasons. According to Neighborhoodscout, the Phoenix real estate market value has appreciated by at least 37% over the past 10 years as of 2019. This is mostly owed to the ever-rising population, job opportunities, and a huge demand for housing.

But according to recent statistics, nearly a third of Americans are in bad credit. This could be a worrying trend, considering the effects this could have on the economy.

With this in mind, it’s become difficult for individuals with low credit scores to find affordable financial assistance from banks and credit unions in Phoenix.

Considering that the fleeting and competitive nature of real estate opportunities requires you to act quickly, hard money loans are the most convenient borrowing options for developers and homeowners whose credit history is wanting.

For those who would be in dire need of expeditious funding for a project but have below-average credit scores, collaborating with a popular hard money lender in Phoenix is a viable option.

Investors in Phoenix are choosing hard money loans because they are reliable and convenient to secure. This is added to the fact that the strict criterion used by conventional lending institutions in this Arizona metropolitan is discouraging many willing investors and home buyers.

Before we get to the main juice, let’s start off with a brief look at the real estate investment opportunities one would find in Phoenix, AZ.

Real Estate Investment Opportunities in Phoenix

As earlier mentioned, the housing market in Phoenix looks promising, mostly due to its high population growth. This has caused home prices to go up 8.8% in just one year. The good news is that the home price trends will continue to spike in the coming years.

Any Phoenician will tell you that Phoenix is the best city to call home in the US. Thriving job opportunities are among the major contributors to economic growth, not to mention other factors such as recreation facilities and abundant sunshine for the better part of the year.

While all this is true, funding for real estate projects has been a challenge among real estate investors and developers. Considering the amount of time it takes for conventional banks to approve loans and strict criteria, investors are opting for alternative financing options.

Real estate investment opportunities in Phoenix are fleeting and this means that you need to have an efficient financial lender at all times.

Now to the main squeeze, here are the reasons why Phoenix is the epicenter of hard money lending.

1. Fast Loan Approval

As an investor in Phoenix, you’re most probably looking for a reliable financial solution that will enable you to seize the available opportunities. A loan application for a hard money loan is easy and straightforward. As a borrower, you’ll not need to fill out lengthy application forms or go through rigorous loan approval processes.

Most conventional banks will take weeks to approve a loan. This is enough time to see the subject property grabbed by another investor. When it comes to hard money loans in Phoenix, it only takes minutes for you to receive what is called a conditional approval and 3-5 days for the lender to fund your loan.

2. Credit Scores and Your Income History Are Unnecessary

When applying for a conventional loan, banks will usually dig into your past financial record and your credit history when evaluating the risks. For your loan to be approved, you’ll need to have an above-average or a good credit score, a good credit history, and a stable income to go with it.

The primary focus for a hard money loan is the property value used as collateral. The criterion is pretty simple, as long as the lender is comfortable with the equity value of your property, you’re good to go.

3. Using Equity for Better Deals

As real estate investors in Phoenix, buying in cash will allow you to enjoy so many benefits. You get to negotiate for the best property prices, buy cash on properties on auctions and in addition to this, cash offers are accepted virtually everywhere. All you need is to provide the hard money lender with equity.

With cash from a hard money loan, your offer will always stand strong, especially on properties that attract multiple buyers. Using a conventional bank loan to secure a property only puts the deal in jeopardy or kills it altogether. Not so many hard money lenders in Phoenix are known for pulling out of deals, making it the most reliable funding option for real estate investors.

With a hard money loan, you are able to close escrow considerably fast and you also have the advantage of leveraging more deals.

4. Flexibility

Conventional bank lenders are known for rigidity, strict regulations, and lengthy loan approval processes. While you’ll be needed to meet certain requirements when borrowing a hard money loan, it’s significantly less than that of conventional banks.

Hard money lenders will offer you flexible terms and in addition to this, they will offer valuable insights and advice to their customers.

Working with an experienced hard money lender allows you to create strong financial partnerships that will you help see your current and future projects through. This is because the last thing they want from you is missed payments or unforeseeable issues that have to do with the subject property or the collateral you provide.

While the underwriting requirements will vary from one hard money lender to the other, lenders look at your applications individually. Traditional lenders are seen as unpredictable because they can pull out of a deal when you least expect them to.

This is a great turn off for real estate investors, especially considering the thin timelines and the competitive nature associated with real estate deals.

In summary, convenience, and flexibility are the major reasons most real estate investors in Phoenix opt for hard money loans. Additionally, Phoenix also happens to be the capital of Arizona State, making it another potential reason it’s the epicenter of hard money loans.

If you’re, therefore, in or moving to Phoenix and you’re credit rating is wanting, don’t you worry… getting a hard money lender will be a breeze.



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