• Kings of Capital

Asset Based Lending for Real Estate Investors

First time investor? Here is why you should look into Asset-Based Lending:


When it comes to saving money or growing your equity through investments, there is no better starting point than Asset-Based Lending.


As a Hard Money Loan, Asset-Based Lending allows for you, the borrower, to acquire a lot of money from a private money lender with little restrictions in the form of documentation or credit score. Given these characteristics, an Asset-Based Loan can be viewed as a much more accessible form of financing than your typical bank mortgage.


Unlike a traditional bank mortgage, an Asset-Based Loan is based on your property’s appraisal value and the loan you receive is based on such, meaning that your property serves as collateral to the lender.


In addition, the approval process is much easier and faster as there is less documentation needed to get approved and your lender will typically be quite experienced within the real estate market such that they can provide good strategic advice on top of a high quality and secured Asset-Based Loan.


Overall, Asset-Based Lending is a common form of financing for experienced real estate investors and it is an excellent starting point for first time investors. Accordingly, here are some reasons for why Asset-Based Lending is the smart choice for first time investors.


Risk Neutral Investment: When applying for a loan, you can get either a secured or an unsecured loan. With Asset-Based Lending, your loan would be secured to your asset (or real estate property), and it would act as collateral if you were unable to pay back the loan.


This establishes a clear result for if the loan were to default. As a result, interest rates are higher, meaning there is greater risk. However, this risk is somewhat neutralized by the property serving as collateral if the project fails.


This risk is also neutralized by the fact that most Hard Money Loans are only at a 70% LTV Ratio for Hard Money Lenders, meaning there is less money given based on your property. Additionally, the impact of higher interest rates are neutralized by the short term timeline of the Hard Money Loan, which typically lasts around 12-24 months, as the financing does not last long enough for the interest rates to produce huge overbearing costs. As a result, you can acquire a fair amount of money for your real estate investment, but it comes with some specifications so as to keep your project on track.


Easier to obtain: Another benefit of Asset-Based Lending is that it is easier to obtain than an unsecured loan or lines of credit. There are also fewer documents to sign and deal with as the loan is strictly tied to the asset’s value. There are also typically fewer debt covenants for a borrower to deal with as there is a clear goal in mind with the loan and the project you are going into.


Comparatively, an Asset-Based Loan will be approved within 14 days whereas a bank loan might take months. Not only is it easier and simpler to get approved but you are also lending from people who have first hand experience within the real estate investment world such that they can give you knowledge and resources that can help you along the way. Compared to other lenders, a private lender is much more streamlined and accessible for real estate investors whether it is their first-time or twentieth time.


With Asset-Based Lending you can grow your wealth through reliable means. By investing in real estate, not only will your equity grow over time through a dependable source, but it is a great starting point to expand your equity’s potential. You can develop good relationships with your lenders, who are available for you at any time, and they can help you work through your project and make sure that you are getting the best value and profit for your plans. With Asset-Based Lending comes the mindset that you can make more money at a quicker and more reliable pace than by simply saving it and living cheaply. By choosing to acquire a loan backed by an asset, you can collect funds that understand your asset’s true value and complement your plans with minimized costs working towards maximum potential.


As your equity grows, so will your money mindset as you realize the massive potential in using Asset-Based Lending to acquire equity through the real estate market. Let us get you started on your investment journey! Book a meeting with our team today.


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