Benefits of Soft Money Loans for Investment Properties
Soft money loans are perfect for investment properties for a variety of reasons.
What are Soft Money Loans for Real Estate Investors?
Soft money loans have attributes of both hard money loans and traditional money loans. There are numerous benefits for borrowers when funding a real estate investment property. For example, soft money loans are usually longer-term but close at a much fast speed than traditional loans.
Additionally, since the loan is based on the real estate investor’s credit score, liquid assets, and past investment experience - there is more underwriting to provide more security and lower rates.
To purchase an investment property, more often than not, real estate investors work with private money lenders for financing. Soft money loans are the leading loan solution for prospective borrowers.
The Benefits of Soft Money Lending for Borrowers
With soft money loans, the maximum LTV is higher than most traditional loans. An LTV is a Loan-to-Value ratio. It is calculated by dividing the amount of money borrowed by the value of the property’s appraisal. Both the value of the property and the money borrowed can fluctuate so the LTV can fluctuate. Also, the higher the LTV the less the borrower is required to put down.
Soft money loans tend to have a maximum LTV of 85 percent while traditional loans have a maximum LTV of 70%. Also, soft money loans don’t usually have private mortgage insurance (PMI).
The second benefit and probably the largest benefit is the timeline for soft money loans. While traditional loans from institutional lenders may take months, soft money loan application processes are much faster. Soft money loan applications can take as little as 2-3 weeks to process and you can have your money in that little time.
When you are trying to purchase an investment property and the deal will close in a month, you can’t wait for traditional loans. It will be too late. If you have a tight deadline on your investment property and you want a quick turnaround, soft money loans are the best option.
The third benefit is that an investment property borrower doesn’t have to worry about income verification. You don’t need to show your pay stubs and bank statements. Another bonus is you don’t need to show your taxes on your income or assets. All you need is a higher credit score (above 650) and you need to provide your credit history, liquid assets, and provide documentation of your previous investment experience.
These four things are all you need and you can be approved in 2-3 weeks and get the necessary money for your investment property. This is great for an investment property investor who may not have a stable cash flow. This may discourage traditional bank lenders from providing you with a loan, but for soft money loans, this isn’t an issue.
The fourth benefit is the variety of soft money loans. You can use them on a variety of investment properties. Here are some options: Single-Family homes, Condos, Townhomes, Multi-Family Homes, Commercial properties, Mixed-Use properties, Office properties, Retail properties, Industrial properties, Warehouse properties and so much more.
Due to the great perks of this loan program, soft money loan programs tend to be very exclusive. There are so many types of loans, so you want to make sure soft money loans are the ones for you. There are qualified mortgages and non-qualified mortgages and it can get confusing. This would be why it is important to reach out to a private money lender who has a lot of experience with non-qualified mortgages. A private money lender can guide you through the entire process and help you decide if soft money loans or another home loan may be perfect for your investment properties. But as mentioned previously, there are plenty of benefits of soft money loans for investment properties.
Soft Money Lending with Kings of Capital
As a private money lender, we aim to help our clients no matter what by providing them with the best options for their investment property.
We want to ensure that whoever comes to us leaves the experience feeling refreshed, informed, and inspired to do business with me and continue their venture into real estate investing.
Our team has a large amount of knowledge and expertise about the real estate industry and we want to share what we have learned! A Kings of Capital, we believe that anyone can reach the heights that we have accomplished.
We believe people can achieve anything that can be visualized and our team can visualize how to grow one’s equity through real estate. We are passionate about giving our clients with the knowledge and skills to become successful in the real estate space - by also providing the leading solutions in private money lending with the most innovate private loan programs available.
Through soft money lending, we can still offer private lending solutions in effective and efficient means despite working within a less common loan alternative. Soft money loans allows us to provide affordable real estate investment ventures to anyone who wants to achieve it.
By lowering the barrier-to-entry for real estate investment, the people who continually get rejected by banks and hard money lenders can finally have a chance to grow their wealth to an equal proportion.