If you’re a real estate investor – or if you’d like to become one – you need to know the differences between asset-based lenders and traditional lenders. This guide explains. 

What is an Asset-Based Lender?

An asset-based lender is a lender that gives business loans using a property as collateral. Generally, these lenders only work with real estate investors; they’re not here to help people become homeowners – at least not directly. Asset-based lenders give investors the money they need to improve a property that the investors intend to turn around and sell.

Related: 3 critical tips to read before your first flip

Why Choose an Asset-Based Lender?

Asset-based lenders operate differently than traditional lenders do. One of the biggest differences – and advantages for investors – is how quickly you can be approved for a loan. With a traditional lender, it can take 30, 60 or even 90 days (or somewhere on that spectrum) for loan approval; obviously, that’s far too long for a serious investor to wait. Asset-based lenders can provide loan approval and funding in as little as a few days, which is ideal when you need to jump on a great deal.

Related: 4 super-smart ways to enhance a small house

Will You Really Have the Cash to Buy Right Away?

Your loan could be fully funded in just a matter of days, which makes your offer just like a cash offer. That means home-sellers may be more inclined to work with you than they would someone who had to wait for a bank to come through.

Do You Need a Hard Money Loan?

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