What is Asset Based Lending for Real Estate Investors

Asset Based Lending

When a real estate investor obtains financing for a property based on the borrower's assets, this is referred to as asset-based lending.

In asset-based lending, liquid assets are assets that may be converted to cash in a relatively short amount of time, such as cash or marketable securities. A person's income, stocks, bonds, mutual funds, and cash on hand are all examples of liquid assets.

However, asset-based lending is not usually associated with liquid assets. The asset is more frequently known as property. In summary, asset-based loans demand collateral, and real estate investors frequently employ asset-based loans for fix-and-flip homes, distressed property improvements, or long-term leases. Asset-based loans are almost often for business purposes rather than ordinary homeownership.

Benefit of Asset Based Lending

However, one big benefit of asset-based financing is that it is far faster than dealing with banks and traditional loans. It also demands less severe bank criteria. As a result, asset-based financing provides the benefit of faster funding and approval. An asset-based loan can be approved in a matter of days, if not a week.

When a person does not qualify for traditional financing, an asset-based lender may be the best alternative.

When Should a Real Estate Investor Use Asset-Based Financing?

People who want to invest in real estate but have bad credit or have been in foreclosure might use asset-based financing. Furthermore, if a person has had trouble obtaining financing from a traditional bank, asset-based lending may be the best answer. Lenders frequently conduct direct evaluations of investment properties, and asset-based lending is popular among investors seeking speedy financing.

Liquid Logics Loan Management

It is crucial to choose the best lenders to work with on your real estate journey. Are you an investor looking to get started in real estate? If so, you've come to the right place.  Liquid Logics offers a true cloud-based SaaS full-cycle lending software solution. Contact us to learn more about our services and see what you're missing out on for your business!

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