Because real estate is interconnected with so many other industries, it’s not surprising that the real estate market is going through some ups and downs these days. Some people who own certain types of rental properties or have certain types of commercial tenants are finding themselves in tight spots when renters can’t keep up with their monthly payments. If you find yourself in such a situation, you might be able to negotiate with your mortgage lender, but many property owners are finding this to be a dead end after following a long rabbit hole. Fortunately, hard-money loans offer a viable alternative.


Why Property Owners Face Challenges in California

There is no doubt that many people are facing tough financial challenges these days, and property owners are no exception. 


Lost wages and revenue

About 3 million California residents are unemployed, and about 1 million of those are renters. This naturally impacts their ability to pay their rent on time and in full. With about one in seven households struggling to pay their rent, many landlords are seeing the impact. Even though the unemployment rate is improving, it’s still in the double digits, and many tenants are still struggling to keep up.

For landlords with commercial tenants, it depends on the types of properties you own. For example, many bars, restaurants, and salons are suffering because they can’t bring in the same revenue as before. However, if your properties are home to essential businesses that are thriving during this time, collecting rent payments might not be an issue. 


Tenant protections

The recent tenant and landlord protection legislation prevents landlords from evicting residential and commercial tenants through Feb. 21, 2021, because of missed rent payments due to COVID-19. Between Sept. 1, 2020, and Jan. 31, 2021, tenants must pay at least 25 percent of their rent to qualify for this protection, but for most property owners, that’s not enough. It’s true that tenants aren’t completely off the hook—landlords can start recovering debt in March, but what about the months in between? 

Small landlords also benefit from anti-foreclosure protections, but the amount they are receiving from tenants simply isn't enough. What if you are a real estate investor who owns multiple properties, apartment buildings, or commercial properties with non-paying tenants? 


Rent discounts

Many landlords are lowering rents for a period of time for existing tenants and offering discounts in order to entice new tenants to rent vacant spaces. Incentives include free rent for one month, free parking, and more. Such offers might get new tenants in the door or keep existing renters in the building, but these types of concessions put a dent in landlords’ wallets.


How Hard-Money Loans Can Help

Hard-money loans are based on your equity in the property, not on your personal financial history or credit score. This means that if you have enough equity in the properties you own, you can get a hard-money loan to cover the gap, even if you can’t secure a traditional bank loan. 

A bridge loan provides short-term capital to help you cover the mortgage and related expenses until you’re able to generate more rental revenue. Cash-out refinancing allows you to get a new loan for a higher value than that of your existing mortgage and keep the difference in cash. Both options provide immediate cash flow so you can cover your monthly expenses.

Socotra Capital Is Here for You

If you have tenants who aren’t able to keep up with their rent, Socotra Capital allows you to use your equity to secure cash. Hard-money loans close fast—think days, not weeks—so you can keep up with your monthly payments even if your renters can’t. Apply today to get started.