The Hard Money Rehab Loan

In the real estate market today, there are several ways to make money; one of them is by funding the hard money rehab loan. The conventional rehab loan is a real estate loan that will allow someone to by a property that is some what run down or a fixer upper, do the repairs and sell the home for more than the original cost, pay the rehab loan off and pocket the profit. This is referred to as a “flip”. Flipping of properties is now again becoming quite popular in this market. The hard money rehab loan comes into play when the person buying the home to be flipped is not in a position to qualify for a conventional rehab loan.

The hard money investor and the real estate flipper can build a quite close relationship doing business in the market today. The hard money lender is a perfect partner for a person who is good at both getting property at a bargain and then fixing it up. Both of these resourceful individuals can make a large sum of money on each investment. The rules of the transaction are basically, buy low and sell high.

The hard money lender will make sure of a couple of things to guarantee his investment. The first thing is to make sure that the real estate flipper will never pay more than 70% of the present value (sometimes this can be a little more because of the repaired value) of the property. This way, no matter what happens, the lender will get his money back. The second way the investor will make good on his money investment is in the fees for the loan. These fees can be 5% to 7% of the loan and will be in his pocket in a matter of a couple of months if things go correctly.

The person that is flipping the home will be making a hefty profit and be glad to pay the high fees on the hard money rehab loan. Just look at an estimate. If the home is worth 100K and he buys the home for 66k, including fees, and then sells the home 2 months later for 86k, he will make at least 17k clear after his added expenses for the rehab. Not a bad deal for 2 months work. You will begin to see more and more of the partnership of the flipper and the person making the hard money rehab loan.

Hard Money Financing Addresses Your Loan Dilemna

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Business loans, commercial loans and many other financial needs are hard to get satisfied in today’s economy unless you know how to search for hard money financing. Many banks that will approve the traditional type loans are extending them at somewhat higher interest rates if they grant approval at all. Unfortunately, people needing quick loans for unique non-conforming needs can’t rely on the banks. You can however, look for a higher success ratio when apply for a hard money loan. There is a significant pool of investors and investing companies at your fingertips. They are experts when it comes to providing flexible options and solutions for your hard money financing needs.

When you work with a company to fulfill your hard money loan requests, you are associating yourself with companies made up of the key investors. This alone will get your application evaluated quickly and an answer on approval extremely fast. It is especially beneficial if your situation is highly complex as the lenders are use to financing in this type of higher risk loans of this nature.

Many hard money financing companies thrive off of accepting profitable requests for loans. When you submit an application that shows your plan will easily come to fruition, you will realize profits, and can pay back the loan within the agreed terms it is nearly a sure fit for an approval and a quick close.

The advantages to requesting a hard money loan is not only that you have a greater chance at approval, but, you have a great chance at meeting deadlines that you may be facing. Many lenders are able to rapidly grant requests from small amounts in the lower hundred thousand’s up to $10,000,000 and some even more.

The good news about securing this financing is there are enough resources to help you shop around and compare interest rates, points, criteria, and loan amounts. It is easy to research the types of loans that a specific company specializes.

Applying for a hard money loan does not generally require you to have extraordinary credit. There are a few important factors lenders do take into consideration when reviewing your application. Having collateral, a strong proposal on how the money will be used, demonstrating your plan is easily achievable and will result in gains not losses, and having a higher net worth, are factors in the decision making process. Embracing these basic fundamentals will help you get the hard money financing you require to reach your goals


Hard Money Lenders Process

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Hard money lenders are usually individuals who have money to invest and are looking for a healthy return on their investment. These are private hard money lenders who offer different types of loans that are for a short term so credit history is not as important as other considerations. Collateral is more likely their concern or high equity in property. Private hard money lenders are not that hard to find but you will probably need to be ready to agree to points on property, high interest rates and large down payments.

One method to locate money lenders who offer hard money loans is simply to approach these individuals and ask about the possibility of them making you a private money loan. Give them full details about the investment that you want to make and how you will be planning to repay the money that they lend to you. This will in many cases result in an investor making a hard money direct loan to you that they would normally not have considered.

There is a possibility that one of your friends or family members may be in the position to fund your venture. Even though they are not hard money lenders, because of your relationship with them you may want to approach them first. Remember, both you and the lender will make a profit on your venture. Once they understand that you are offering collateral and a generous interest rate they will probably be excited about earning some money on their money.

There are a lot of opportunities to be found online as well. Private money lenders will come up as a match to your search criteria and should have contact information. You can speak with these lenders and share the details of the venture you are considering and the terms of the personal loan that you want. Some sites offer a list of hard money lenders. Another method of finding a lender is to place an ad in your local newspaper explaining that you are in search of a loan and that you will pay it back with generous interest and provide collateral. This is a good way to find investors who are looking to make a quick return on their money. When they hear your terms they may just be willing to offer hard money financing. If you are contacted by a potential lender, give them all the details of your venture and offer collateral plus a high interest rate on their loan to you. This may just end up being exactly the funding you need. Be sure you can easily meet the terms that you discuss and have a professional check your contract before you make a commitment.


Commercial Hard Money Loans, Sign Over Your Real estate

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When someone experiences financial difficulties and need to borrow money, especially large amounts of money, they can apply for a commercial hard money loan. If they have a poor credit rating already they may find that they have few options when it comes to getting needed funds. Many who are in financial distress seek out a loan that is large enough to pay off many smaller debts. These can be obtained from hard money equity lenders who must determine if the property in question has enough value to be worth the amount requested in a loan. This type of loan enables a borrower to have just one larger payment that most likely will result in paying out less in overall interest in the long run. A commercial hard money loan will give that borrower a chance to catch up on their bills.

Obtaining a loan based on the value of property is called a hard money mortgage and can prove beneficial to people who own property as an asset but do not wish to sell it. Often times a private money loan is merely a private lender who wishes to invest in real estate in exchange for the interest he will gain during the lifetime of the loan. They will be willing to lend based on what the property “loan to value” is at the time. As an example, if the property is valued at one hundred thousand dollars, the largest amount the borrower can expect to receive is about sixty five to seventy percent of that value, or sixty five thousand to seventy thousand dollars.

Finding parties interested in lending commercial hard money or fast hard money for those in need can be considered a last ditch effort when money is needed quickly and the real estates owner does not wish to entirely give up their property. They borrow based on the value of the real estate and risk losing it if they cannot repay the money borrowed in a set period of time.

Owning property can be an asset for some but often they consider themselves to be real estate poor due. When the values on real estate “crash” as they have several time in the past, commercial hard money lending can be a risky business for lenders. In the early nineteen eighties and again in the early nineteen nineties property was devalued considerably but eventually came back up. This made the “loan to value” rates lower overall to protect investors.


Becoming A Hard Money Lender

Right at the core of a good real estate investment plan is becoming a hard money lender. There is always danger involved in loaning money but being a hard money lender literally opens up a new way to being a successful real estate investor. Being the one who does the lending puts the control into the investors hands and also provides the opportunity to earn a much higher rate of return on any investment he makes. As you can see there are several ways to make money in real estate investing that involve more than just flipping properties.

To become a hard money investor it is necessary to take a good hard look at the source of the investment opportunity. Your money that you use to invest may come from your IRA or from savings. If your source is hard money brokers or trust deed there is an investment minimum that you need to meet. This minimum can be as high as $100,000 or as low as $5,000. Your choice will be your own comfort level remembering that any loan investment is a risk. It may not be prudent not to put all your eggs into one basket. There will be other deals that will come along.

Becoming a hard money lender means that your cash on hand needs to be more than if you were investing with a trust deed firm. You will of course need to have good legal advisers that can assist you in drawing up your appraisals, underwriting, loan documents, loan servicing, and title services. To find hard money financing firms with investment opportunities, an online search will turn up many local firms.

When you find your company you will need to ask a lot of questions and check into their references. You will want to know the full details of the underwriting process of the trust deed firm that you consider. You need to know their years in business, their default process, the investment minimums, the loan to value guidelines and the regulatory practices that exist in their state of operation. There are public records available that you can check to see if the company has any outstanding complaints. Check their references with their present investors. If all this is not available then move to another firm or if you have decided that you will not use a firm but become a hard money lender on your own then you will need to set a team of professionals to put together any potential deals.

How to Refinance a Hard Money Loan

The hard money loan is usually one that is provided by a private lender or individual who has money to loan as an investment. The loan is usually based on the value of the assets. Each loan will vary in its terms depending on the holder of the loan but this type of loan is always very strict in comparison to traditional lenders and the rate of interest on the loans will be much higher than other types. Usually the hard money loan will need a thirty percent down payment.

If you do have a property or a foreclosure that you have purchased using hard money funding it is possible to do a refinance of the loan and turn it into the conventional mortgage. When doing this the borrower needs to be very careful about the terms of both types of financing. Before beginning the process to refinance, the borrower should be very sure they will qualify for the loan. Hardmoney lenders usually don’t require a credit score that is high but conventional loans put great significance on the score.

Other qualifications have to do with seasoning. This is a term used which is about the length of time that the seller has owned the property. Refinancing of a loan can be contingent on the seasoning of the hard money loan. This happens to be a variable with different loan institutions so the borrower or seller needs to know they can meet these requirements before any deal is constructed. A loan that is the primary residence of the borrower will not be from a hard money investor. This is also a consideration for refinancing with any traditional funding.

When the refinance is to take place, the current value of the home will need to be verified and anything that has been repaired or fixed will need to be validated with paperwork and receipts about each update done to the home. The seasoning issues of the home may make it so that the investor will have to wait up to a year before beginning any refinancing.

The terms of the conventional loan, the terms of the original hard money mortgage loan, the credit rating of the applicant, and the seasoning requirements will all dictate whether refinancing of the hard money loan is possible. Hard money foreclosure can be stopped by refinancing but finding the best service on the market today will take some investigation by researching and comparing options. There are reputable stop foreclosure specialists available that help with finding the best service for refinancing.

Hard Money Definition

Looking for a hard money definition? Well you’ve come to the right place. This article will not only help you know and understand what hard money is all about but will also help you with a few tips and tricks here and there. Learn how to define hard money today. Read on to know find out hard money definition and more.

Hard money is what you call the funds from an asset-type of loan. This type of loan is not offered by the usual banks that we know. Instead, they are offered by private hard money lenders that have a lot of cash readily available for investors like you. Like mentioned, the loan is asset-based. This means that you don’t have to show off a good credit score or even convince the lender that you have the ability to pay. Leave those things to the bank. What a hard money lender needs to see is the asset or the property you’re investing in. These lenders want to see the potential of that property. They want to know if you are going to make money out of it. In a way, they are also investors. That’s why they want to make sure that you are in the right direction. This type of loan is risky for them because unlike banks, they don’t look at your credit or your ability to pay. That’s why they care about where they put their money in. Now that we’ve discussed hard money definition, let’s discuss more about this type of loan in general.

We already know that hard money is a type of risky loan based on properties, such as a real estate property. Now we want to know more about the lenders. How can they afford to give you funds for investment properties? Well these people or groups are definitely wealthy people. They have the amount of cash to spare. They have a lot of extra cash, making them very liquid in terms of assets. They have the ability to lend investors with a potential. Now as we mentioned, this is a risky type of loan. At the same time, this kind of loan is processed faster. Because you’re not dealing with a bank, the processing time is quicker. As long as you have convinced the lender, then you can receive the funds as soon as possible. It can take days or just a few weeks as compared to a month with a bank. Because of the risk and the faster release of money, they charge higher than the banks. That’s how they earn more.

So now that you’ve learned hard money definition and learned about the lenders as well, you’re probably wondering on how you can avail one. If you don’t know any lender of this kind, you should talk to your real estate agent and ask if they know anyone. Chances are that they do because they have probably dealt with one before. If not, perhaps you’d like to look for brokers in the area who will match you with a lender.

What Is a Hard Money Bridge Loan?

A hard money bridge loan is a kind of hard money loan that is often utilized in commercial or residential real estate transactions to serve as a bridge or a stopgap measure during certain situations and then it is promptly repaid after certain things have happened. The most common situation when this type of loan is used is when a bank loan will take too long to be processed and the borrower has a time limit in completing a transaction. Another possibility is when the borrower wants to save a property from foreclosure and expects his or her financial situation to improve soon and as soon as this occurs, the bridge loan is repaid. A hard money bridge loan is usually provided by a private company, individual or investment pool instead of a bank.

The interest rate for a hard money bridge loan is usually much higher than that offered by banks and the term is usually one year although a certain kind of this loan does not have a specific payoff date. For residential properties the amount of the loan does not usually exceed 80 percent of the property’s value and for commercial properties, the maximum loan-to-value ratio is often 65 percent.

A hard money lender may provide a bridge loan to a developer during that period when the permit is still being processed so that conventional loans are not yet available. After the permit is approved, the developer will be able to get a loan from a bank for lower interest rates and repays the bridge loan. In the case of a residential property, a hardmoney lender may be needed by a homeowner who has to make a down payment on a new home but the money from the sale of the existing home is not yet available. The loan is promptly repaid after the money from the sale of the current home is finally on hand.

A hard money bridge loan may also be used for a business during that period when a senior shareholder wants to leave. A bridge loan is taken based on the value of the real property where the business is located so that the departing partner could be paid until such time that a new major shareholder could be located. Finally, this kind of loan becomes important when the buyer of a property wants to take advantage of a discount that would only be possible if the deal is closed quickly.

Fast Hard Money When Its Needed

Starting out in the real estate investment profession can be difficult if you don’t have easy access to fast hard money for purchasing property when you are ready to buy. There is good money in buying property, fixing it up to increase the value and reselling it at a substantial profit. To do this you have to have the money on hand when you see the deal or someone will beat you to it. That is where getting your hands on funding quickly is necessary. Did you know that you can get fast hard money through a lender specializing in approving a hard money rehab loan?

Real estate can be a prime investment these days. There are excellent properties in need of a little work that are selling for far less than appraised value. If you have tried getting funding quickly through a bank or other financial institution, you have come to know this can be like pulling teeth. By working with a lender you open the doors to the opportunity of getting approved for a hard money rehab loan using this painless approach.

Fast hard money lenders are looking for quick deals that are profitable. This makes them more receptive to the plans and ideas presented to them. Once you have provided an application and enough detail about the property that can justify that once you rehabilitate it, and showing a favorable ROI, you have done the bulk of the work that it takes to qualify. Another benefit is the lender will examine the property value and not your credit, making their course of action quicker and smoother.

Submitting an application for a hard money rehab loan is a fairly straightforward process and can be done on the internet. The information you will need to have for a advantageous approval is the current market value of the property, the market value in the property’s improved condition, and whether there is outstanding debt owed on the property. Most importantly, you need to be able to articulate well your ability to successfully repay the loan.

The uniqueness of a hard money rehab loan is lenders and investors will allow you to pre-qualify for funding. This not only makes it easier for you to have the fast hard money on hand when you need it, the process is quick and it allows you to start your project without unnecessary delays.

Private Money Loan Primetime

With the real estate market in a mess, it is an excellent time for the private money loan aka: the hard money loan. When people speak of a hard money lender, usually, they are referring to a person who has a large sum of money and is willing to lend the money to people as long as the loan is secured by real estate. The lender will not be as concerned with the borrowers ability to pay or his credit report for that matter, he is mostly concerned in lending a set amount of money according to the value of the property. The private money loan is designed to help people who are in a financial crisis of one sort or another.

There is no shortage of people who are in a financial crisis and need to borrow money today. There are thousands of people that are facing losing their homes to a short sale or bank foreclosure, due to the drop in real estate values and the economy, plus a few other factors. This has made an ideal climate for the hard money lender. This can be a good situation for both the lender and the borrower in the right instance.

The hard money loan will be secured by the property. The lender will make sure his money is secure in two ways, short a few creative twists. One way is that the lender will not even entertain lending more than 70% of the present value of the property. This insures that if the borrower defaults, he can sell the property for at least, if not more than the original loan amount. The next way is that he will insist on having a first position lien on the property to make sure he gets paid first on the sale of the property.

There may be a few variations of the first lien to secure the loan. The property may have a loan on it presently and the borrower may only want a small amount of money and not pay of the 1st lien holder. If this is the case the first thing is the loan to value ratio may drop to 60% so the lender gets his money in the case of default. The lender may opt to put a first position lien on a different property to secure the loan if the borrower has more property. Either way, the lender will make sure that in any case, he will get his money back on the private money loan.