What Can a Hard Money Lender Do For You in Today’s Market?

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Do you have a small business that needs some extra funds? A hard money lender might be the answer to your financial problems. Learn more about how hard money lenders can give you the loan you need to stay in business.

How Hard Money Lending Works

Have you tried to take out a loan with traditional banking? They often deny your request if you have bad credit or don’t have proof of a steady income. It makes it nearly impossible to keep your business running without some extra financial assistance. Therefore, some small businesses or startups have to resort to hard money loans.

Quick Hard Money Lending Process

You can easily apply online for a hard money loan as soon as you find a few that you can trust with your business. The significant part about hard money loans is everything is faster, from your application acceptance to getting the money you might need right away.

This can come in handy for those trying to build businesses such as flipping properties. If you depend on traditional banking, it might take too long to buy the property you have your eye on. Or to get the materials in time to get those renovations done. Sometimes fast money can be crucial to the success of your business when you are flipping properties or other similar businesses.

Don’t Need A Good Credit Score for a Hard Money Lender

Do you have bad credit? It doesn’t mean an instant denial of getting a loan when you go through hard money lending. Instead, a hard money lender can help you where banks and credit unions will usually deny your request when your credit is too low.

According to the Senate Committee on Banking and Financial Institutions, hard money loans are for “people with tarnished credit, whose low credit scores render them ineligible for more traditional forms of credit.” You don’t have to worry about having any other alternatives to save your business from bankruptcy.

Hard Money Lender Policies

Like with any loan, it’s better if you check each hard money lender’s policies. They will all give you different estimates on how much money you can borrow. This can be good since you find out which one offers the best deal possible, meaning you get to borrow enough without having to worry about any additional fees.

These lenders will all have different rules on any fees or points that they will charge you. So, make sure you know what each lender’s policy is with their hard money loans. These fees or points can add up to a lot of money if you aren’t careful.

Downfalls of Using a Hard Money Lender

Hard money loans sound good when you have nowhere else to turn to. However, don’t be too hasty in accepting the first offer presented to you.

High-Interest Rates and Points

Since you have to repay the loan faster than traditional lenders, prepare to pay more than you borrowed. As reported by the Senate Committee on Banking and Financial Institutions, hard money lenders give you a shorter amount of time to repay the loans.

So, this means you might have higher interest rates and points than traditional loans. Those interest rates and points can be high, so always think it over before signing up with any hard money lender.

Get Legal Advice Before Signing

A hard money lender can be helpful for businesses, but you also have to be careful with the paperwork involved. If hard money loans are your last resort, then this will make you vulnerable. They might try to add clauses that you might not understand that will add stipulations even after you repay them their money.

You should have the clauses in your deal looked over by someone who can give you legal advice on it. If you don’t, you might get yourself into something you didn’t know you agreed upon.

Are you ready to get a hard money loan? If your business is in danger of shutting down before it begins, you might need to look into getting this loan. It can save you from having to pull the plug on your business before you can make your dream job a reality. So, why not look into getting help from a hard money lender? You can go over your choices with your family or business partner and see what the best option for your business should be.

Sources: https://sbnk.senate.ca.gov/sites/sbnk.senate.ca.gov/files/final%20backgrounder.pdf

 

 

Private Lenders and Hard Money Loans

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Are you searching for a way to gather quick funds for a project or investment? You may need to turn to private lenders and take out a hard money loan to make that happen. Many people turn to hard money loans to help achieve their short – term goals or projects. Bloomberg’s Michael Sasso noted, “However, a for-profit trade group called the American Association of  Private Lenders estimates the number of hard money lenders and related  “private money” lenders at 8,300, or up almost 40% since 2016.”

What Are Hard Money Loans?

Hard money loans are secured based on real property assets. These types of loans are generally seen as last resort loans. These loans are primarily used for real estate transactions. Hard money loans are normally provided by private lenders or companies. This is different from typical loans that are provided by banks. These types of loans are taken out for a short amount of time and have higher costs associated with them. The terms of hard money loans are often negotiated between private lenders and borrowers.

How Do They Work?

The negotiated terms of hard money loans are based on the value of the property that is used as collateral. They are not normally based on the borrower’s credit or financial situation. The individuals and companies that lend hard money loans are capable of seeing the potential value in this type of risky investment. Many people who seek out hard money loans may be property investors who are searching for funds to remodel a house. They are investors who will remodel the house, or “flip” it, and resell it to make a profit. They hope to make enough money to pay back the loan and gain a profit from the collateral. Since the terms of these types of loans are so short, the borrower will attempt to complete the project within a year.

Hard money loans may be quite risky, but the higher risk is offset by some of the other values that they offer. Since borrowers intend to pay off the loan quickly, the terms are normally between one and three years. If the loans are paid off quickly, then the interest won’t accrue. This means more profit for the borrower.

Pros and Cons of Hard Money Loans

Hard money loans often have a higher cost to the borrower than traditional loans secured from banks. This is a reflection of the risk that the lender is taking. In return for this high cost, borrowers have quick access to capital, less strict approval processes, and sometimes flexible repayment plans.

Pros

One of the critical advantages of hard money loans is the less stringent approval process. For traditional loans, many banks will require the lender to provide proof of income, a credit check, and a low debt to income ratio. This can cause many potential borrowers to be declined in the process. Lenders of hard money loans can also assist the borrower in a quick approval process. They do not have to jump through the hoops that normal banks have to for approval.

Many lenders of asset-based loans do not worry as much about repayment. If a borrower defaults on the loan, then they may be able to still sell the collateral and make a profit. Lenders often take this into account and are flexible with the repayment schedule for hard money loans.

When a borrower applies for a loan through a bank the terms are normally set in stone. With hard money loans, the underwriting process is determined on a case by case basis. This allows for some negotiation between the borrower and the lender. Each side may be able to create a better lending contract for themselves.

Cons

Since the collateral of hard money loans is only the property itself they often have a low loan to value (LTV) ratio. The LTV is a term used by lenders to compare the value of the loan to the appraised value of the property. These low LTV loans are not always favorable to the borrower.

Another disadvantage of hard money loans is the high interest that accrues if the loan is not paid within a certain time period. According to the Pew Trust Foundation, the interest rates can be as high as 15 to 30%. Most borrowers can only make payments equal to about 5% interest on their loans.

Resources:

Sasso, Michael.  “Home-Flipping Trend Weakens as High-Interest Lenders Jump 40%” Bloomberg. https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens. Accessed 11 Oct 2019.

“From Payday to Small Installment Loans: Risks, opportunities, and policy proposals for successful markets” The Pew Charitable Trusts Foundation. Accessed 11 Oct 2019.

 

 

Benefits Of A Hard Money Loan

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Hard money loans are a fantastic funding solution for those who have difficulty obtaining more traditional loans. They can have great benefits for the borrower.

Banks and mortgage lenders can be quite strict with their lending requirements. Those can make it challenging for those with poor credit or financial hardships to get loans.

That’s where hard money loans come into play, opening up new opportunities for investing in property at a great price. You should know about some of the major benefits associated with hard money loans.

Hard Money Loans are Easier to Obtain

When you choose a hard money loan, you are able to take advantage of the benefits. That’s because hard money loans tend to be easier to obtain than traditional avenues of funding. In many cases, these non-standard hard money loans from private lenders will be approved more quickly with less paperwork.

Hard money lenders won’t do as much background research into your financial history, they can take bigger risks. Whereas banks approve or reject loan applications based on credit ratings and scores. Hard money lenders look at the value of the collateral instead. This collateral is typically a real estate property. Although there are higher risks involved, hard money lenders can justify this by charging higher interest rates and fees.

Borrowers who obtain hard money loans are not usually deterred by the higher interest rates. They don’t plan on having a hard money mortgage forever. Financial columnist and journalist  Jean Chatzky said – debt isn’t always bad, “A mortgage can help you afford a home. Student loans can be a necessity for getting a good job. Both are investments worth making.”

When it comes to deciding whether or not a hard money loan is right for you, you have to think about your likelihood of getting a bank loan and also what your plans are for the property.

Hard Money Loans can Have Benefits

One of the other things you should know about hard money loans is that they are advantageous for those looking for funding right away. If you’re in a hurry to get your funds or you’re struggling to get approved through regular resources like banks or mortgage lenders, then hard money loans can help you get the property you want or stave off foreclosure.

There’s a lot of people out there buying real estate, as the volume of loans to homebuyers looking to renovate and resell increased to about $20 billion last year. That’s a 37% rise from 2016 and nearly double the amount from five years ago. Many of these purchasers took advantage of attractive hard money loans to lessen their risk of foreclosure.

Another benefit of hard money loans is that they can come in handy if you’re trying to buy a new home while selling an old one. Perhaps you need a hard money loan to cover a down payment while the proceeds from the sale of your previous property are not yet available. If there’s not enough time or availability to get a loan from a bank, hard money lenders can help.

Both real estate investors and homeowners can refinance their properties with hard money loans. One thing to always remember about hard money loans is that you want to be quite confident your financial outlook is positive. Most people pay back a hard money loan within a few years once they sell the property. That way, they aren’t stuck with those higher interest rates forever. So whether you’re getting into house flipping or you’re eager to avoid foreclosure, hard money loans will work well as long as you’re ready to repay the loan sooner rather than later.

Hard Money Loans Assist Real Estate Developers

Those involved in real estate development may also use hard money loans for projects that won’t get approved for bank loans. For example, projects that have yet to receive final permits and approval are unlikely to receive a conventional loan because the bank can’t be positive that the project would make it past the development stage. Non-standard loans like hard money funding can be used to finance these projects. Once the permits are all in place, the real estate developer can apply for a conventional loan to repay the hard money loan.

For those real estate developers who want a more flexible funding option, it makes sense to explore hard money loans. If you are interested in hard money loans, you can always ask a reputable lender for more details.

Sources:

“Jean Chatzky Quotes.” BrainyQuote, Xplore, https://www.brainyquote.com/quotes/jean_chatzky_724897.

Sasso, Michael. “Home-Flipping Trend Weakens as High-Interest Lenders Jump 40%.” Bloomberg.com, Bloomberg, 13 June 2019, https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens.

 

 

Hard Money Loans: Cracking the Hard Situations

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When you’re dealing with hard situations and need help fast, a hard money bridge loan is the type of loan you may need. Many people are unaware of what a hard money bridge loan (1) is or how a hard money lender works. In its most basic terms, a hard money loan is a short-term loan secured by real estate. When you are racing against the clock to obtain a loan, hard money loans for your hard situations you can be approved sometimes in as little as 48 hours.

Length of Your Hard Money Loan

The length of your loan typically runs about twelve months, but lenders can extend it for two-five years in special cases. Significantly, using hard money loans for hard situations help crack difficult financial times.  The hard money loans are considered temporary and beneficial answers because you don’t have to pay the principal off throughout the life of the loan. You’re only paying the interest or the interest with limited principal through the loan’s life. When the loan term is over, you have a balloon payment due which includes whatever you have left on the hard money bridge loan to pay.

What makes hard money loans work, and be approved quickly, has everything to do with your property’s value. Hard money lenders may check your credit score, but they’re primarily concerned with the real estate property you’re putting up. Many hard money lenders use what’s called the loan-to-value ratio (LTV) to determine how much they will lend you.

How Fast are Hard Money Loan Lenders Growing?

It’s the LTV ratio that helps hard money lenders evaluate your loan risk. The more money they are going to lend you, the higher the hard lender’s risk. When you have assessed a higher risk based on your LTV ratio you will have to:

  • Pay a higher interest rate on your loan
  • You may be assessed additional costs, like fees or the lender may  need you to get mortgage insurance

But you won’t have any problem find a hard money loan lender. Hard money loan lenders are up 40% since 2016. There’s a lot of activity in the hard money loan markets. A hard money commercial loan lender knows each hard money loan will have different percentage rates based on how much the loan is and what their real estate property value is.

Crowdfunding companies are jumping on board to become hard money loan lenders too. They are loaning out millions of dollars at very high-interest rates which makes them a fortune. But that’s not the way the real hard money lenders like to do business. Most ethical, hard money lenders are in the business to help those who need quick loan approvals while making a reasonable profit for their business. Those hard money lenders approve their loans with a sense of fair play.

What are Hard Money Loans Used For?

Business is better than ever for hard loan lenders, but they try to “work with those who need them most.” This is usually in the low to middle housing and commercial markets. That’s the market where people who are hit with unexpected bills or events, don’t have the cushions of large savings accounts. Private money or hard money lending is also always good for certain populations or targeted groups like those who flip and flop houses. Hard money loans can be great for short-term or long-term investors who need their financing fast.

Many buy and hold investors will use hard money lending to buy and renovate properties before they refinance the homes through conventional loans. Another common hard money loan need is when long-term investors need to season their property. There are as many reasons as there are dollars to lend through hard money loans. But cracking the hard situations is done on a one-on-one case basis.

It’s not uncommon for your loan to be approved through a hard loan lender before you walk out the door. A prequalification can be faster than that. You can be prequalified in as little as three minutes. More importantly, you can get your funding, cash in hand in as quick as 10-15 days. It is the quick turnaround time, and the ability to take care of whatever emergency you’re dealing with that makes hard money loans so popular.

When You’re Ready

When your ready for your private money lender experience reach out to us. Find a hard money lender who has the expertise you need, with the interest rates and costs you can afford. You want your hard money lender to have the real estate knowledge needed to value your property fairly. Get a hard money loan with terms that help you deal with your hard situations. You can now take your first financial breath in a long time.

(1) https://www.fdic.gov/regulations/safety/manual/section3-2.pdf

Private Hard Money Lender Means Quick Loan Approval

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When you need money quickly for your business, navigating your way through the mountains of paperwork can be hard. What a traditional lender demands can make a quick loan approval deal untenable.

In this instance, more often than not, your best option is a private hard money lender. You can attempt to go the traditional route, but if your application has been rejected then you should consider a private hard money lender.

Why is it Quicker?

Private hard money lenders don’t have the same regulations as normal lending institutions. Many banks were bailed out during the crash in 2008 and new laws have rightfully ensured that they can’t simply give out loans without fulfilling some strict criteria.

This does protect consumers as well as the banks, however, it can make getting a loan quite difficult. Getting approval from a private hard money lender can be easier as they look at the information available to them on a case by case basis. Your credit score is not much interest to them, your assets are.

“Small- and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.” Vince Cable, formerly of Shell Oil

A decent private hard money lender will look at what you want the money for, whether they are satisfied that you will be able to repay that debt on their terms and the possibility of a future relationship. Private lenders comprehend the need for quick loan approval. They are usually astute investors who know that time is of the essence in making a good deal, so they will assess your situation quickly.

How Does Quick Loan Approval Work?

Private money lenders can offer you more flexibility in terms than traditional lending institutions. However, in the majority of cases, the length of the loan will be much shorter than normal loans or mortgages. Usually, the terms are around 2 – 5 years maximum, and their interest will be higher. However, they won’t have to refer to a list of stringent conditions or board members who are imposing regulations, and not having to do this speeds up the process.

It is pretty simple to apply for a private hard money loan. First, you will need to present them with your financial data – if that is for your business that you are taking the loan against, or if it is your own personal net worth.

You also have to offer collateral. This is one of the big differences between a traditional loan and a hard money loan. In this case, the collateral is usually the property or asset that you are actually using the loan to acquire. In business, it could be against your premises as you hope to extend or pour money into a new product.

If it’s to flip a property, which many hard money loans are for, then you need to provide information on the property, the area and the potential for profit. You still have to do your homework, they just won’t spend as long scrutinizing it as a bank would. Many private hard money lenders now let you apply online, and some promise approval in up to 36 hours.

Where to Find a Private Hard Money Lender?

Over the past few years, the number of private hard money lenders has jumped. According to the American Association of Private Lenders, there are now almost 40% more since 2016.  So, it’s easy to find one, but make sure you go for a private money lender with a good reputation. You can find a host of both large and small private hard money lenders online. Don’t ignore local ones, but do try and get some referrals.

Private hard money lenders used to be viewed quite cautiously, but times evolve. In a business environment, working capital is required and often a traditional loan process won’t let you access the money in time. It can be beneficial to build a relationship with a private hard money lender to finance deals and grow your business.

Resources:

https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens

 

 

What Do Hard Money Lenders Look For?

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For individuals seeking capital to purchase a new home, avoid foreclosure, or make renovations, a traditional bank loan doesn’t always work out. Things like a poor credit score or little equity can quickly lead to rejection. However, in recent years, hard money lenders have provided people with a way to get the money they need for real estate projects or to keep their homes.

Unlike banks who look at a borrower’s financial history when considering whether to approve a loan, a hard money lender uses the property as collateral. This means applicants have a much higher chance of getting approved for quick cash. House flippers often turn to these private lenders to secure a new investment before it’s sold. They’re great resources for real estate investors, especially when home sales are up as they are right now. According to the Department of Housing and Urban Development, sales for single-family homes saw a 2.5% increase from June to July in 2019.

However, even though hard money lenders are concerned with credit scores, borrowers should still know what they’ll be considering when evaluating their loan application. That’s why we’re going over some of the top things these lenders keep their eye on.

The Value of the Property Used as Collateral

Because the house in question will be used as collateral against the loan, one of the lender’s primary concerns is the total value of the property.  They need to know that if the loan isn’t repaid, they can recoup their losses. To do this, they’ll need to determine the loan to value ratio. This may require having an appraiser look at the property or having a real estate agent run a broker price opinion that will analyze the value.

If the borrower is seeking a loan to complete renovations on a home they own, the lender will determine how much the property will be worth after the upgrades are made. This is why house flippers often go after hard money loans. Lenders may also include land in the appraisal of the property as well.

It’s important to keep in mind that many hard money lenders won’t give loans for properties occupied by tenants. Potential legal issues could make the loan too risky.

The Borrower’s Commitment to the Property

The last thing a hard money lender wants is for the borrower to default on the loan. This is why they look at how committed the individual is to the property before approving the loan. Yes, the lender doesn’t care about a borrower’s credit score, but they still need to have confidence that the repayment terms can be met.

If a borrower needs the loan to secure the purchase of a home, the lender may want to know if they’ve put any type of down payment towards the property. If they have, the lender knows the borrower has something to lose if they don’t make their mortgage payments. This added reassurance goes a long way.

Lenders may also want to know what the borrower’s plans are for the home. If they plan on flipping it, what renovations do they intend to make? Once they sell the renovated home, what’s their plan for paying back the loan? Many house flippers have a portfolio of investments they’ve made. This is a good tool for securing hard money loans.

The Ability to Repay

The British economist John Maynard Keynes once said, “If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.”  Hard money lenders must take this to heart. There’s certainly no surefire way to know a borrower will pay back the loan. However, lenders can look for at a few things that will help them determine whether the venture is a good idea.

Lenders often look at a borrower’s exit strategy for fulfilling the repayment terms. For example, if they’re using the loan to secure a piece of commercial property, the lender may want to know how they intend to start earning a profit. Lenders may also want to know how motivated the borrower is to pay back the loan. If a house flipper doesn’t intend to start renovations on the home anytime soon, a lender may be hesitant to approve the loan.

Hard money lenders are investors too. Because these loans have higher interest rates and shorter terms, lenders can use the repaid money for new loans. Looking at the items discussed above is the best way they can protect themselves.

Resources:

https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market-Indicators-Report-August-2019.pdf

Private Money Loan Primetime

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Real estate markets rise and fall. Different factors affect prices – from schools in the area to good transport links, to the overall economy. It seems that mortgages and loans are increasingly hard to get when dealing with traditional lenders. As with any market, it evolves. In this case, it has meant it’s primetime for private money loans, otherwise known as a hard money loan.

With one in every 370 homes in the U.S. filing for foreclosure in the first six months of last year, there is space for people to pick up bargains. It also means smaller real estate investors can start investing. This has created a situation where private money loans are king. Traditional lenders aren’t lending as much as they used to; their terms are becoming ever more stringent. Private money lenders are becoming more recognized and reputable and more people want to know how it works. It is prime time for private money loans.

What is a Private Money Loan?

A private money loan is a primetime loan that is usually made based on the value of the property. In this way, it is different from normal loans from banks and lending companies, as it isn’t based on the credit of the person buying the property. The property itself is used as collateral for the loan.

Private money loans have much shorter terms than traditional loans too and interest rates are higher. Most terms are between one and three years. Private money loans are risky – they should only be taken if the person has knowledge of the market in the area and more particularly the value of the property they are buying.

The main reason for getting a private money loan is to buy and flip a house. This way, both the lender and the buyer can make a profit. The buyer can get a bargain with homes that have been foreclosed on, or through a short sale. They carry out the work needed on the home and put it back on the market for a higher price, thus making them able to pay off the private money loan and hopefully take home some profit.

Why is it Primetime for Private Money Loans?

Private money loans can be used for any kind of short term financing. They are a great option when you don’t qualify for a normal loan and if you have equity in your property. If you can foresee a way out of your financial bind in the short term, then it can be a primetime to get money quickly.

Managing Director of Connecticut-based lender RCN Capital, Jeffrey Tesch, says that “business is better than ever” in the workforce housing segment.  More homes are now being bought up and flipped. He said that he expects his firm to loan around $500 million for real estate deals 2019.

Another reason why the private loan sector is booming is that companies want to diversify. They have assets but they don’t have hard cash. When they see an opportunity they want to jump on it quickly. Private money lenders don’t require borrowers to go through a lengthy process to apply, so the money can be received quicker, which is a serious advantage in a fast-moving world.

Private money lenders aren’t bound by the same regulations as banks and other traditional lending institutions. They draw up their own terms and the customer either agrees or goes elsewhere. This means that they can pour their money into investments that they believe in, and make a nice profit in the meantime.

Should I Get a Private Money Loan?

If you need an injection of cash for your business, then a private money loan may be a good option.  If you have spotted a property but you can’t fulfill traditional requirements, you could take advantage of a private money lender.

Most private money lenders won’t take on an investment that they don’t have faith in, even with the high-interest rates. Reputable private money lenders want to build relationships that are beneficial to both parties.

Resources:

https://www.attomdata.com/news/market-trends/foreclosures/midyear-2018-u-s-foreclosure-market-report/

https://www.bloomberg.com/news/articles/2019-06-12/high-interest-lenders-up-40-even-as-home-flipping-trend-weakens

 

 

Hard Money Brokers

Hard Money Brokers and Hard Money Lenders

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When you need money quickly, traditional loans are often not the best option because getting approval can be difficult. Many people who are looking to start investing in real estate turn to hard money lenders. Understanding hard money loans is important. This guide walks you through a few things you need to know before choosing hard money brokers.

Your Credit Score Isn’t Important

When you apply for a traditional loan, your credit score is considered to be very important. Hard money brokers aren’t as worried about it because you have to put down something as collateral before you can be approved for the loan. Traditional loans often require 7% as a down payment, whereas, you can use the property that you are buying as collateral or property you already own for hard money loans. The amount of loan you possibly qualify for will be dependent on the value of the property that you are using for collateral. The hard money lenders will typically provide you a loan that covers a portion of the overall value of the property.

Hard money loans are considered to be high risk. If you don’t pay your loan on time, the lender will have to sell the property in an effort to get their money back. If they approve a loan for the full value of the property, getting the money back if you default will be slim to none. According to Consumer Finance, for traditional loans ” Loan amount must be $484,350 or less in most counties and may be as high as $726,525 in high-cost counties. ” Hard money loans do not have such a stipulation.

Interest Rates for Hard Money Brokers are Often Hefty

Hard money lenders do not lend money to people out of the kindness of their hearts. The transaction needs to be profitable for them in order for them to make the loan. This means that they have to charge an interest rate for the loan that takes some of the risks out of it for them. Higher interest rates are attached to hard money loans than traditional loans. Since they require less stringent stipulations to be met, they can be easier to get. This often makes the higher interest rates worth paying for many borrowers.

Approval Takes Less Time

Traditional loans can take a long time for approval. Many stipulations must be met and then the lender, typically a bank, takes often more than a month to approve a loan. When you need money to buy a property that is up for auction or simply selling at a great price, you need to be able to get the money quickly. This is where a hard money loan comes into play. You can often get approved for a hard money loan within a very short period of time. This allows you to never have to miss out on great deals.

Your Loan Needs to be Repaid in a Timely Manner

Hard money loans often have the requirement to be repaired in a very timely manner. The loan agreement has stipulations for when the entire debt needs to be repaid. This is often just a few years or less. You don’t have to make a lump payment to pay it off though. Many people who use the loans do pay it off in a large payment when they sell the property. Most hard money loans are used in the house flipping business.

Choosing Hard Money Brokers Isn’t Difficult

Choosing a hard money lender to work with doesn’t have to be difficult. You simply want to work with a lender that has experience with hard money loans. An experienced lender will have the paperwork already created. They will be able to answer specific details when you ask them and get back to you quickly about whether or not you have been approved for the loan.

Before applying for a hard money loan, you need to know exactly how much money you need. Have an attorney look over the application to ensure that you understand the stipulations of the agreement. You need to be sure you know how much the loan will be for, how long you have to pay it back and what the interest rate will be. Once you are approved for the loan, you can buy your property and get started with your project right away.

Resources:

Consumer Finance – https://www.consumerfinance.gov/owning-a-home/loan-options/conventional-loans/

Down payment for traditional loans – https://www.nerdwallet.com/blog/mortgages/20-percent-mortgage-down-payment-dead/

Definition of hard money loan – https://www.investopedia.com/terms/h/hard_money_loan.asp

Fast Hard Money

Fast Hard Money When Its Needed

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Do you need a loan right away? Some people find it too hard to get traditional loans from credit unions or banks. Hard money loans might be just what you need when everyone else is denying you money for your new investment idea such as flipping houses. Learn more about how hard money loans can help make your dreams of real estate investment a reality.

Why You Need Fast Money

Are you looking into flipping houses as your new career change? If so, you might need money right away to make this happen. You might be desperate for a money loan as quickly as possible. Other investors buy real estate property off the market in a blink of an eye, especially if they see similar potential. This means you need the money right away to buy it before another buyer grabs the opportunity for themselves.

Most traditional money lenders take too long to grant you the loan. Or you might not be eligible enough to get their approval. They might take as long as 30-45 days to approve you for one. By then, someone else will have used their loan or cash to buy the property you had your eye on.

So, what can you do? You don’t have to give up because hard money loans can be the answer to all your money struggles.

How to Get One When You Need It

Have you ever heard of a fast hard money loan? You can easily search for reputable hard money lenders online. There are a lot of options to choose from, whether it’s companies or individuals who’ll invest their money into your new lucrative business. With it, you can restore those real estate properties, and both of you can gain profit from it.

According to Washington State Department of Financial Institutions, “hard-money loans are based primarily on the value of the property with which they are secured, which the borrower already owns or is acquiring with the loan.” Therefore, you still have to give up some types of property as collateral to get a hard money loan. They won’t hand over a loan with no backup, especially if you have bad credit.

Benefits

Applying for a loan is as simple as filling out an application online. The best part is that you don’t even need to have the required eligibility rules that most traditional lenders expect. This means you that even those with bad credit scores or an unreliable income can get approval from these lenders.

It’s also much faster for hard money lenders to approve you for a loan. You could have it as soon as a few weeks after you submit everything required for the process. However, you need to create a thorough plan when you apply to explain how you will repay them on time. Having an excellent plan will also give you an easier and faster approval for a loan, so that can be an incentive to create an excellent one. Investors will take you more seriously than if your plan was sloppy or confusing.

Pitfalls

What happens when you aren’t able to stay on track with your detailed plan? Other complications can arise with construction or unexpected costs. Or you could fail to remain committed to the project. This can all lead to you not paying them back the money within the time frame you agreed on.

When you don’t pay them back on time, this means you’ll default. As reported by the Washington State Department of Financial Institutions, when the borrower defaults, the moneylender can take control of the property and sell it themselves. This could make you question getting this loan. If you aren’t confident in making a profit or repaying them the amount within a shorter time than traditional investments, it might not be the right loan for you.

Another thing to consider is the high-interest rates and points that the lenders can also add to the total amount you owe them. There are a lot of benefits to this loan, but you can weigh in if it’s right for you.

Are you letting a lack of money keep you from your dream job? Whether it’s flipping houses or another type of investment business, don’t allow money to get in the way. Hard money loans can solve your money troubles. As long as you have a well-thought-out plan for repaying your lender off, then you can do this. You could also gain enough profit to make a full-time career out of it. The choice is yours to consider taking action today and researching the best hard money lenders in your area.

 

 

Profit from Hard Money Loans

Hard Money Profits

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Are you interested in making profit fairly quickly in the real estate market? Any good investor is always looking out for something that can provide a high return on investment with a quick turnaround, so probably, yes. A great way to invest in real estate is with hard money loans.

Hard money loans are a specific kind of very short-term loans. They are usually paid in around 12 to 24 months, sometimes even quicker. They often have loan fees ranging around 5% and the annual interest can be as big as 15%. That looks high, so why would you be interested in this kind of loan?

Because it can be highly profitable for you. With this kind of loan, you can invest in real estate quickly and without any hassle. This way, you can be able to get a high return on investment within a short timeframe.

How Does a Hard Money Loan Work?

A hard money loan is made when you borrow money to buy a property and repair it in order to sell it for a higher price. The main goal of this investment is to choose an old house in need of repairs, keep the costs low and the profits high.

The investor can borrow around 65 to 70% of the house’s “after repair value” (ARV) to get started. Let’s use an example. If you buy a house for $100,000 and its ARV is around $180,000 after it is repaired, you could get a loan for up to 70% of that value, that is $126,000.

With a loan fee of 5% and an interest of 15% a year, you would owe $132,300 plus the annual fees, which are paid monthly. The quicker you can repair the property and sell it, the more profit you can get.

If you are able to repair the house in two months and then take another two to sell it, you can pay the interest for only around four months. You can also try to keep the costs of renewal under the $26,000 you still have. This way, you do not even need to use any of your own money.

This way, even by paying the fees, you can still profit around $40,000 in only four months. If you could make three of these deals per year, you would profit around $120,000. Not a bad investment, right?

While you could argue that the interest rates are, indeed, very high, they are simply meaningless. What matters is only your profits.

Is a Hard Money Loan a Good Way to Profit?

If you have enough money to be sure that you are not risking too much, hard money loans are a great idea. You should be certain that you are not making a mistake, though. To be protected, you need to study the local real estate data carefully.

According to specialists Denise DiPasquale and William C. Wheaton, you have to look at the market via both micro and macro perspectives. From the micro perspective, they affirm that prices vary a lot across locations, even in the same city. Some places are more valuable than others. From the macro perspective, they affirm that the “broad economic forces” always affect the market, so the economy is a good indicator as well.

At the moment, the number of houses on sale is going up, so you have more choices (and prices will tend to go down). According to the latest report of the National Association of Realtors, the number of existing homes for sale is 2.5% higher than the last month.

This is the kind of data that you need to pay attention to determine if you making a good deal. Without viable research and a good idea of how costly the repairs will be, it is easy to make a meaningless profit with a hard money loan. This will only waste your time and money.

Many people get rich with hard money loans. If you want to be one of them, you have to work hard. Understanding the market and the costs involved is the key to success in this market. The chance is out there, but you have to be prepared to take it.

Sources:

https://notendur.hi.is/~ajonsson/kennsla2013/The_urban_land_market.pdf

https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales