Hard money lenders are gaining more and more popularity for home flippers around the country. They are becoming easier to find and much more responsive to their partners than banks or other institutions. While they may have a slightly higher interest rate, they provide much more value and help house flippers complete deals in a much shorter timeframe than traditional lenders. There are a few reasons why hard money lenders are the preferred choice.
Financing flip properties can be a very tricky proposition, especially with banks having tightened their belts since the housing crash. Luckily, it is not an entirely lost cause. While some of the more advanced methods might require significant capital, that doesn't mean that they all do.
Gone are the "good ole days" when the loan business was easy to understand. Regulations limited the number and types of loans and the businesses who made them. Unless they had rich relatives, borrowers depended primarily on banks or the government for loans.
Hard money lenders issue short-term loans for individuals who are seeking to purchase commercial or residential real estate. Some hard money lenders also extend funds for people who are purchasing land. Most hard money lenders work in private practice and do not utilize conventional financing standards when extending credit. Most borrowers use hard money lenders as a temporary loan that will need to be repaid with an agreed upon fee schedule for the term of the loan. Hard money lenders service a particular niche of buyers who can't acquire financing through conventional methods. Now that you know what a hard money lender is, you need to understand their unique structure of extending credit.
Flipping a property is one of the most exciting and potentially profitable real estate deals that any investor can make. Still, finding the money to make one of these deals can be problematic. Seasoned investors know that private or “hard” money is an excellent, alternative option for financing when traditional funding sources are not available for one reason or another. Here are some of the reasons why:
Investors with private or “hard” money make their own decisions without having to report to an oversight or approval board. As such, they can invest in any deal that makes financial sense to them. The bottom line is there is more money for non-traditional loans or deals that wouldn't have a chance at getting funded by a bank.
The real estate market in the first quarter of 2014 showed certain resilience as the economic woes of the United States continued. The average selling price of single family homes remained stable while the multifamily market made some steady if meager gains. Here are a few lessons we learned in this market while we waited for the real estate market to truly recover.
To the inexperienced investor, hard money borrowing may seem like a most unusual and daunting way to find funding for a real estate project. On the other hand, more experienced investors understand that hard money borrowing actually offers some significant benefits to anyone looking to fund a single/multi-family or apartment deal. Here are the most important benefits:
The nation's economy has always been closely linked to the health of the real estate market; as a result, when the real estate market is booming, so is America's financial state. This symbiotic relationship stems from the influx of cash that investors spend on real estate investments. Fortunately, the investor's measures prove to be as advantageous for the economy as it is for the investor.
Finding the right real estate deal may seem like a most daunting task to an inexperienced investor but more seasoned ones know that there is an excellent alternative to traditional lending institutions – private or “hard” money. In fact, hard money offers some distinctive advantages to the funds provided by banks, savings & loans, and other traditional lending institutions. Here are just three:
The most advantageous aspect of hard money loans is their versatility, since the loans are made by accredited investors – who make decisions about their money on their own - there is no need to jump through hoops of traditional lending institutions with their subjective loan criteria and their loan approval boards. Instead, if a lender and borrower can agree on terms, the deal can be consummated in a legally binding and very secure way.
Hard money lenders offer quick loans on hard to finance properties. Not unreasonably, though, they charge for their unique offering. With this in mind, hard money isn't always the perfect solution for every investment real estate purchase. However, when you need a fast, flexible loan for a property that offers the potential of significant near-term equity growth, hard money lenders are hard to beat.
