California, Colorado, and Nevada are the land of opportunity in the real estate industry – when you have money. What about when you don’t have the money though, does that mean you lose out on the opportunities? Absolutely not! Opportunities abound with hard money lending that can get you that boost you need to jump into this real estate market.
If you’re picturing hard money lenders to be shady characters that do business in the backseat of long, black cars, or the back of a dark restaurant, you are wrong! Today, hard money loans are a legitimate business deal that can easily and quickly get you into the real estate game. Best of all, it is above board and straightforward with reasonable interest rates and payment plans.
What Is Exactly Hard Money Lending?
Before discussing how you go about getting a hard money loan, let’s discuss what hard money lending is precise. Hard money loans are a way to break down the financing of real estate. They can be your best friend if you’re interested in real estate investing. While the challenging money lending process can be an easy and fast way to secure a real estate deal in California, Colorado, or Nevada, it can also be complicated if you’re new to the industry.
Hard Money Lenders offer short-term loans that are secured by real estate. A hard money lender is a private investor or a group of private investors versus conventional lenders like banks and credit unions. A hard money loan term is typically between twelve months and up to five years. There are monthly interest payments, sometimes principal and interest, then a balloon payment at the end of the loan.
- Hard Money Lending Can Be Your Answer
- What Types of Deals Should Hard Money Loans Be Used For?
- Hard Money Loans Create Good Questions Too!
- What Makes A Hard Money Loan A Good Option?
- Hard Money Loans Aren’t Hard to Obtain
Hard Money Lending Can Be Your Answer
In real estate, it is the early bird that gets the best property at the best price. However, if you don’t have the money, you lose out. With a hard money lender, you can grab that real estate opportunity fast. They say to make money, spend money, and hard money lenders know this to be true. When you can fast access funding, hard money loans are the lifeline you need for that fantastic real estate investment opportunity.
As a new real estate investor or house flipper, or a homeowner needing to do some repairs and upgrades, a hard money loan could be a solution to getting the funds you need. A hard money lender bases the loans they provide on the asset and resale value of the property you’re planning to purchase. The loan process with a hard money lender is more straightforward, but there are some tradeoffs, as we mentioned earlier:
- Higher Interest Rate
- Shorter Loan Term
That is why a hard money loan is excellent for a flipper planning on making repairs, upgrades, then selling the property before the note comes due.
What Types of Deals Should Hard Money Loans Be Used For?
Hard money is your source of financing when banks are not an option or the loan is needed in a short period of time. Hard money loans are ideal for situations such as:
Hard Money Loans Create Good Questions Too!
While a hard money loan could be your answer to a real estate deal, you need to ask yourself some questions first that can help you determine if this is right for you:
- When should you seek private financing for a real estate transaction?
- Where can do you find hard money lenders for real estate transactions?
- Then list the pros and cons of a hard money loan.
What Makes The Hard Money Loan A Good Option?
A hard money lender has the cash and can fund your loan fast. They don’t go through the approval process that banks and credit unions require. They see the value of the property you want to buy and the price you’re paying. If they see the value that they can resell in case of default, they fund the loan. No appraisal reports or inspections. No credit reports or employment verification.
Before you begin making real estate offers, find those hard money lenders first. This way, you know where to go when you find that great real estate deal; you will have already had a relationship with one or two, maybe three or more hard money lenders. This will increase your likelihood of getting that real estate deal done faster because you will have already established a relationship. Then do your homework first, check out several hard money lenders, read past customers’ reviews, and what kind of history the lender has from past deals.
Before you go to a hard money lender, do your homework on the property you want to purchase. Check out the real estate deals in the area of California, Colorado, and Nevada that are available. While a hard money loan is easy and fast, you will need to supply the lender with these six things:
- The Property Address
- Estimated Purchase Amount
- The Loan Amount Need (purchase and repairs)
- Property Photos
- Plans for the Property
- Your Budget and Plans After Property is Ready
What will these six things tell the lender? They can determine:
- The market and the comps in the area
- Your plans for the money and what ROI they can expect
- The potential value after the repairs and updates
Keep in mind, a hard money lender’s prime concern is the property value and the ROI they can expect. They aren’t checking your credit or employment. They don’t require an appraisal or property inspection. If you’re short on cash and your credit isn’t up to par, then a hard money lender may be the answer for you.
Hard Money Loans Aren’t Hard to Obtain
However, they can be an expensive and expensive tool essential for a budding and serious investor. Because of that, it is critical to know if the time is right for a hard money loan, and it should be a last resort for a once-in-a-lifetime real estate opportunity. With all that being restated, though, a hard money loan is ideal for fixing and flipping properties.
Transactions.” While hard money loans do tend to be short-term, “last resort” is a bit of a stretch. Many investors use hard money as an integral part of their financing strategy—particularly those who need loans to fix and flip loans.
Be careful not to confuse a hard money loan with a private money loan! They may appear to be alike, but they aren’t. The difference is that a hard money lender is effectively brokering a short-term loan for a real estate purchase. A private money loan is between you and a family member or friend, even a private business owner, like an employer.
The first step you need to take before diving into real estate fix and flip deals is to gain a clear understanding of hard money lending basics. The more you know about the money you borrow, the better decisions you’ll make. While a hard money lender can be your best tool, it can also get complicated fast if you don’t understand every aspect.
If you are looking Hard money lender near your area, Give us a call at (562) 857-2285 and we can explain the hard money loan process. We’ve been in a Direct Portfolio Lender since 2004 with a focus on California. We’re expanding into Colorado and Nevada and are ready to talk to new borrowers. RTI Bridge Loans has extensive, deep, and long-term experience and knowledge of the real estate business in every aspect—the reputation we have built by operating as an efficient and responsive lender with both borrowers and clients.