What is a hard money loan?
A hard money loan is a short-term, non-conforming loan usually secured by real property. These loans are commonly used by people with poor credit but sufficient asset ownership when traditional financing is not available or unsuitable.
Why apply for a California hard money loan over applying for a conventional loan?
In many situations, applying for a hard money loan instead of a conventional loan works better for commercial real estate investments. Four examples of situations where hard money financing makes more sense include:
» Easier to Obtain
Hard money lenders tend to pay less attention to your creditworthiness than traditional lending institutions. Instead, they are more interested in your property’s value, as it will be used as the loan collateral.
» The Need for Speed
Hard money loans can be a solid route for real estate investors who prefer fast approval times and quick funding windows.
» House Flipping
Are you thinking of becoming a professional house flipper? Since those projects typically happen fairly quickly, you may have to consider utilizing hard money loans as they are often faster funded, and house flippers generally don’t need lengthy loan terms.
» Purchasing Commercial Property
Hard money loans are ideal for investors purchasing unique properties that don’t qualify for conventional financing.
What type of properties qualify for hard money loans in California?
Even though hard money lenders issue loans for almost any commercial property, certain property investments pair well with hard money. These include the following:
- Single-family properties
- Multi-family properties
- Mixed-use properties
- Condo conversions
- Duplex, triplex, quadplex
- Large developments
- Commercial properties
How long is the term of the hard money loan?
Hard money loans usually have much shorter terms than conventional loans, with repayment periods that range from as low as six months to two years or more.
How fast can hard money loans close?
One of the most important questions to ask a hard money lender is how quickly they can close a loan. At RTI Bridge Loans, our hard money loans close in as little as three days!
How can I qualify for a hard money loan?
You must meet certain qualifications to obtain a hard money loan for real estate investments. Here are the three main hard money loan conditions:
» Down Payment/Equity
The most critical factor when trying to qualify for a hard money loan is the deal itself. To protect themselves in case of default, hard money lenders have to ensure that they have enough equity secured.
» Overall Financial Stability
The more cash reserves you have, the more likely you will be authorized for a hard money loan.
» Real Estate Knowledge
Most hard money lenders want to first learn about the borrower’s real estate background. First-time borrowers often have limited expertise and may experience more difficulty obtaining a hard money loan than seasoned real estate investors.
What documents are involved in a hard money loan?
The typical documents you need when applying for a hard money loan vary from lender to lender but may include the following:
- A note and a deed of trust
- A personal guarantee from the borrower
- Personal financial statements such as proof of income past tax returns and
- Assurance that you have access to sufficient funds to perform any proposed property renovations.
Are Hard Money Loans a Good Idea?
A hard money loan can be beneficial in tricky situations because it offers rapid fund disbursement with considerably less borrower scrutiny — which can be the perfect fit for projects on tight timelines.
Hard money loans are a good idea because of the following:
- Fast turnaround: Hard money loans can often be closed more quickly than traditional loans, mainly because the lender’s primary concern is your posted collateral. Bank statements, tax forms, credit reports, and your employment situation are distant secondary considerations.
- Flexible terms: Instead of using a traditional underwriting process, hard money lenders evaluate deals on a case-by-case basis. Revising the loan’s duration and repayment schedules may also be possible.
- Approval amount: When purchasing an investment property, the lender will approve you for as much as the property is worth.
As long as investors give ample consideration towards the higher interest rates and fees and mind the shorter repayment period, there are very few drawbacks to utilizing hard money financing — as long as the situation calls for it.
What risks are associated with hard money loans for commercial real estate investments?
The only significant risk of hard money loans is the higher interest rate and fees. Hard money loans usually have higher interest rates than traditional loans. They also come with additional fees such as origination, processing, and closing costs. Additionally, they typically have a shorter repayment period, making it difficult for investors to repay the loan on time. Also, you may risk losing your property if you cannot repay the loan.
What is the average interest rate on hard money loans in California
While the average interest rate on hard money loans varies from one lender to another, the average hard money loan interest rate in California for 2024 is 10-18%
Do hard money lenders require a down payment?
In most cases, hard money lenders require a down payment of 10-25% of the purchase price. If you have a decent credit score and plenty of experience, you can potentially put less money down.
Are there any alternatives to a hard money loan in California?
While hard money loans seem like an attractive solution for California real estate investment financing, there are several options available that you may consider:
- HELOC
- Cash-Out Refinance
- Home Equity Investment Products
- Peer-to-Peer Loans
Whichever option you choose, it is essential to consider the total cost of your financial solution and the loan value before committing to it.
How is RTI Bridge Loans Unique from Other Hard Money Lenders in California?
RTI Bridge Loans has the perfect selection of hard money loans for property investors in California. Choose us for:
» Consistent, Responsive, and Reliable Service
At RTI Bridge Loans, we pride ourselves on providing excellent customer service. We walk you through the entire process so you know what to expect. Quit your search for “hard money loans near me” and take your business to RTI Bridge Loans!
» Licensed Lender
Unlike many hard money lenders in California, RTI Bridge Loans is fully licensed and insured. Quick Approvals: We can approve hard money loans within a week, sometimes even on the same day.
» Wide Service Area
We are located in Gardena, CA, and provide hard money loans throughout California and neighboring states.
Need Reliable Financing for Your Real Estate Investment?
Need funding fast? Look no further than RTI Bridge Loans!
If you’re a California real estate investor looking for flexible terms, fast funding, and increased liquidity, consider applying for a hard money loan at RTI Bridge Loans. Our experienced team can help you find the right loan option to meet your unique needs.
Call us today at (562) 857-2285 or fill out the online form to see if you qualify for a hard money loan!
