Investment and Rental Property Loans

Securing financing with a hard money lender offers you several benefits, including:

• Speed: Time is essential, especially for real estate investments, and hard money lending can help speed that process along.
• Flexibility: You can negotiate on loan terms of hard money loans since you deal directly with individual investors. 
• Collateral: With hard money financing, the property is your collateral for the loan. Some lenders even accept other assets, like residential property under your name or construction equipment.
• No “Red Tape”: While conventional borrowers must worry about credit scores, LTV ratios, and debt-to-income, hard money lenders are asset-based lenders who are more concerned with the collateral than the borrower’s credentials.
• Convenience: Supplying a lender with bank statements, tax returns, income documentation, and leases can be overwhelming and time-consuming. On the other hand, hard money cuts out the middleman and many headaches.
• Volume: You should consider hard money rental property investment loans If you want to fund multiple deals at a time. This is because hard money lenders allow investors to leverage other people’s money.
• Competitive Edge: Hard money gives you a competitive edge over the competition, or at least those using traditional loans.

The process of obtaining hard money loans for rental property can vary, but it typically takes 1 to 14 days. This timeline includes application submission, prequalification, approval, and loan agreement finalizing.

Hard money lenders, such as RTI Bridge Loans, tend to focus solely on the value of the collateral securing the loan and don’t consider the borrower’s credit score.

Here are the essential hard money lending terms:

1. Collateral: This is the asset the borrower pledges to the lender to secure a loan.
2. Loan-to-Value (LTV) Ratio: This is a percentage that represents the proportion of a loan amount relative to the appraised value of the collateral, used by lenders to assess risk in lending.
3. Loan-to-Cost (LTC) Ratio: This is the ratio of the loan amount to the total cost of the property, including purchase price and renovation costs.
4. After-Repair Value (ARV): The ARV is the property’s estimated value after completing repairs and renovations.
5. Appraisal: An appraisal is the assessment of a property’s value
6. Loan Term: This is the length of time over which you need to repay the loan.
7. Default: A loan default can occur when a borrower fails to adhere to the agreed-upon loan terms, which can result in consequences such as the lender taking possession of the collateral property or pursuing legal actions to recover the outstanding debt.
8. Exit Strategy: An exit strategy is the borrower’s predetermined plan for repaying the loan, often involving selling the property,using other financial means to meet the loan’s terms and conditions, or refinancing with a traditional mortgage.
9. Equity: Equity is the difference between a property’s value and the amount owed on the loan.
10. Refinance: This refers to the process of replacing an existing hard money loan with a new loan, often with more favorable terms or a longer repayment period, in order to pay off the original loan and potentially access additional funds for various purposes.
11. Origination Fees: This refers to the upfront charges or costs that borrowers are required to pay to the lender for the processing and initiation of a loan.