So what exactly are the hard money loan benefits?
Unfortunately, not everyone on this earth is qualified to receive a loan from the bank. A history of bad credit, no credit and high debt in your portfolio can really stack the cards against you, lowering your chance of being approved by most financial institutions. So what should a person do if they can’t receive money in the “typical” way? Those that often have a hard time borrowing money often turn to private lenders which are also referred to as hard money loans.
Finance your Rehab
One of the biggest advantages of hard money is the ability to borrow funds for renovation expenses. Most investment properties have some equity potential, but the average home buyer is often discouraged by the less-than-attractive condition of the property. As investors we create margin by having the ability to find, acquire and renovate these properties. The ability to finance the purchase and repairs is key to this equation, and hard money is one tool that allows us to do just that.
If you have ever been to a bank you already know it’s a slow process. When the process is all said and done, there isn’t a guarantee that the bank will approve your loan and the opportunity might come and go.
Private loans are different. Private loans generally take less time for you to be approved for the loan, which allows you to use your loan money quicker. This time saving process can allow you to act on more opportunities and even gain an edge on the competition through speed and execution. These are just some of the hard money loan benefits.
Private lenders can offer you more flexible terms on the loans they give you because they aren’t handcuffed by bureaucracy. Additionally, private lenders often take a more personal interest in you and your business! Great private lenders will look for terms to benefit both themselves and you. If you want more flexibility on your repayment, a private lender might be for you.
Using a hard money loan, an investor may be able to use hard money financing for the purchase and repairs, while having to place only 15% down on the total cost.
As a quick example, a $50,000 purchase needing $20,000 in repairs could potentially cost an investor $30,000 out of pocket using a conventional loan ($50,000*20% plus $20,000). However, if that investor uses hard money financing instead, the out of pocket cost may be more like $10,000 ($70,000* 15%). Even if an additional $5,000 is added to the equation to cover loan fees and closing costs for the hard money loan, most investors are perfectly willing to factor in this cost in exchange for the leverage hard money provides. These are the hard money loan benefits.
If Fixing and Flipping houses is a part time gig or your full time job please check out how Capital Fundings can help you achieve your goals. We offer great service, great rates and great terms AND our valued experience in the Central Florida Real Estate market. Apply online now at www.capfundings.com