Hard Money in Houston
As financial products evolve and change, there are many new terms that potential real estate investors may not be familiar with. Hard money lending is one of these terms that are really changing up the way the real estate market works. If you are interesting in real estate, understanding hard money loans is vital. Here are five instances when a hard money loan can help your real estate business.
You Need Capital for Your Real Estate Project
Starting a real estate business can be exciting and also daunting. In the past real estate investing was reserved only for the really wealthy or the really credit worthy. Hard money loans are making real estate business opportunities available to average people with big dreams. A loan for hard money in Houston can get money to you quickly for your first fix and flip real estate project.
You Do Not Have Perfect Credit
Although credit is checked for a hard money loan, your credit worthiness is not the end all of qualifiers for this type of financial product. Hard money loans are based on the collateral of the prospective property. This gives real estate business opportunities to individuals who may not have otherwise been able to pursue this type of business.
You Want To Fix and Flip Quickly
Hard money loans are not for properties which will be held for the long term. Hard money loans are usually established for 3-12 months. This is generally the amount of time that a real estate investor would need to re-sell a house or to fix and flip a property. The short terms of these loans allows investors to quickly get capital for their projects and turn a profit in a short amount of time.
You Can Pay Closing
Individuals who are looking to obtain a hard money loan in Houston usually do have enough cash on hand for a down payment and closing costs. If you do not have money on hand for these expenses it is an indicator that you are not ready for this type of investment. Closing costs will vary by hard money lenders. Doing a bit of research beforehand can help you determine which hard money lender will best serve your specific needs and real estate ambitions.
You Understand Interest Rates
Hard money lenders tend to have higher interest rates than traditional mortgage lenders. This is due to the fact that the loan is dependent on collateral instead of credit worthiness. It is also due in part to the short terms of the hard money loans. Because borrowers plan to re-sell properties within a short amount of time, interest rates can be higher without interfering with the ability to make a profit.
You Are Committed to Your Project
Hard money loans in the Houston area are available to individuals who are committed to their real estate projects. If there is any doubt you can see your real estate project through, then a hard money loan can be a risky endeavor. Because hard money can be obtained quickly and without extensive credit considerations, it can be very tempting to jump in without fully considering the scope of the project. In instances when many repairs must be made before the property can be flipped, potential investors must carefully evaluate their commitment to the project before obtaining a hard money loan. It is also helpful to carefully consider the housing market in the area you plan to purchase to ensure your chances of success.