Commercial Hard Money
Although in the past residential and commercial hard money loans have gotten a bad reputation, today this is a viable real estate tool that can help individuals turn a non profitable piece of property into a profitable investment. In today’s market there are stricter guidelines governing how hard money loans are issued and regulated, making the shady hard money dealers of the past ancient history. Understanding how hard money lending works can help you take your real estate goals to the next level.
What You Need to Know
First it is important for potential hard money borrowers to understand that a hard money loan is not like a traditional mortgage. The hard money loan is usually backed by private investors rather than a bank or credit union. The other thing you should understand is that although in the beginning of the loan you will pay only interest, or interest with some principal, later you will have a balloon payment. Hard money loans are done this way, because in most cases the intention of the borrower is to invest the money into the property and then to turn a profit quickly.
Residential and Commercial hard money loans are usually set up for short periods of time, as little as 12 months or a long as 24 months. This is a very short amount of time when compared to traditional mortgages which are usually set to last 15- 30 years. This short life of the loan helps the borrower to do the repairs or upgrades that need to be done so that the property can be sold quickly for a profit.
Hard money lenders generally will loan money on any property type. This includes, single family residential, multi-family residential, commercial or land. If you find a hard money lender who is not willing to work with your property type it could be due to their simply not having experience with that property type. A little more research will reveal a lender who will be willing to work with you. Most hard money lenders will not loan money on an owner occupied residence, however, because there are other rules and regulations which apply in those situation.
What Can I Use Hard Money For?
Hard money loans can be used for a variety of real estate deals. If you have great credit, plenty of time, and are purchasing a home to live in, going through a traditional bank can be a good option for funding. Hard money lending is designed for projects in which a bank is not going to be a viable option or when the loan is needed very quickly.
Hard money loans are great for fix and flips, land loans, construction loans, when there are apparent credit issues for the borrower or when time is of the essence. This is especially true with rehab properties and anything else one might be looking to fix up and sell quickly.
Who Should Get A Hard Money Loan?
Hard money loans are usually procured by real estate investors who want to move quickly with their real estate projects. Hard money loans are usually funded within a week as compared to a month or more with traditional loans. This gives the real estate investor a significant advantage in order to move a property quickly onto the market during a certain time period.
Hard money loans are also perfect for real estate investors who may not have great credit. Hard money loans allow those with or without the best credit to pursue their estate dreams. If you’re in need of a residential or commercial hard money loan, or just have some questions, call or fill out our short form.