Using Hard Money Loans To Buy Investment Properties
In this blog, we will cover using hard money loans to buy investment properties. Hard money loans are only for non-owner-occupant primary properties. Residential mortgage rules and regulations prohibit hard money loans on residential mortgage lending due to the SAFE Act of 2008 and predatory lending laws.
Asset-Based Mortgage Loans For Real Estate Investors
Why do Real Estate Investors Prefer To Use Hard Money Loans Versus Traditional Loans?
Hard Money Loans are not necessarily for real estate investors with bad credit. Hard money loans are used by sophisticated investors with great credit and income. Why is that?
Hard money lenders can normally close a real estate loan in 30 days or less. There is no stress and red tape during the hard money loan mortgage process.
Mortgage Lending Process on Hard Money Loans
You do not need environmental reports, multiple surveys, two appraisals, engineering reports, income tax returns, financial statements, and other personal financial statements and information.
Hard money loans are asset and collateral based. The high interest is worth every penny for investors who want no stress and a quick fast easy closing.
Timeline From Application To Closing on Hard Money Loans
What Are Hard Money Loans?
There are limited to no lending regulations on investment properties. Regulators and federal law consider real estate investors as sophisticated investors. Therefore, residential lending regulations normally do not apply. In the following paragraphs, we will cover hard money loans and how hard money loans work.
Traditional Versus Hard Money Loans?
Why would any real estate investors use hard money loans versus traditional commercial loans to buy real estate? Hard money loans are high-interest quick cash loans 0ffered by private money investors.
Do Lenders of Hard Money Loans Go Off Credit Score?
Hard money investors mainly are concerned with the borrower’s assets and collateral versus their income and credit.
The ability to repay is more based on if they do not pay, the investor will forfeit the property.
What Type of Collateral Do Hard Money Lenders Require?
Hard money lenders offer hard money loans with large down payments, high costs and fees, and high-interest rates.
Still, many real estate investors would pay high interest and fees to be able to purchase investment properties with hard money loans versus not being able to have the opportunity to buy.
Capitalizing with Hard Money Loans
Do real estate investors need hard money loans? Hard money lending is a huge industry. Many real estate investors will not have the opportunity to be able to buy investment properties without having money loans. Many investors would not be able to invest in real estate without hard money lenders.
Why Would You Use a Hard Money Lender Versus a Traditional Bank?
Hard money lenders are more interested in collateral and assets versus income and credit. Hard money loans are not just for investors with bad credit or investors who cannot show income.
Hard money loans are for investors who are willing to pay the higher interest and costs of the loan because it is much quicker to close on hard money versus traditional investment mortgage loans.
What Are Typical Terms of Hard Money Lenders?
Real estate is hot again throughout the United States. Since the 2008 Real Estate and Mortgage Meltdown and property, investors are back purchasing properties, rehabbing them, and reselling them at a handsome profit.
Why Are Hard Money Loans So Popular?
With tough mortgage rules and regulations with conforming loans, many real estate investors are turning to hard money loans. Traditional loans take an average of 60 days to close on investment properties.
The average timeframe for Fannie Mae and Freddie Mac investment conventional loans take over 45 days to close. Many property investors are turning to Hard Money Loans due to fast turn times of less than two weeks. Closing with hard money loans can take as fast as less than a week.
Hard Money Loans For Bad Credit
How did I get Cash out of my Investment Property while I was getting my Credit Fixed? This is a story a client told me recently. In the paraphrased words of Bob the Borrower:
Who Lends Money on Hard Money Loans?
Hard Money Lenders can be individuals, groups of investors, part-time investors, small investment groups, or financial institutions of all sizes. They make their own rules and regulations. Hard money lenders care more about the individual story than the real estate investors’ financial statements. Once you develop a relationship with a hard money lender, there are many instances they will lend you on a handshake.
Lender Three of Hard Money Loans
Lender number 3 asked about all my credit issues after Bob told him about the 2 flats in Tampa, Florida he could buy for $62,000 and sell for $150,000 after he put $15,000 into it. Why did he now ask him about my credit? He was interested in the deal. Bob had a house worth $180,000 that he owed $15,000 on. Then he had a clear plan, a good deal in place, and Bob appeared to Hard Money Lender 3 to know what the heck he was doing.
Hard Money Loans With Bad Credit
Borrower Bob had credit challenges, but he learned that he has to present an opportunity to a Private Money Lender that makes sense, and helps them both make money.
Can I Get Approved For Hard Money Loans With Poor Credit?
First, you have to sell your project or idea for why you need the money. Remember, there are a ton of other people looking for money. You need to then sell yourself.
Why do you have these credit challenges? What are you going to do to fix them? Why are you a good bet for a Private Money or Hard Money Lender to take a risk on? If you are a real estate investor in need of hard money loans for an investment property, contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
