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Why Hard Money Lenders Are Better Than Banks

If you are a real estate investor and looking for funds to finance your property or you want clear and better terms in repaying your loans, then going with a hard money lender can be your best choice.

And here’s why you should:

Deals are more important than your current credit score. This means you can secure a loan from a hard money lender even if you have a bad credit score. But with banks, we cannot even think for a loan with a bad credit score. Private money lenders don’t care about your credit history. They only look for a profitable deal. And if you can present one, then you have got a deal!

Get a loan with a hard money lender in a day! Yes, it is that easy. You don’t need to get queued in long lines and talk to dozens of representatives only for your loan to be rejected in the end. Hard money lenders can provide you with the money in a matter of days. You only need to present a good deal to them. If a hard money lender thinks that the house or property has the huge potential to be sold immediately, then he will provide you with the loan.

If you propose a really good deal to your private money lender, There are chances that you don’t need to spend even a single dollar from your own pocket to complete a deal.

Why do you need hard money lenders while investing?

You need to have sufficient amount of money to buy the property of your choice. If you have sufficient cash flow, it becomes much easier for you to act quickly in case a good deal pops up. Above all having a hard money lender by your side makes your work easier, this improves your credibility as an investor.
There are many reasons why most of the real estate investors choose hard money lenders for help. One of these reasons is that these private lenders are not bothered about the borrower’s credit history or financial status. An investor can still borrow money from these non-traditional financiers even if they have poor credit scores.
The other reason why the real estate investors prefer borrowing money from hard money lenders is that they can obtain coverage for a property’s repair cost. It is interesting to know that why these lenders are willing to risk their money on the borrowers who were probably turned down by banks and other leading institutions. Basically, hard money loans are based on the benefits it offers to the lenders.
It means the value of a property, for which the loan is being given, has priority over a borrower’s credit score. As long as your property has a high after repair value, the lenders will approve a loan application, regardless if the borrowers are capable of quickly paying back the mortgage or not.
The other reason why the real estate investors choose to borrow funds from hard money lenders is that they can obtain coverage for a property’s repair cost.
A positive selling point of hard money loans is that the funds can be released immediately. A bank needs about a month to decide on a loan eligibility, but a private lender can approve a loan application in less than a week.
Hard money lenders can be real estate investor’s best friend. This is the reason why an investor should cultivate good relationships with these financiers.

Take a Local Approach to Hard Money

There are a lot of options when looking to get a hard money loan .Commercial mortgage
brokers can feel overwhelmed in knowing who to trust and where to go to find the best option
for their clients. 
It’s easy to choose or partner with a national lender because of their excellent programs and
extensive reach. Arranging a hard money loan through a local partner, however, may be the
better option in many cases. A local hard money lender is someone who lives close by, can be
on-site within a few hours and can meet clients face to face. Unlike national lenders that deal
with everything via fax or phone, local lenders can be there in person to help your client along
the way. 
Local hard money lenders are not affiliated with any banks. key reasons why choosing to work
with one of these specialty lenders is the right option for a commercial rehab or fix-and-flip
project. These reasons include the lender’s speed, extensive knowledge, varied partnerships
and valued support.

An Introduction to Fix and Flip Loans

Every house flip starts with actually finding the property. Once you find the property, you’re left with figuring out how to finance the project.

And unless you’re independently wealthy, you’ll have to borrow money to finance four parts of your house flip:
1.The purchase price of the house (you’ll need to bring 20% to 45% of the purchase price as a down payment depending on the lender)
2.The “holding cost” of the home (e.g. insurance payments, HOA fees, and other costs of owning the home while renovations are underway)
3.Materials and labor for the renovation
4.Realtor costs and closing costs to find a buyer and sell the property post-renovation
The first thing you should know before searching for financing is that getting traditional bank loans for fix and flip projects usually isn’t the best route.

Top 10 Tips To Make Your Real Estate Investment More Profitable!

If you are a first-time real estate investor, there are lots of things for you to learn. Real estate investing is more complicated than investing in stocks because of the financial, legal, and extensive due diligence requirements involved. That’s why you are advised to give yourself a solid education before you purchase your first investment property. Here are top 10 tips to help you become your investment more profitable:

1. Set your budgets carefully. Purchasing an investment property requires a lot of study, planning, and budgeting to be certain that your investment will have a positive cash flow that is in your expectations. Especially you need to set your budgets carefully because it’s very important to get a satisfactory return on investment through either reselling the property, or through rental income. Evaluate the trends in the market as you are setting your budget, to make sure the purchase allows for expected occupancy levels or changes in value.

 

2. Choose a property that is more likely to increase in value is the most important decision you will make, so buying at the right price is absolutely critical. To evaluate your potential market, don’t only look at what homes are currently selling for, but study people’s reactions to those prices. You are advised to do your research and find out the right property at the right price for your investment.

 

3. Research your market carefully, look for the areas of town that are on the rise. Also, watch for markets near these areas which may be on the low end of the curve, and getting ready to start an upward trend again. As an investor, you need to find markets which are starting to move up the investment curve so that you can sell towards the top.

 

4. Buying real estate properties have its own unique needs and different market pressures. So do your research and understand your market closely for the reasons you are buying investment property. Whether you are buying vacation rental properties or homes to fix up and resell to families, you need to evaluate the expectations of the renters and buyers in your markets to make sure the property meets their needs.

 

5. You are advised to step away from your own area. Many times when your local market is having a downswing in real estate, other communities in neighboring states, or possibly in other countries are on an upswing and prime territory for real estate investment.

 

6. Estimate the total cost associated with buying your investment property, taking into consideration government costs, stamp duty, establishment fees and other financing costs. You may be familiar with closing costs, insurance fees, documentation costs for your area, but when you step outside of your hometown, you must research. Costs can increase greatly in different communities, especially when you venture across country lines.

 

7. It’s important to check your capital growth potential. Find out what direction is the real estate market moving in your targeted community. You will need to project the capital gains you expect to help determine the potential profitability of the property. Evaluate real estate projects which are underway, and how they might affect your purchase.

 

8. Explore your costs when selling a property in any new market. Capital gains taxes vary widely between countries, and sometimes even among different states. This is a critical piece of information in your profit potential.

 

9. Analyze your potential profit margin. For rental property use estimated occupancy levels, and rates to estimate your potential income over the time you will hold on to the property. Will it produce a positive income? Figure out the same for properties you plan to resell. Make an estimate the potential sales price after renovations, and then figure backward using your budget estimates, to determine an appropriate offer.

 

10. Plan your real estate investment for a long term. Many times property becomes the most profitable after you have held onto it for several years. Unless you are buying property for flipping, you are advised to make your plans for a longer duration.

 

The Bottom Line:

Thinking of buying your first investment property? Following these steps can help you evaluate properties in any location or market conditions, and keep your real estate investments profitable. For more information about real estate investing and its funding, Contact Magna Capital Group, Inc. today at (310) 734 4044 or email at info@magnaloans.com.