Top 6 Advantages Of Using Hard Money Loans To Fund Real Estate Deals

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Top 6 Advantages Of Using Hard Money Loans To Fund Real Estate Deals

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Category : Hard Money Loans , private money lenders , Real Estate Loans

A hard money loan is a short-term financing option used to fund the purchase of an investment property. This type of loan is often a financial tool for house flippers or real estate investors whose goal is to renovate or develop a property, then sell it for a profit. Hard money loans offer huge benefits that are not typically available through traditional lenders such as banks and other financial institutions.

Here are top 6 advantages of using hard money loans to fund your real estate deals:

1. Simple, Easy And Quick Loan Process:
The application process for a hard money loan generally takes 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. The simplicity and straightforwardness of a hard money loan has made it a popular choice for all kinds of real estate investors.

2. Minimum Loan Conditions:
In order to obtain hard money loans, a borrower needs to satisfy a short list of criteria whereas a bank has many hard-set requirements, like income history, experience, etc. that need to be met. The entire process of bank loans can become drawn out and the borrower, ultimately, may not even be approved in the end. On the other hand, hard money loans are fairly simple and straightforward. If the hard money lender assesses that a borrower’s target real estate investment is an excellent value and the borrower has at least 20% equity to put into the deal, it is likely that the investor will qualify.

3. Quick Approvals And Rapid Funding of Loans:
Loan approval for hard money loans is far quicker than traditional banks or financial institutions. Traditional loans are based somewhat on your credit, it could take 1 to 3 months to secure a traditional mortgage whereas hard money loans are typically based on the value of your investment property. Since the property is the asset that is backing the loan, hard money lenders are only interested in how much value they see in the property. Depending on your lender, you could obtain hard money loans in a few days or a few weeks.

4. Flexible Term Structure:
Banks are not flexible and typically take a one-size-fits-all approach to all loan requests whereas private hard money lenders can structure repayment and collateral release terms in ways that are mutually beneficial to both borrower and lender. Greater flexibility often results in better outcomes.

5. Works With Bad Credit History:
In order to obtain traditional loans, you should have a decent credit history to meet the bank’s criterion. If you have negative items in your credit reports, the process takes even longer and you might not ever get approved for traditional loans. In the case of hard money lenders, credit history does not matter. They lend based on collateral securing the loan, and they are less concerned about your ability to repay. For hard money lenders, the value of the collateral is more important than your financial position.

6. Zero Prepayment Penalties:
It’s another significant advantage of hard money loans is the absence of prepayment penalties. Traditional financial institutions often charge hefty prepayment penalties if circumstances change and a loan is fully or partially repaid before the due date. You can avoid these fees by opting for hard money loans. Private hard money lenders are fully invested in your success and typically structure loans without prepayment penalties or added fees.

The Bottom Line:
Hard money loans are very beneficial for those who need quick financial solutions and either cannot wait for or do not qualify for conventional banking approvals. You can utilize hard money loans in order to grow your financial portfolio in short-time. Hard Money lenders can fund quickly, within a flexible structure and without prepayment penalties that can unintentionally hinder the success of your business.

If you are trying to get a hard money loan to grow your real estate business, contact one of the most trusted hard money lenders today called Magna Capital Group, Inc. We provide residential and commercial real estate hard money loans at competitive rates. We have helped hundreds of California investors get the real estate capital they need. We are a quick, simple bank financing alternative. For information about our hard money loan programs, Call us today at (310) 734 4044 or email at info@magnaloans.com.

Hard Money in Real Estate Funding

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Category : Hard Money Loans , Real Estate Loans

Real estate funding is crucial to your real estate investing success, and contrary to popular belief it’s really not that hard to find the money.

I believe the number one most frequently asked question for a newbie investor is “were do I find the money to fund my real estate deals.” This is perhaps the biggest concern if not the main concern newbie investors face when starting to invest in property.

Believe it or not it’s actually easier than you think to fund most if not all your investment properties, even in today’s tough economy, with no credit, bad credit, little money, or no money.

You literally have access to over $1,000,000, if you know where to find it of course. The problem is most new comers don’t take the time to educate themselves in the importance of finding, funding, fixing, and flipping deals correctly.

Let me explain how the system works…

Most of you go out and try to find the money first and what happens next is you have absolutely no leverage. While you might have a sound proof plan you still have nothing to leverage it with.

Most private investors, at least the one’s I’m going to be teaching you about need to see a property first.

Why? It’s simple, having the property in contract is going to give you the leverage you need, but it can’t just be any property out there. You have to buy right. Meaning you must purchase the property at a wholesale price. This will determine if you’ll get real estate funding for your deal or not.

I can imagine what most of you may already be thinking. “How can I buy a property if I don’t have any money or credit, it’s just not possible.” How wrong you are.

Find the deal first and the money will come. I can almost Guarantee it.

Understanding how to find the deal first will give you leverage to fund all your deals.

Let me give you an example of what a good deal should looks like.

It’s a secret most newbie investors struggle with when learning how to buy a property because they simply just don’t know how much to pay for a property. I like to call it the 65% Rule. What is the 65% rule? The 65% rule means you don’t offer to purchase an investment property for more than 65% of the fair market value.

So let’s just say you found a distressed property that you know once it’s been rehabbed is worth $100,000 fair market value.

By using the 65% rule you would multiply it by $100,000 or $100,000 x.65 which would equal to $65,000.

In the example above I would offer no more than $65,000 for the distressed property. This leaves you a safety net and a potential profit margin of 35% or $35,000 not including closing costs.

Can you see your leverage power now!

Do you understand how powerful the 65% rule is. Now you see why I’m telling you to first find the deal in order to acquire real estate funding. By following the 65% rule you can acquire real estate funding with little or no money and no credit or even bad credit. I bet you’re wondering who these lenders are right about now?

These lenders are what we investors call hard money lenders.

Unlike the traditional banks that want to check your credit and your income, hard money lenders lend you money based on the property and not you personally.

Private Hard Money Lenders – Choose the One, Which Suits You Best!

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Category : Commercial Loans , Hard Money Loans , Real Estate Loans , Residential Loans

I want to talk about the core difference between private and institutional lenders. An institution is basically a bank or a credit union, which provides funding for different stuff.

On the other hand, private is more about a bunch of people, who works under a private organization, which works towards helping people buying and selling good deals by providing financing. They are not held by government or any other regional organization but they work by themselves and use their own money.

Now, we come down to two basic types of lenders in the world of real estate:

1. Institutional lenders

These are the hard money lenders, who are a part of a bank or any other federal organization and they work with them. Although, it is quite difficult to get a loan from them because they look at lots of things including the borrower’s credit history, job, bank statements etc.

These are only stuffs that institutional hard money lenders are concerned about. They don’t have a real estate background, that’s why; they don’t care much about the worth of a property. Even, if you have a good deal, they won’t lend you unless your credit or job history is satisfactory.

There’s a huge gap between institutional lenders and real estate investors, which isn’t easy to fill.

2. Private hard money lenders

Private money lenders are usually real estate investors and therefore, they understand the needs and demands of a borrower. They aren’t regulated by any federal body and that’s why, they have their own lending criteria, which are based upon their own real estate understandings.

Their main concern is property and not the borrower’s credit history or bank statement. The motto of private hard money lenders is simple: If you have a good deal in hand, they will fund you, no matter what. But if you take a crap deal to them, then they won’t fund you, even if you have excellent credit history because they believe that if you’ll make money, then only they would be able to make profit.

If you have found a hard money lender but he or she hasn’t got any experience in real estate investment, then they won’t be able to understand your deal. They will always think like a banker.

A true private money lender is one, who can help you in evaluating the deal and giving you a proper direction and funding if you find a good deal. But if the deal is bad, they will tell you straight away. Before rehabbing a property, they know what would be its resale value, due to their extensive experience.

The basic difference between institutional hard money lenders and private hard money lenders is that the institutional lenders try to have everything in place and perfect order. They want to have all the figures and the amount of profit they would be making. They completely ignore the main asset, i.e. the property.

Whereas, private money lenders use their own fund and experience to realize what’s store for them. They don’t try to sell the paper or recapitalize. They just look at the property and see if it is worthy enough to rehab or not.

In the end, they just want to make good profits along with the borrower. If anyone goes to them with a good deal, they will fund them. Some of them only fund for the property, whereas, others gives funding for the repairs too as long as they can see a good ROI.

Right ways to know about private money lenders in California

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Category : Hard Money Loans

To find the right private money lender that can meet all your financial needs you are required to carry out some good research work.

Qualifying guidelines to obtain private money is quiet different when compared to other traditional sources of obtaining loan. Private money lenders can guide you with such guidelines in order to allow you to take appropriate decision.

Banks usually do not sanction loan if they find out any risk that is high with a particular investment. In cases like these private money loans can turn out to be really helpful. Private money lenders fund on the basis of collateral. Private money lender basically fund deals that do not come under the terms and conditions of the banks.

Before offering loans to people, banks generally verify the income of the borrower, credit score, etc. If they find any issue in on any of the details of the borrower then it becomes difficult to get a loan. On the other hand private money lenders are a bit more lenient in such verification processes and can offer you with the needed loan.

You have to Inquire about the lender before making any decision. You should know whether the lender you are choosing is licensed or not. Avoid getting into agreement with money lender who does not possess a license.

Private money lenders in California can be found by carrying out proper networking. Get in touch with business associates, accredited investors etc. to know more about private money lending terms and conditions. Browse private money lender directory of California and gain further details about them. This can further make your research work simple.

Look for a private money lender according to the type of loan you want. See to it that loan terms added can work best for you in a particular situation.

Requirement of a Hard Money Lender For Your Next Investment in Real Estate

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Category : Hard Money Loans

It is really essential to have a hard money lender by your side if you are going to make an investment in real estate. Commercial and even residential real estate can be expensive. If you are looking for a profitable deal, then you need to consider the best option. Choosing the Hard Money lender will be a good idea, that can give you the cash that you need to make an investment in real estate and actually be highly profitable off of your endeavors. Hard Money Lenders is a group of individuals that offers you a substantial amount of hard money so that you can purchase short sales, foreclosures, or other excellent deals on the real estate market. Within a short period of time, you can become profitable off of your investment and start to repay the hard money that you owe.

Hard money makes real estate investments more profitable:

When you choose hard money lenders, your real estate investments are going to be even more profitable. You won’t have to worry about interest rates or difficult down payments, hard money lenders typically require very little advance. This is why they are so beneficial to the investors. They give you the cash that you need with a small down payment and once you buy the property and sell it, you can pay back the loan in full and make more profit. Hard money lenders help investors make more money off each property that they buy than a bank could even come close to.

Hard money lenders are easier to work with:

To work with a hard money lender is much easier than working with a bank. You will not be tied down to any ridiculous fees or complications, they are flexible while working with you and wait for your property to sell before you have to repay the cash.

Hard money lenders require a small down payment:

The most significant benefit to a hard money lender is that the down payment usually is very small. When you compare this to the bank, it is very affordable. Hard money is unique in this way, there are very few loans out there that do not require a down payment.

Hard money lenders have a lot of benefits when you compare the loans that they provide for traditional bank loans. If you want to save money and get the property that can be incredibly profitable for you, then you need to look into a hard money loan provider in the California area

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