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September 18, 2012
Shawn Molem
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Getting Comfortable with Hard Money Investing

Tags : estate hard money hard money loan hard money loans home owner loan loans loans typically long provide market value money loan money loans property provide real estate

Many real estate investors overlook hard money loans as a strategy for acquiring property. That’s because these loans are typically used by desperate property owners looking for a way out of the real estate market, rather than into it. But hard money can work for anyone, and it can be particularly useful if you’re a new investor looking to build your portfolio quickly.

Hard money loans can generally be described as high interest loans available to borrowers with any credit rating, as long as they can can provide solid collateral – usually equity in real estate, such as a home. These loans are almost never issued by banks or deposit institutions, but rather by private lenders who specialize in short term lending at high interest.
Normally a home owner in need of a big loan would apply for a second mortgage, using real estate equity as collateral, but bad credit can make things difficult here. If a home owner has missed a few mortgage payments, the banks may refuse to provide more financing – hard money might be the only option in this case.
The limit for hard money loans typically hover at about 60 to 70 per cent of a property’s quick sale value, defined as the price a lender could reasonably expect to realize if the borrower defaulted on the loan, and the property was liquidated fast. The interest rate for a hard money loan is usually in the 15 to 25 per cent range.
Investors can take out hard money loans to buy a property, as long as they provide acceptable collateral – in this case it could even be the property they’re buying. The strategy here is to find a pre-foreclosure property, or any real estate with an owner prepared to sell below below market value as long as the sale is fast. If the investor can re-sell the property at full market value, before too much interest is paid on the hard money loan, he or she can make a significant profit. Hard money loans have helped many successful investors get started in real estate.

August 21, 2012
Shawn Molem
0

A Look at Hard Money Loans For Home Purchase and Residential Hard Money Lenders

Tags : conventional hard money hard money lenders hard money loans lenders money lenders money loans

Category : Hard Money Loans , Real Estate Loans

Hard money is a way to secure property in a short period of time then refinance into conventional finance and can provide an alternative source of financing for real estate investors. Conventional institutional lenders will not finance hard, hairy loans and on the other side equity investors demand very high returns and/or shares of profits.

Investors who borrow hard money understand that this type of loan is more expensive than conventional loans. A hard money borrower perceives that the loan’s value extends beyond its cost. Investor rehab loans are particularly easy to find with a number of competitors but at the same time you should watch out for the hard money lenders that are also wholesalers.

The Lenders

Lenders of so-called “hard money” are becoming more common and more accessible: Perform a search for “Las Vegas hard money lenders” and you will discover many results, many for the state of Nevada, specifically. There are even private lenders based online, at your convenience.

Lenders have much stricter criteria these days, and for a good reason. In today’s society, the laws favor consumers, not banks. So lenders turn to look at whether or not the applicant is worth the financing and if the business plan is practical. They can scroll through the list of entrepreneurs and make a selection based on the person they wish to lend money. Most loans when approved are made via credit card or PayPal.

Most lenders ask borrowers to pay a minimum of five percent upfront deposits, as a guarantee. The greater amount of deposit will shrink your interest rates and mortgage payments under most circumstances. Lenders want the loan to be current, not to have to complete a foreclosure. But can you make up the defaulted amount over a period of months?

The Borrowers

Most people apply for hard money loans when they have credit problems, are in default, have had a foreclosure or bankruptcy, have been recently unemployed, or for some reason cannot provide proof of income.

Borrowers are advised not to work with hard money lenders who require exorbitant upfront fees prior to funding. If you feel you have been the victim of unfair practices, contact your state’s attorney general office or the office of the state in which the lender operates.

Some borrowers love to use hard money lenders on all real estate deals. Borrowers of hard money loans qualify based on the value of their property more so than the quality of their credit history. However, there is a market out there that hard money lenders cannot fund. So make sure you do your research right before taking on a hard money loans.

August 8, 2012
Shawn Molem
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Private Hard Money Loans

Tags : borrowers excellent borrowers excellent credit excellent credit hard money lenders hard money loans money loans poor credit private investors private money qualified borrowers real estate

Category : Hard Money Loans , Real Estate Loans

Private hard money loans used to be a small segment of the financial world. Reserved for those with poor credit, these loans have traditionally been a last resort for many. In addition, many well qualified borrowers would not have considered this option in years past.

With the turmoil in the financial markets these days, however, all of that has changed. These days, private money loans are a viable option for even the most well qualified borrowers. Excellent credit, large down payments or a large amount of equity in a property are becoming the new private money norm rather than the exception.

It used to be that credit played no role in this type of lending. If you had equity and a pulse, someone would make a loan for you. These days, however, poor credit can play a role in dictating your approval with a hard money lender. While poor credit may not deny you a loan, it could require a much more conservative loan than you may expect. At the same time, borrowers with excellent credit and assets are finding that their normal banking relationships are not able to secure the financing they need. Due to this, they are turning to hard money options.

Many people considering this type of financing for the first time may be surprised by the terms. Typical terms on this type of financing can range between 9 and 14 percent, in addition to points being charged on the transaction that can range anywhere from three to seven or more. This is expensive money, but in these times of tightened credit, savvy investors realize that it is still much cheaper than taking on a partner.

Hard money loans are typically funded by a private individual. Sometimes you can have multiple individuals who fund a particular transaction, in which case it is referred to as having multiple beneficiaries. The benefit to this structure for those private investors making the loans is the high rate of return and the security of the real estate that is being used as collateral. With the strict lending guidelines the banks have these days, private investors can make double digit returns, while staying at a 50-60% loan to value. This means they are lending a maximum of 60% of the value of the property, keeping a safe buffer of protective equity.

The benefit to the borrowers is the ability to actually borrow funds. Although the interest rates being charged can be in the double digits, the ability to leverage in this real estate market often times outweighs the cost of funds.

Getting Comfortable with Hard Money Investing

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Getting Comfortable with Hard Money Investing

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A Look at Hard Money Loans For Home Purchase and Residential Hard Money Lenders

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Private Hard Money Loans

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