Investors would agree to the fact that it’s quite a challenge having to secure financing for their projects. Securing a capital is necessary for rehabbers before they can start renovating a home for rental or sale eventually, and to acquire the property, cover listing fees, and many other expenses that are necessary. Most fix-and-flip investors would rely on hard money loans when it comes to funding their projects. The advantage of doing business with hard money lenders is that they specialize in serving fix-and-flip investors and they would usually offer them a much quicker turnaround and a lot more financing options that you can’t avail from traditional banks. Below are important things you may want to keep in mind when it comes to hard money loans. Follow the link for more information about Texas Hard Money.
Higher rates and shorter terms.
Each hard money lender have different terms. However, one thing for sure is that these types of loans can give you a significantly shorter term than those of traditional bank mortgages and these usually have maturities that would range from one to three years. Lenders would expect rehabbers to have their renovations done and that they should have resold properties before due of their loans and will use the sale proceeds to be able to settle their loans. The loan works with the idea that monthly interest payments are due while renovation is ongoing and principal is due once the home is sold. As mentioned earlier, hard money loans have shorter terms than conventional mortgages and it is because of this that they tend to have higher interest rates. Get more information about Bridge Loans.
Quick Turnaround Gives You Advantage
The thing about hard money loans is that you can actually gain access to capital a lot faster than conventional bank financing. You can be assured of the fact that hard money loans are quickly processed, with some lenders being able to provide you with loan approvals on the same day. You can also expect rapid dispersion of funds usually within days of approval. The fix-and-flip investors are enjoying a distinct advantage on the fast turnarounds on the loans in terms of competition with other buyers for properties. Also, when it comes to hard money loans, lenders will focus mostly on the property’s value and not so much about the wealth of the borrower. A reputable, skilled rehabber who seeks to finance a property may still be qualified for a hard money loan even if they don’t really have a perfect credit score or bankruptcy.
You can also enjoy the versatility of hard money loan. The more types of properties you cover as a fix-and-flip investor, the more profit opportunities you can enjoy with hard money loans. You can read more about hard money loans https://en.wikipedia.org/wiki/Hard_money_loan by clicking the link.