- Hard Money
- 1031 Exchanges
We Are Often Asked,
What is Hard Money?
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Usually made by private investors and not by banks, the hard money lenders main concern is that his entire principal will be returned if there is a problem with the property. So he lends much less, as a percentage, than a bank would. |
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He also knows there are more risks because the investment property is usually (but not always) in various stages of disrepair, your basic fixer upper house. For the real estate investor this is a virtual goldmine. If you are able to secure a contract on a handyman special that is undervalued you may be able to get a loan for 100% of the purchase price and the fix-up costs!
The hard money lender is going to base his estimate of value on the price the home will sell for AFTER it is repaired (ARV). Some lenders will even lend you some or all of the fix up money.
People always ask: Why is the interest rate so high? The interest rate may appear high as compared to the interest rates you might pay on say an owner occupied mortgage loan. In reality that is short sighted thinking. You have to look at the situation as "access to capital".
With no money in your pocket, sometimes no credit or income verification, you are able to borrow tens of thousands of dollars, maybe even hundreds of thousands, simple because you have secured a contract on an undervalued handyman special.
What better way can an enterprising person ask for to be able to get ahead in life? With enough work and determination, and just your willingness to learn a few simple rules and techniques you can be on your way to being a full time real estate investor and someone else will provide the money for that to happen!
Do you have a deal now and need funding? Or just want more information?
Find the Right Lender for You!
About the Author
Mike Collins is the Founder of RehabList.com
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