Would it help you as a real estate investor to be able to "Close For Cash in Days," even if you're tapped out financially?
Hard money lenders are perhaps the best way to get 100% financing with easy qualifying, money for fix- up, and fast closings.
So what can hard money lenders do for you? Hard money lenders make relatively short term (12-24 month) loans to real estate investors for the purposes of acquiring the property and rehabbing the property.
These loans are often funded by pools of private investors that have been grouped together into a pool of capital by a lender.
The hard money lender is looking for maximum return, and is willing to take more risk for this return in the form of easier lending standards.
If you strike the right purchase deal, you can even borrow 100% of the purchase price plus some or all of your repair money by using hard money lenders. Here's how it works.
Hard money lenders typically loan 65% of the ARV or After Repair Value of the property when it is repaired or ready for resale.
That 65% loaned by the hard money lender is calculated based on the value of the property AFTER REPAIRS, not as it currently sits, and not based on the price is being paid for the property.
For example, Say that the owner is willing to sell me his house for $60,000. The hard money lender's appraiser agreed with my assessment that the home could be sold for $100,000 once it was fixed up. That appraisal would allow me to borrow 65% of the $100,000, or $65,000. I'm only paying $60,000 for the property, so guess where that extra $5,000 goes?
Unfortunately, not into my vacation fund!
The extra loan proceeds go into an escrow account held by the hard money lender, and I can draw it out as I do repairs.
Remember, hard money lenders are not concerned with your personal credit to the level that traditional lenders are. They're concerned with the property. They know that their loan is fairly secure if you default.
What's bad about hard money loans?
The fees are higher than conventional financing.
Hard moneylenders in my area charge 15% interest, and 5% of the value of the loan in closing costs ("five points").
Thus, on a hundred thousand dollar loan, there would be $5,000 in fees to the lender to close the loan, plus attorney's fees and other charges.
Secondly, the loans usually are only good for 12-24 months. After that time, you have to refinance. If you haven't sold it by then, you have to get a new loan, pay more fees, etc. These are not loans to buy rentals with.
Another disadvantage is the fact that most hard money lenders don't figure the payments on a 30-year basis. The longer the payments stretch out, the cheaper the payment. They figure these loans on 15 or even 10-year terms. Thus, the monthly payment that you must pay is much higher than it would be on a conventional 30 year amortization schedule.
Also, hard money lenders are often more difficult to find than traditional funding sources. As a gift, I have compiled a national list of hard money lenders at my site to solve this problem for you.
Finally, most hard money lenders require a pre-payment penalty that must be paid if you refinance or pay off the mortgage before a given amount of time. Fortunately, this time period is often fairly short. For example, the hard money lender that I use has a two month pre-payment penalty period. Even if I am not going to do much work on the property, and have a contract on it quickly, I can just set up the closing for after the pre-payment penalty expires.
In conclusion, hard money lenders present an attractive option for investors to succeed without having to resort to the late night TV creative hype that we've probably all been exposed to. If you can qualify for traditional financing, and your seller is comfortable with a longer closing window, you may want to stay with conventional financing.
However, if down payment money is tight and your credit is not perfect, or you need to close very quickly, hard money lenders may be a viable solution since they will allow almost anyone who can find a good deal to purchase a property extremely quickly, with less red tape, get money for rehab, and have virtually unlimited access to cash.
**Attn Ezine/Blog editors/ Site owners** Feel free to reprint this article in its entirety so long as you leave all links in place, do not modify the content and include the resource box. If you do use the material, please send us a note. Thank You!
David Wnisnant is a real estate investor and attorney in Atlanta, Georgia who teaches cutting edge real estate tactics specifically designed to increase the number of deals investors find, increase the profits from each deal with less risk. Download Dave Whisnant's FREE 50 state hard money lender list and forever banish the problem of where to find the cash for your deals! Go to http://www.realestateinvestingbrain.c om/freehmlist.html
Why does research and education play an important part of... Read More
What is a guru?A guru is a teacher. A mentor.... Read More
Hogwash!That's what I say to people who tell me that... Read More
Never underestimate the power of perception! Perception plays a major... Read More
Imagine that you have operated a successful franchise business for... Read More
Have you ever heard the phrase, 'PREPONDERANCE OF PROOF'?I recently... Read More
Would it help you as a real estate investor to... Read More
If you are thinking of turning your current into a... Read More
Everyone loves a good story. Whether it's the story of... Read More
The revenue history is a vital piece of your power... Read More
What's your job profitability? I meet with business owners every... Read More
Do You Really Need a Toll-Free Number for Your Business?... Read More
The story is told of a tiger chasing some goats... Read More
Your on-line success is based on your efforts and yours... Read More
Business checks are available in many styles and varieties. They... Read More
Being a small or home-based business owner can be loads... Read More
Writing a business plan for a mobile car wash is... Read More
One of the first things you will need to set... Read More
In this paper, I will:1. provide a framework for creating... Read More
Anyone in business today realizes both the natural dependency on... Read More
Technical writing services are employed to explain the details of... Read More
What was your aim when you went into business for... Read More
Perhaps you are building a new home office or you... Read More
In the summer, I can't drive two blocks without seeing... Read More
Small businesses need Public Relations, possibly more than large corporations,... Read More
Cash is King?That is what everyone tells us and it... Read More
The way you manage your money is one of the... Read More
Is your business making money? Would you know?Figuring out whether... Read More
If you've been considering incorporating your small business, you've probably... Read More
In a perfect world, starting a small business would be... Read More
For many small businesses, the "S" corporation is the business... Read More
Sometimes when you run a business you feel as lonely... Read More
Every employee would like to earn as high a salary... Read More
Why does research and education play an important part of... Read More
Today is a Red Letter Day! It's special because today... Read More
Why should you always maintain a good report with a... Read More
CONSIDERING COMPANY NEEDS: In identifying your needs for the internship,... Read More
Why are Chambers a good launching pad?Chambers provide you with... Read More
There's no question that hard work and a little luck... Read More
There is a rather famous true story called "Acres of... Read More
How do you make sure you have the business solutions... Read More
Do you have a Business Plan? Congratulations, but you are... Read More
It is most fascinating to study how entrepreneurs spot opportunity... Read More
Scenario OneDuring a recent presentation, a business owner was given... Read More
Starting and growing a small business can be a daunting... Read More
The employer / employee relations environment has been constantly evolving... Read More
Disclosure laws in franchising are suppose to help the consumer.... Read More
What is a Family Business? A family business is basically... Read More
Everyday more web based companies enter the business scene. The... Read More
Competition in the business world is often viewed as a... Read More
Setting priorities in your business? Your first job is to... Read More
You're pretty proud of yourself! After all, only four months... Read More
Q: I have outgrown my home office and need to... Read More
Many job applicants want a job but often do not... Read More
Office support services can range from basic data entry to... Read More
I love work, I can watch it all day.I am... Read More
There are many potential niches for pressure washing companies that... Read More
Washing the exterior of a truck. Sounds easy right? Well,... Read More
A Mattress Cleaning Business might be just for you if... Read More
How do you know when an alliance needs to be... Read More
What is in an information plan?Before you even meet with... Read More
Don't let your customer satisfaction research initiative collect dust on... Read More
Many mobile pressure-washing companies turn to government contacts to make... Read More
A janitorial cleaning service is one of the best businesses... Read More
During the 1980 presidential campaign, candidate Ronald Reagan vowed, if... Read More
Small business owners can relieve a lot of their own... Read More
Small Business |