Is hard money loans only for distressed properties?

[Simon Obas]

Greetings! Is it normal to use a hard money loan to acquire an invest property that’s ready to go/doesn’t require work? So I’d borrow the money just to get the home and then do a cash out refinance later. Is that normal or is this a silly idea?

[Alex Shea]

Hi Simon,

Great question! Yes, we've done plenty of those specific deals before especially with wholesalers. I would go with a hard money loan if the conventional path is: i) not fast enough to fund; ii) you're tapped out on a global LTV basis; iii) you need up to 100% of rehab costs to be covered, which I know isn't your case; and/or iv) you want a loan to be underwritten with the asset in mind and minimal emphasis placed on borrower FICO. Otherwise, conventional is cheapest for sure and gives you more time to secure permanent financing. It never hurts to at least inquire the HML route if you check off any of the above boxes.