The Pros of Hard Money Loans

There are a lot of hard money lenders like SFR Ventures, Inc. that are looking for projects and are ready to lend prospective investors money. Just keep in mind that hard money lenders are also looking for well thought out and researched plans. It is also just as important that the borrower can bring “skin in the game”, meaning that hard money lenders want the borrower to be in a position to finance some of the project as well. These types of loans are short-term and usually range from as little as six month and possibly as long as two to three years.

Any investor, whether new to the game or a seasoned professional, knows that raising investment money can be difficult. It can be even harder if you have a less than perfect credit rating. An investor needs to be aware of their finance options. You don’t necessarily have to have perfect credit to get a hard money loan, but you do need to have a good exit strategy and you should have the ability to bring some of your own money to finance your project.

One good option for the real estate investor is a hard money loan. Here is a short summary of a hard money loan and how to repay it. You should always keep in mind that your lender is going to need information as to your project, your budget and your intention/ability to repay your loan.

To speed up the process of your application, make sure that you have prepared your information relating to how you plan to use the money. As the investor, you should also have worked out a budget that outlines the estimated total costs of the renovation/project, including contingency money. A well-thought out plan is key in expressing your project and showing the hard money lender that you are prepared and serious about completing the project. Not being totally prepared may delay a formal approval of your loan.

Most lenders will require some sort of asset to secure your hard money loan. Some will lend you money based on the value of the real estate offered as a security for repayment of the loan. The only potential downside of hard money loans is that your interest rates can be higher.

On the positive side, hard money loans are faster to approve and are usually approved within a few days. Another advantage of hard money loans is that there is more weight placed on what you offer as “collateral” than on your credit score, checking account balance or other income requirements that more traditional lending institutions use to determine denial or approval of your loans. You usually have the ability to borrow up to 70% of the property’s value.

A hard money loan may be the right choice for you. The advantages of easy access, convenient requirements and rapid processing allows you to make your dreams of real estate a reality.