When you hear our company referring to ourselves as hard money lenders, we essentially mean that our practice is the lending of money to those who are looking to build, fix and flip, or rehabilitate property. We deal with builders, property rehabilitators, landlords, real estate investors, or flippers, and these types of loans are usually secured using property, rather than the usual credit score. Because of this, hard money lending can be largely beneficial to those who know they can purchase a property and turn it quickly, but still aren’t able or willing to get a standard mortgage.
As far as rates go, hard money loans are traditionally a bit more expensive for two reasons: We typically overlook things such as slight dings on your credit report, and we can make loans that the banks won’t because we have a bit more flexibility. Why? Because we lend based on the property you’re investing in, rather than yourself and your financial situation. The terms for these loans vary, but generally we offer terms of 12 to 36 months, though we do have long-term options as well, depending on the situation. The loan amounts available will always depend primarily on the value of the property in question.
The first thing we’ll say is that we do not deal with owner-occupied residential properties or payday loans – we only deal with loans for business purposes, such as loans made to a Corporation or LLC (Limited Liability Company). Though a hard money loan may not always be appropriate for all deals, we can be your source of financing when the banks will not work with you, or when you need the loan finalized within a certain time frame. For instance, hard money loans are perfect for:
- Land loans
- Fix and flip projects
- Buyers with credit issues, or
- Real estate investors needing to act quickly.
Interest rates for hard money loans will, of course, vary depending on the area you are borrowing in, but it is important to note that they are typically higher, due to the increased risk we take on with the nature of these loans. Because of this, you should also remember that though we do not take your personal credit history into consideration, we do have to consider your plans for the property. This means that it will always be beneficial for you to have an outline of your plans for the property and how you expect to pay off the loan so we can give you the best quote and service possible when you come to us. As hard money lenders, we want to work with you to get the best outcome for both of us, so every little bit of planning on your part with help you a great deal.