Hard money lending refers to the practice of lending money to those wishing to build, rehabilitate, or fix and flip property. Hard money lenders like us deal with people such as builders, property rehabilitators, flippers, landlords, or real estate investors. These types of loans are typically secured with property rather than your credit score, and benefit hugely those who know they can buy a property and turn it quickly for a profit, but still aren’t able to get a standard mortgage.
The rates for these loans are more expensive than traditional loans because we overlook things such as dings on your credit report, and make loans that banks won’t. We lend based on the property itself rather then you, the borrower, and your financial situation.
A hard money loan is, simply put, a short-term loan secured by real estate. We general offer terms of 12 to 36 months, but have long term options as well for those seeking them. The loan amounts we are able to lend are primarily based on the value of the subject property.
Property Types For Hard Money Loans
It is important to note that we do not deal with loans on owner-occupied residential properties or payday loans – we strictly deal with loans for business purposes that are made to an LLC or Corporation, and a hard money loan may not be appropriate for all deals. However, we can be your source of financing when banks are not an option, or you need the loan within a short period of time. These types of deals are perfect for the following situations:
- Land Loans
- Construction Loans
- Fix and Flips
- If you’re a buyer with credit issues, or
- When a real estate investor needs to be able to act quickly.
The interest rate for these loans will vary from area to area, but they will be higher than a traditional loan because we take on more risk with our loans. Our rates range from 10-15%, with 3-6 points of the total amount loaned. When considering this type of loan, remember that although we are not so much concerned with your personal credit history as we are the property value, we also have to consider your plans for the property. Before coming to us, make sure you present a reasonable plan showing how you plan to ultimately pay off the loan to ensure we get you the best deal and loan plan for you.