HardMoney Lender and How Can They Help Your RE Investments?

Real estate investing can be a lucrative business, but it requires capital. While traditional lenders like banks offer loans to investors, they may not always be the best option for those in quick need of funding. This is where a hardmoney lender comes in.

What is a HardMoney Lender?

Hardmoney lenders are private individuals or companies who provide short-term loans that use real estate as collateral. These loans are typically used by real estate investors who need money quickly or those who cannot obtain financing through traditional means. Hardmoney lenders are also known as private money lenders or bridge lenders.

Unlike traditional banks, hard money lenders evaluate the collateral value of the property above all else. This means that even a borrower with poor credit may still be eligible for a loan if the property is worth enough. Hard money lenders typically offer higher interest rates than traditional lenders, but their loans are also funded much faster.

Why Use a HardMoney Lender?

There are several reasons why real estate investors may choose to use hardmoney lenders:

1. Fast approval and funding: Hardmoney loans can be approved and funded within days, while traditional loans can take weeks or even months.

2. Borrowing flexibility: Hardmoney lenders are typically more flexible than traditional lenders when it comes to repayment terms, interest rates, and loan purpose.

3. Lack of credit requirements: Because the loan is secured by the real estate property, hardmoney lenders may not require a high credit score or credit history.

4. Creative financing: Hardmoney lenders are more likely to finance unique properties or situations that traditional lenders may not.

How Do HardMoney Lenders Work?

Hardmoney lenders make money by charging interest and fees on the loans they provide. The interest rates on hardmoney loans are typically higher than traditional loans, with rates ranging from 8-15%. Hardmoney lenders also require points, which are upfront fees charged as a percentage of the loan amount. Points can range from 2-10% of the loan amount.

Loan terms for hardmoney loans are typically short, with most loans lasting anywhere from 6-24 months. Some lenders may offer longer terms, but these are less common. Hardmoney lenders also typically require a down payment of 20-30% of the property’s purchase price.

When evaluating a potential borrower, hardmoney lenders typically look at the value of the property above all else. If the property is worth enough to cover the loan amount, the lender may be willing to lend to the borrower regardless of their credit history or financial situation.

How Can a HardMoney Lender Help Achieve Real Estate Investment Goals?

There are several ways in which hardmoney lenders can help real estate investors achieve their investment goals:

1. Quick financing for time-sensitive deals: Hardmoney lenders can provide financing quickly for deals with tight timelines, such as auctions, foreclosures, or distressed properties.

2. Flexible financing options: Hardmoney lenders can offer more flexible financing options than traditional lenders, which can make it easier for investors to structure deals in a way that works for them.

3. Lower barrier to entry: Hardmoney lending can be a good option for investors who cannot obtain financing through traditional means, such as those with poor credit or limited financial resources.

4. Creative financing options: Hardmoney lenders are more likely to finance unique properties or situations that traditional lenders may not, such as fix-and-flip or rehab projects.

FAQs:

Q: What is the difference between a hardmoney lender and a traditional lender?

A: Traditional lenders, such as banks, evaluate a borrower’s creditworthiness and financial situation above all else. Hardmoney lenders evaluate the value of the property above all else and are typically more flexible in terms of loan purpose, repayment terms, and interest rates.

Q: What types of properties can be financed with hardmoney loans?

A: Hardmoney lenders can finance a variety of property types, including residential, commercial, industrial, and land. Some lenders may specialize in certain property types.

Q: What are the interest rates and fees for hard money loans?

A: Interest rates for hard money loans are typically higher than traditional loans, ranging from 8-15%. Hard money lenders also charge points, which are upfront fees charged as a percentage of the loan amount. Points can range from 2-10% of the loan amount.

Q: How quickly can hard money loans be funded?

A: Hard money loans can be approved and funded within days, while traditional loans can take weeks or even months.

Q: Do hard money lenders check credit scores?

A: Hard money lenders may check credit scores, but they typically place more emphasis on the value of the property. Even borrowers with poor credit may still be eligible for a hard money loan if the property is worth enough.

Q: What is the typical loan term for hard money loans?

A: Loan terms for hard money loans are typically short, with most loans lasting anywhere from 6-24 months. Some lenders may offer longer terms, but these are less common.