Hard Money Loans

New York, NY, United States (AHN) – Coffee lovers face rising prices because prices for coffee beans continue to rise on commodity markets.

Retail prices for bagged coffee on grocery store shelves have already gone up and more price increases are expected.

Poor growing conditions in South America and other coffee-producing areas has caused concern over shortages of supplies, resulting in investor speculation in commodity markets that has driven up coffee futures prices by 95 percent during the past 12 months.

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Earlier this week J.M. Smucker increased prices by 11 percent. It marks the fourth time it has raised prices in a year. Smucker sells Dunkin Donuts, Folgers and Millstone brands. Kraft, which owns Maxwell House, has raised its prices three times recently.

Then on Wednesday, Starbucks announced plans to raise prices in mid-July by 17 percent for bagged coffee.

Green Mountain Coffee Roasters also announced plans to raise coffee prices by 10 percent.

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Aspen Financial Services faces at least the fifth investor lawsuit filed since 2008. The company is a hard-money lender. Aspen has moved to dismiss a lawsuit filed against it in January by an investor who is a Las Vegas attorney.

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Why A Hard Money Loan.

The reason real estate investors choose to use hard money loans is that they are a source to purchase and rehab property to make a substantial profit that they may not have without the use of this expensive money. These short term loans are expensive and even if they were legal for a home owner to borrow from the private lenders offering these loans it would never be advisable. So how hard are these short term loans, you ask? The answer is threefold. They are restrictive in loan to value, they are high in rate and high in fees.

Restrictive in Loan to Value.

The maximum loan to value for most private loans range from 50% to 75%. No deals are done at the higher loan to value for two reasons. First the hard money lender requires lots of equity in case of default they can list and sell the property quickly because they will in theory be below market value. The reason I say in theory is because there are so many REO’s, Short Sales and foreclosure properties on the market today that what was normally considered an exceptional deal is common place. Therefore, private lenders are more particular about the properties, borrowers and loans they choose to fund.

Secondly, any real estate investment that has less than 30% equity are not good investments for the investors unless they are purchasing the property for the cash flow. In that case they are long term investments and not suitable for the short term nature of these expensive bridge loans.

High Interest Rates.

Whether as n real estate investor buying and or rehabbing commercial or residential investment real estate the interest rates are much higher than conventional commercial or residential investment lending. The rates are higher much because the risks are much higher and there source of these funds are limited. Risk and Reward. Supply and Demand. The risks are higher because these loans are not underwritten based on the standard conventional guidelines and there is a very limited or no secondary market for private bridge loans. This is generally not an issue because the borrowers know these are only short term loans. The terms range typically from 3 to 24 months. Therefore, the higher interest rate is of minimum importance because both lenders and borrowers know that the borrowers have an exit strategy to quickly payoff these high interest rate loans. Most lenders require a viable and verifiable exit strategy before they make will the loans.

Higher Points.

Because these loans are short term in nature the hard money lenders always charge discount points. They may charge 1 to 5 points. In addition the private money brokers will charge 2 to 5 points. An average a borrower will 5 to 10 points. Plus closing costs. These are high fees. They only make sense when an real estate investor will make substantially more money and they have no other way to fund the deals.

Why Use Hard Money Lenders.

Simply to make money. As a real estate investor you have choices in financing your deals. You can choose conventional financing that requires at 30% to 35% down payment for properties that are in good shape. There are many other conventional mortgage criteria including credit, cash reserves, seasoning of funds and property. These all make conventional financing almost impossible.

Another option is to use your own funds and not finance a deal at all. But, most astute real estate investors know that if they can make a net profit of $25,000, $50,000, $100,000 or more using a hard money loan they do not like the fees but they we pay them versus not making any money because of lack of financing.

Louis Jeffries has been a Mortgage Banker for over 20 years. A Investor Rehab Specialist Louis will help you fund you next rehab or construction project. Contact Louis louisj@alldominionmortgage.com 708-299-3244 Visit The Blogs Investor Rehab
Hard Money

Author: Louis Jeffries
Article Source: EzineArticles.com
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There are tons of loans available for real-estate investors. One type of loan commonly used by investors is the Hard Money loan. These loans allow investors to buy and fix investment property. If used correctly it can definitely put money in your pocket right away. But, be aware because there are some pitfalls you will need to avoid in order to be successful. Below explains how a Hard Money works and what to look out for.

1. Scope of Work- for these specific types of loans lenders will require the investor to provide a scope of work worksheet. Every repair you plan to make needs to be written down on this sheet. The scope of work worksheet is what the Hard Money lender will use as a guide, in order to pay for the project. If repairs are done that are not on the worksheet, then you may have trouble getting reimbursed by the Hard Money lender. The lender will want to see everything written down to be sure everyone is on the same page. Lenders will normally allow investors to change the scope of work in the middle of the project if able and necessary.

2.Requirements- Most Hard Money lenders now want 20% down from the investor on all projects. The lender will also want to see reserve money sitting in a bank somewhere. The investor’s monthly income will play a big role with the lender in approving the loan. Credit score is a factor, but they do not require a stellar score to be approved for a loan. The last Hard Money lender I used did not even pull my FICA score, they just wanted to see a copy of my credit report-which I was able to order for free. There will be requirements for loan to value, but each lender will have their own set of guidelines.

3. Over estimating repairs- Repairs on an investment property is always just an estimate. When rehabbing property nothing ever goes as planned. Over-estimate the repair that needs to be done to cover yourself if any repairs are added later in the rehab. If you did a good job with the initial inspection, and no additional repairs were needed then you can return the money or keep it. If you decide to keep it do not spend the extra funds. Keep the extra money as additional reserve.

4. Process- The process of receiving money for repairs is called a draw. After your contractor finishes a percentage of the work you will call your Hard Money lender, and tell them that you are ready for an inspection. The lender will send an inspector out to verify the work has been done and completed within code guidelines. Once the inspector gives the lender an o.k., the lender will release the funds that equal to the amount stated for the cost of work. For example, if you listed carpet repair $1500, paint $1200, and new light fixtures $100; when the inspector checks all the items off: the lender will cut you a check for $2800. Now you can understand why it is important to have all repairs and cost listed on the worksheet. If the repairs are not listed then they will not pay you. Normally the lender will give you 3 to 7 inspection dates depending on how large the project is. Unless you can convince the contractor to start working without putting money down, you will have to put the money up to get things started. Expect to get reimbursed from the Hard Money lender through your draw checks.

5. Refinancing- This is the most important part in rehabbing property using a Hard Money lender. Hard Money loans are short term loans with high interest rates. These interest only loans will have an interest rate of somewhere around 15%. That may seem high, but these types of lenders understand how important it is to make their money and get out. We need these companies in order to rehab properties if we cannot fund our own projects. Hard Money lenders realize the risk they are taking, so lenders ask themselves “WIIFM” (What’s in it for me). They compensated with a high interest rate for the risk they take. Hard Money lenders expect you to either sale the property quick for a profit, or refinance into a long term loan and rent it out to a tenant. Whatever your exit strategy is, be sure to do it quick. Hard Money loans are normally due in full 6-12 months after origination.

Hard Money lenders have allowed many investors to make money in real-estate. These types of lenders are more flexible when compared to traditional ones. They allow investors to make things happen when no other lenders want to take the chance on them. Their guidelines are loser and allow an investor to spread his wings. These types of loans are expensive, but they can allow more deals to be done due to the amount of money they have access to.

Watch this video on hard money loans—–> http://www.youtube.com/watch?v=6KcUGPxM0cA. Get a Free Report “How to Buy Wholesale Property Without Any Risk” at http://www.AssetPropertiesATL.com/cheapproperty

Author: Khalid Johnson
Article Source: EzineArticles.com
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It would be an understatement to say that the decline in the real estate market changed the lending environment. Lenders who used to allow stated income loans no longer offer them, or they may claim to offer them but decline 99% of the stated loan submissions offered. This is extremely bad for investors who have made their incomes solely from real estate investing, or other self employed endeavors.

Primarily because when they do their taxes they have a lot of items to deduct from their income, and so their tax returns do not effect the true gross income that they earn. W2 employees do not have this problem, as they are qualified based on their full gross income and even if they do write off their incomes, the tax returns are hardly ever requested when W2′s are provided.

A good Residential Hard Money Lender, understands this is the case for full time real estate investors, and they will not have much taxable income on purpose at the end of the tax year. Even if tax returns are requested, its just to verify that the investor really does what he said on the application provided, and not to calculate debt to income ratios.

Another benefit to obtaining a Residential Hard Money Loan is that the loan is based on the After Repair Value, and not the Purchase Price. With a conventional lender, it doesn’t matter if you are buying at 10% of value; they would still require a certain percentage down payment on that purchase price. In other words, conventional lending methods ignore the fact that you are getting the property at a deep discount.

When you obtain a mortgage with a Residential Hard Money Lender you can rest assured that the After Repair Value (ARV) is being considered in the transaction. In a lot of cases the deep discount an investor is getting will allow room for the lender to roll in closing costs, rehab costs, etc… This decreases the amount of capital that an investor has to put into their projects, and therefore leaves more capital available so that he can do more deals.

If you have a real estate investment in mind, and are concerned with minimizing risk, and maximizing return on investment, you should consider utilizing a Residential Hard Money Lender. Its easier to qualify, and they are more flexible on the structure of a transaction.

Are you an investor looking to minimize risk, and maximize ROI by partnering with an aggressive Residential Hard Money Lender? Does including closing costs, rehab costs, and basing your loan on After Repair Value sound appealing?

If so, you owe it to yourself to see if you too can qualify for an Investor Rehab Loan by visiting this website: http://www.residential-hard-money-lender.com/

In the world of real estate investing, people are always on the look out for different ways to make an investment purchase. Typically the property would simply be bought & mortgaged in the traditional manner but as home values increase and the cost of living rises buyers are seeking out other ways of making the down payment on properties. One way that this can be accomplished is through the use of hard money loans. Now, one must be careful in purchasing with a hard money loan as interest can stack up quickly as most interest rates range between 10 and 16%. In comparison to a normal mortgage this is a fairly high rate. The best way to make this kind of loan work is on a home where the owner is looking for a quick sale and the property has the potential to sell for greater than the purchase price.

The most attractive aspect of a hard money loan is the fact that it can allow a buyer to act quickly to take advantage of a particular home sale. An investor will have to plan carefully and be intelligent and educated about the terms of the loan and the value and viability of the property. An investor should be sure about the attraction of the property as with a higher interest loan the whole point is the flip the property quickly before the payments start to pile up. Additionally the loan should be designed to comprehensively cover the costs of purchase and renovation if necessary or desired. in such a situation the buyer will need to have everything organized ahead of time in terms of renovations or construction to the home and should have a definite timeline as to when things should be complete and the home can be listed. This will also take an intricate understanding of the local real estate market and the trends that dictate it. There are certain times when the market will be hot and times when it will be cooler and the sale of the home will have to be a planned event that takes advantage of the peaks of the market.

In planning a purchase with a hard money loan, be sure to sit down with your realtor and explore all the available options before taking the plunge. They are the best suited individuals to help plan the purchase and subsequent sale of the property. They will also be able to direct a investor to loan professionals that are reputable and honest. With such a wealth of dishonest mortgage companies as this country has seen in the past years, it is essential that an investor has a good amount of background on the lender that they choose to deal with. Good Luck!

Being a real estate investor, one of the most important things you should do is to find a good source of funds. It is because having someone who can help solve your financial problems will give your investing business a boost. Without such a partner, you won’t be able to make offers to motivated home sellers as well as buy properties that you can flip or rehab. Fortunately, there are lots of hard money lenders who might be willing to help you out, even if you have a bad credit score.

A hard money loan is the perfect alternative for those people who want to secure funds in a short time. It is basically a type of asset-based financing in which the lender relies on the value of an investment property to assess the eligibility of a loan.

Unlike their traditional counterparts, hard money lenders do not require the borrower to provide documents, his credit history, and other credentials. Thus, securing a hard money loan is faster and easier. In addition, most of these lenders are private individuals or small venture capital type groups that have a huge amount of cash on their hands and are willing to finance investment projects.

To find a partner who’s willing to provide you with quick cash, you can join a real estate investing club or visit mortgage companies and ask for referrals. You can also surf the Internet since most hard money lenders advertise their services online.

But if you want to learn how you can use hard money loans to your advantage, you can log on to www.Rehab-Real-Estate.com. This amazing website is home to quality articles, audio files, and videos on hard money lending and real estate investing. Visiting the site can surely improve your skills as a real estate investor because you can learn from the best in the business.

Real estate investing has made a significant impact on the lives of many people. It has helped many investors fulfill their dreams of climbing the career ladder. It has also given others the opportunity to provide the best for their families. So if you are one of those people who want to achieve all these things, then engaging in real estate investing is the perfect career path for you.

Being a real estate investor, one of the most important things you should do is to find good financing. Financing enables you to purchase investment properties, which are prime ingredients to your means of living. Without it, you won’t be able to buy a house that you want to flip or rehab.

But what if you have a bad credit history and banks and other traditional lenders won’t approve your loan? Should you stop being an investor? No, you shouldn’t. Such a scenario mustn’t discourage you from being involved in real estate investing because there is another way to secure funds for your business.

A hard money loan is the perfect alternative for those people who want to secure funds in a short time. It is basically a type of asset-based financing in which the lender relies on the value of an investment property to assess the eligibility of a loan.

Unlike their traditional counterparts, hard money lenders do not require the borrower to provide documents, his credit history, and other credentials. Thus, securing a hard money loan is faster and easier. In addition, most of these lenders are private individuals or small venture capital type groups who have a huge amount of cash on their hands.

To find a partner who’s willing to provide you with quick cash, you can join a real estate investing club or visit mortgage companies and ask for referrals. You can also visit RehabHardMoney.com.

Because the web site allows thousands of hard money lenders and borrowers to meet each other, finding a reliable partner who will back you up is easy. Log on to RehabHardMoney.com today and jumpstart your career in real estate investing.