Hard Money Loans

Real Estate Investing is better today than it has ever been. Imagine getting a property for less than half of what it was valued at 10 months ago. The problem is getting the cash to close the properties. That is why investors have and always will rely upon hard money loans to get real estate deals done.

A hard money loan is a loan based on the after repair value of the property. The loan is not based on the actual credit worthiness of the borrower. If the deal is good enough, you can potentially get a real estate deal done with no money out of pocket.

When you are working with a short sale or bank owned property, you must present a proof of funds letter. Proof of funds shows your ability to actually close on the property if the bank agrees to the price. Hard money lenders are able to provide you proof of funds letters to allow your deals to get negotiated.

Now the rates are not the lowest rates available for real estate purchases. A typical hard money loan will require you to pay 5 points upfront and pay back the money borrowed at a rate of 15%. The 5 points means you pay 5% of the total loan at the time you borrow the money. For example: a $100,000 loan would require you put down $5,000. This typically is the amount of money that the actual lender will make on the loan as the servicer of the loan.

The lack of credit available for real estate in today’s credit crunch makes hard money loans even more sensible. Yes, the rate is high as well as the points. If you are going to make money on the deal, then it is worth it to pay the money.

The lenders will also allow you to borrow the money for the repairs in many cases. The total amount of money that they will generally let you borrow is 65% of the ARV after repair value. So if the property is worth $100,000 and you get the property for $50,000, you have $15,000 worth of room to get the project done. That is not that much an you will probably need to get the seller to come down on the price, or use your own money to get the projects done.

I have used hard money to get deals done for the past 6 years. I also have worked for a hard money lender allowing me to see the business from both sides. I have used my contacts to put together the most comprehensive list of hard money lenders nationally. Go to Local Hard Money and get the best local lenders to fund your deals.

If for no other reason, you need to at least have the option of using hard money lenders to close your real estate deals. The more exit strategies you have available, the more money you will make in real estate investing.

Author: Doug Powell
Article Source: EzineArticles.com
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One of the best scenarios for commercial hard money loans is when the borrower has an opportunity that he knows he will make a substantial amount of money on, needs to move on it immediately, and regardless of the fees the hard money lender charges. With this scenario the profit the borrower will make will easily offset the fees the borrower has to pay to the commercial hard money lender.

Commercial Hard Money Loan – Scenario 1

For example, we have recently worked with a borrower that had an opportunity to purchase a fleet of trucks for his business at a 50% discount. Total purchase price on the trucks was just over a million dollars with a value over $2,000,000. On the commercial hard money loan the borrower had to pay 3% in fees in order to get the loan or $30,000, to be able to save over a $1,000,000 of needed trucks for his business. He collateralizes the commercial hard money loan with his building and was able to close in 3 weeks. So $30,000 in fees to save over a $1,000,000…

Commercial Hard Money Loan – Scenario 2

Another similar example is when a borrower wants to purchase a property from a distressed seller at a substantial discount. Typically the seller can’t wait 60 to 90 days to close a conventional commercial real estate loan and instead needs to close in a few weeks or will not offer the discount.

So say the property is really worth $2,000,000 but the seller has agreed to $1,500,000 a $500,000 discount. The buyer would get a commercial hard money loan at 60% of the purchase price or a loan amount of $900,000 and pay say 5% or $45,000 in fees to the commercial hard money lender. So the borrower would save $455,000 by taking advantage of the opportunity. In this case most borrower wouldn’t care (at least that much) about paying the commercial hard money lender their points because of the amount of money they make off the deal.

In general these type of scenario are much easier to close than the bankruptcy/company turn around/debt consolidation type situation. Many commercial hard money lenders no longer look at deals like this.

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or Commercial Hard Money Loans

Author: Jeff Rauth
Article Source: EzineArticles.com
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For anyone seeking residential hard money loans, time is of the essence. The major reason that people seek this kind of unconventional financing is because banks simply take too long, or they are unable to meet the increasingly strict criteria that the lending institutions put forth.

There is some confusion over what the money can be used for. One reason for the confusion is that lenders and brokers use different terminology. In some cases, they mean to confuse the borrower. In others, they simply forget that everyone is not as “savvy” as they are. Below, you will find some common terms used by financers and what those terms usually mean.

Acquisition loans are hard money home loans used to purchase a property. The amount available will vary depending on the lender. It is usually a percentage of the appraised value. Commercial banks typically require that you have around 20% of the purchase price. Else, they will charge a higher interest rate. Private lenders may be able to finance the entire amount and the closing costs are usually lower.

Construction loans may be used to build a residence, but they can also be used for repairs, expansions or upgrades. Current homeowners or real estate investors may be interested in these types of hard money home loans. Conventional lenders typically require that the property in question is or will be your main residence before they will approve financing. Private lenders are usually more flexible.

Mezzanine loans typically refer to residential hard money loans that are similar to second mortgages, but the term may also be used to refer to specific kinds of business loans. Mezzanine loans are short term, typically three years or less. The funds may be used for a variety of reasons, including “buying out” a business partner. The amount that you can borrow depends on the resale value of your home or business, minus the amount of other outstanding loans, such as a first mortgage, in other words, the amount of equity that you have.

Asset based hard money home loans may be used for any purpose, as long as you have collateral or assets to “put up”. Conventional lenders refer to them as secured loans. The primary difference is the time that it takes to complete the loan, but there may be other differences. If you have collateral, private lenders may not be as concerned by your credit score. For conventional lenders, a less than perfect credit score may end up costing you thousands of dollars more, because of higher interest rates, if they will approve the loan at all.

Bridge loans fill in the gap when permanent financing solutions are in the works, but the actual purchase needs to be completed quickly. Bridges may be commercial or residential hard money loans. The funds can be used for practically anything. Depending on the lender, there may be no limit to the amount you can borrow. The funds are made available to you quickly. But, bridge loans are very short term solutions, typically not more than 6-24 months. So, you need to know where your long term financing is coming from.

Both private and commercial lenders might use other terms that you do not understand. The best advice: When you do not understand, ask for clarification. As mentioned above, some lenders simply forget that everyone is not familiar with the “lingo”. If a lender is unwilling to explain something to you fully, then you should probably seek another source for your residential hard money loans.

James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Guide, a comprehensive resource for those looking to secure funding for real estate projects.

Author: James Whitmore
Article Source: EzineArticles.com
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Financing for commercial real estate is a completely different game when compared to residential mortgage loans. It moves much faster and is much more flexible.

Commercial Real Estate – Hard, Hard, Hard Money Loans

When purchasing commercial real estate, financing is the most significant factor in determining whether the project is worth pursuing. Although there are a variety of commercial real estate loans on the market, we are going to look at hard money loans in this article.

Hard money loans for commercial real estate are often a matter of last resort. They aren’t good deals, but they can save a financing situation that has gone critical. Most hard money loans come with significant upfront costs and astronomical interest rates. When you are facing the prospect of losing a commercial property, however, they can be a godsend because they also are granted very quickly.

Hard money loans are considered very risky and are issued by private financing groups, not banks or lenders. The loans tend to be only available as the primary loan on the property, which isn’t that rare a situation in commercial property.

Unlike home loans, hard money loans are all about the potential sales price of a piece of commercial real estate. The party considering lending you money is not going to look at the appraised value of the property. They are going to look at the probably sales price if the commercial real estate has to be sold a few months after making the loan. Depending on the condition of the property, this figure will typically be between 50 and 75 percent of the appraised valued of the commercial property.

Put another way, a hard money loan is a short-term loan designed to get you past an immediate problem. It is undeniably a loan of last resort and is not an ultimate solution to a financing problem with a commercial property. It does nothing other than buy you time, and at a fairly hefty cost. If you are in a tight spot and can resolve the problem with a few extra months time, a hard money loan may be the answer.

Sergio Haros is with Great Western Mortgage – San Diego Mortgage Brokers – providing San Diego home loans. Great Western Mortgage is a San Diego mortgage company writing San Diego mortgages and San Diego refinance and home equity loan.

Author: Sergio Haros
Article Source: EzineArticles.com
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When being bogged down by a mountain of unpaid debt, it can oftentimes feel as if bankruptcy is the final and only available option to regain your financial security. But many people are reckless in filing bankruptcy, taking it as an easy way out. Bankruptcy is a serious action, the results of which can stay attached to your credit file for an entire ten years in some cases, haunting you as you attempt to get the loans that you need, rent an apartment, buy a house, or even obtain insurance at a reasonable rate.

And since more and more potential employers now check the credit record of their prospective employees, a bankruptcy notation on your credit file can even lower your chances of getting the dream job that you have been working so hard for. For this plethora of good reasons, smart borrowers are turning to consolidation of their debts via private party loans in lieu of the drastic measures of bankruptcy.

What Are Hard Money Loans?

Hard money loans are loans that are made using the funds of private lenders, and many borrowers are having an easier and more hassle free time securing loans for consolidation of unpaid debt than other more traditional options. Being approved for this type of loan is easier than traditional loan products because approval is based more upon assets than on credit history.

Private lenders are not held to the strict lending and underwriting practices that govern bank lending, and this allows them the freedom to loan money to a greater number of borrowers, even those with bad credit.

Advantages Of Hard Money Loans

Hard money loans can allow you some relief from your debt much faster than a conventional loan can. Although every borrower is different, those borrowers who take advantage of these loans can find themselves free of debt with a few years; traditional debt consolidation can take a decade or longer. This is due in large part to the deflated rate of interest that is found in hard money lending, which puts your debt at a more manageable level and allows you to pay more of the total principle that is owed on your debt each month.

Hard money loans are better for your credit than bankruptcy, obviously, but perhaps even better than loan consolidation with a typical lender. Why, you may ask? Simply put, many of the debt consolidation companies out there only worsen the situation that borrowers are facing. Hard money loans allow you to build positive payment history by actually paying off the debt you owe faster, without falling behind.

Before you take a hard look at bankruptcy, consider a hard money loan. Bankruptcy can leave a stigma on your credit record that takes a big part of your lifetime to overcome. Bankruptcy demonstrates in one of the harshest ways possible that you are more than willing to walk away from your debt, and your responsibilities. Hard money loans can give you freedom over your finances once and for all, while avoiding bankruptcy.

Kate Ross has a Master in Finance and has been a university teacher as well as a financial consultant for years. She specializes in Unsecured Loans and also in helping people to get approved for Guaranteed Loans for Bad Credit, home loans, guaranteed loans, bad credit auto loans, guaranteed credit cards among many other financial products. For further information, please visit SpeedyBadCreditLoans.com.

Author: Kate Ross
Article Source: EzineArticles.com
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Private lending is an alternative to conventional loans such as you would apply for at your local bank or Mortgage Company. They are also referred to as Hard Money loans. Private loans are short-term loans ranging from 3 months to 3 years. They have a quick approval time line and usually a 55% to 75% LTV (loan to value) rate. This is a great option for residential, commercial, construction, and land investment purchases that are expected to have a fast turn around.

There are a variety of Hard Money loans:

-Hard Money Acquisition Loans – This type of loan is used to acquire real estate using the loan proceeds.

-Mezzanine Financing and Loan – This is a loan subordinate to a Primary Lender. This is a debt instrument, which is paid back at the time of sale or refinance of the total capital stack. Mezzanine loans have flexible structure, including debt and equity mixes that can increase the borrowers leverage.

-Hard Money Acquisition and Development Loan – These loans are used to acquire and develop property with the intention of improving it. The loan proceeds are dispersed with interest only paid on the funds Distributed. The loan amount is determined by the overall LTV Expected following the improvements.

-Asset-Based Hard Money Loan – This can be used for any purpose. Collateral is put up for security. Collateral may be property, equipment, inventory, etc.

-Hard Money Bridge Loan – This is money that is used for only a short period of time until permanent financing is put in place. This is a perfect solution for a business opportunity or acquisition that needs a quick process for financing. Circumstances that may be considered are Buy-Outs; foreclosures; construction; hotel and motel; office complexes; commercial business opportunity; apartment buildings and even golf courses.

-Hard Money Construction Loan – This money is used for the construction of a building or other improvements of real property. The land or the improvements become the collateral for the loan. Some lenders will loan up to 100% of the cost of construction available depending on the determined value upon the completion of all improvements.

-Hard Money Credit Enhancement Loan – This loan is for a borrower who lacks the credit or capacity to acquire a conventional loan of sorts.

-Hard Money Raw Land Loan – This can be used for lots to large acreage. The LTV ratios are determined by the price it would be valued at a 90 day quick sale.

The key to Hard Money loans is the ability to do a quick turnaround in your sale of the property purchased, or speed in which you are able to acquire a more permanent long term financing.

Blue Light Financial is a private lending group aimed at helping investors take advantage of market opportunities in a timely manner. With a sound investment strategy and a determination for excellence, Blue Light LLC has been solving client’s financial needs for over 28 years. For more information about investing with Blue Light LLC, please visit our website at the following link: http://www.bluelightfinancial.biz.

Author: Ginese Wilmot
Article Source: EzineArticles.com
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We often face emergencies and getting rid of it becomes really hard in middle of the month. It gets worse if you are running on bad credits because it is going to act as a hurdle in obtaining cash from bank. It is not an issue to get worried as you can apply for Money loans Australia. These short term loans are easily available without any tacky formalities. You can easily get it with an adverse credit score. You just need to prove that you can repay the loan in time.

Money loans Australia are issued on the basis of your power to payback. Your power to payback is defined on the basis of your job and your income. If you are employed and have a steady income then you can get these loans. The lender can offer you an amount up to $1500 for a period of two to four weeks. The best thing is that you are not required to undergo any credit checks for these loans. So it makes it easy for you to get rid of all the financial crunches without any hassle.

Applying for these loans is very easy. You just need to submit a loan application through the internet. You will be asked to fill in your name, your address, your bank account details and some details about your income. You need to prove that you are a citizen of Australia and are at least 18 years of age. After filling the form you just have to wait for a day. After verification of all the information filled in the form the loan will be approved and the money will be deposited in your account without any delay. So you can pay all your pending bills from the comfort of your home.

Using Hard Money to Fund a Construction Project You are ready to start construction, but the loan process is slowing you down. You should consider obtaining a hard money loan to get going on your project today. Hard money loans can be obtained quickly and with little upfront cost to you. What are hard money loans and how can I obtain one? Hard money loans are a type of real estate loan that is provided by private investors, through brokers. The collateral for this type of loan is the value of the property. In the case of a construction loan it is the improved value of the property. In order to provide security to the lender, the hard money loan will have higher interest rates than a conventional loan, and will be limited to around 65% of the improved value of the property. The lender will also only lend from the first position, so that in the event of a foreclosure, they are the first party to recover their investment. Hard money loans are short term loans, so you need to have an exit strategy before obtaining one of these loans, such as a plan to sell the property when completed or to refinance the property through traditional institutions.

Although the loan is limited to 65% of the improved value of the property, construction loans will generally cover all of the costs of construction, assuming that costs for construction are less than the value of the property upon completion. If you have a business that is growing at a rapid pace and you are ready to expand by constructing a new building or updating your current building. Obtaining enough capital to obtain traditional financing for this construction can take a while. In this case, it would be worthwhile to pay a higher interest rate for a hard money loan, and be able to start construction within days. Hard money lenders are available all over the country; a web search will turn up many lenders available in your area. Several websites will give you access to multiple lenders. Before approaching a lender, have your plan in place. Have complete details on all of the costs associated with the construction project, an appraisal of the completed property, as well as details on your exit strategy. Provide this information to the lender(s), and you should receive approval within a day or two, and be able to close on the deal within a week.

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by: Hard Money Bankers, LLC www.hardmoneybankers.com

Using Hard Money to Fund a Construction Project You are ready to start construction, but the loan process is slowing you down. You should consider obtaining a hard money loan to get going on your project today. Hard money loans can be obtained quickly and with little upfront cost to you. What are hard money loans and how can I obtain one? Hard money loans are a type of real estate loan that is provided by private investors, through brokers. The collateral for this type of loan is the value of the property. In the case of a construction loan it is the improved value of the property. In order to provide security to the lender, the hard money loan will have higher interest rates than a conventional loan, and will be limited to around 65% of the improved value of the property. The lender will also only lend from the first position, so that in the event of a foreclosure, they are the first party to recover their investment. Hard money loans are short term loans, so you need to have an exit strategy before obtaining one of these loans, such as a plan to sell the property when completed or to refinance the property through traditional institutions. Although the loan is limited to 65% of the improved value of the property, construction loans will generally cover all of the costs of construction, assuming that costs for construction are less than the value of the property upon completion. If you have a business that is growing at a rapid pace and you are ready to expand by constructing a new building or updating your current building.

Obtaining enough capital to obtain traditional financing for this construction can take a while. In this case, it would be worthwhile to pay a higher interest rate for a hard money loan, and be able to start construction within days. Hard money lenders are available all over the country; a web search will turn up many lenders available in your area. Several websites will give you access to multiple lenders. Before approaching a lender, have your plan in place. Have complete details on all of the costs associated with the construction project, an appraisal of the completed property, as well as details on your exit strategy. Provide this information to the lender(s), and you should receive approval within a day or two, and be able to close on the deal within a week.

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by: Hard Money Bankers, LLC www.hardmoneybankers.com

Hard Money Lending is Improving Your Community Recent troubles in the real estate market have left many homes vacant and often unattended. These vacant or blighted properties cause many problems for local communities. As the level of decay increases the houses become safety and fire hazards, attract criminal activity and vandalism, and lower the property values in the neighborhood. These blighted properties thereby increase the demands for local government services, such as police and fire, as well as code enforcement. Local officials spend a lot of time trying to track down the owners of these properties to enforce building codes, but often to no avail. Local communities would greatly benefit from a renewed interest in these vacant properties. But with banks cracking down on their lending policies, many real estate investors have become unable to obtain traditional loans through banks, and other financial institutions to purchase and rehab these properties. Many savvy real estate investors however are now turning to hard money lenders to finance their purchase and rehab of these vacant properties.

Hard money lenders assess the value of the property and make a lending decision based on the property’s equity. An individual’s credit score is much less of a factor in these lending decisions; so many more real estate investors are able to obtain these loans. As more of these properties are purchased and improved, the property value of the entire neighborhood increases. These hard money loans are short term loans, often with higher interest rates. But for the purpose of purchasing a vacant property, improving the property, then reselling, this type of loan is a perfect fit. The loan can be obtained quickly (much more so than a conventional bank loan), and used to purchase and improve the property, then a quick resale recovers the investment and returns a profit. With more real estate investors turning to hard money loans, more vacant properties are getting a new life. These properties are being refurbished and sold, bringing new families to these previously blighted areas. With the removal of these “eye sores” in the neighborhood, property values increase, and the drain on local government services are relieved. Overall community vitality is greatly improved by the removal of these blighted properties, and hard money lenders are facilitating this community renewal.

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Jason Balin www.hardmoneybankers.com