Hard Money Loans

Hard money loans are tools for investors, business owners, property owners, would-be property owners and others for whom conventional loans are unattractive or unavailable. Originally, the term was used to describe any loan that was secured by property or other collateral, as opposed to unsecured borrowing, such as cash advances from a credit card or bank line of credit. Today, although the meaning has not really changed, the way that the term is used has. It can all be confusing to the average person, so we hope to shed a little light on the subject.

At one time, it was relatively easy to get a hard money loan. The bank knew that if you could not make your payments, they could take possession of your property. The only real consideration was the value of your property.

Times have changed. Foreclosures take longer. Banks are often unable to recoup their losses. The large number of defaults in recent years has actually hurt some of the financial institutions. Believe it or not, the funds that commercial lenders have available are not endless. Some have had to reduce the number of loans that they make. In general, all lending institutions have adopted stricter qualifications for potential borrowers, in many cases, making it more difficult for individuals to get the money that they need.

Commercial banks are governed by the Federal Reserve and they must follow certain rules and regulations. In addition, each bank has its own policies. We commonly refer to the considerations, rules, regulations and bank policies as red tape. When we apply for a loan, the paperwork can be overwhelming and very difficult for the layman to understand. Read this, initial here, sign there, etc, etc. The red tape is meant to protect the consumer and the bank, but even when you understand that, it can be frustrating. Plus, the whole process takes a lot of time. You might wait weeks, only to hear that your request was denied.

This is where private lenders offering hard money loans may come in. In most of the United States, private transactions are not regulated by state or federal laws. There is less red tape, so you will get your answer faster. There is still no guarantee, but at least you will know that you should look elsewhere for financing in a shorter period of time. There will be less confusion and less frustration. Of course, the policies of individual lenders vary. Some check credit, references and employment. Others are more concerned about how quickly you can repay.

A hard money loan is generally a short term solution. It is most attractive to investors and others that need money quickly, in a matter of weeks, to close on a deal or take advantage of a potentially profitable opportunity. Long term financing may be available, but in the time it takes to find it, the opportunity may be lost.

There are several advantages to hard money loans from private lenders, as opposed to secured loans from conventional lenders (the banks), particularly for real estate investors. Suppose you have the opportunity to buy a property that “needs work”. The seller is particularly motivated because he is facing foreclosure or moving out of state, so he is willing to sell for far below the assessed value of the property, as long as you can close the deal quickly. If you go to the banks, it will take at least 30-45 days (probably more) to close. A private lender may be able to hand you a check in a much shorter period of time.

Time is very important to someone who wants to take advantage of the auction of a foreclosed property or a trustee’s sale. You may have the bidder’s fee, but the trustees typically want the full amount within 14 days. The banks do not work that fast.

For those who can wait for the money they need for a real estate investment, traditional loans might be the way to go. But for everyone else, hard money loans make a lot of sense.

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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Hard Money Lending is Helping the Economy For real estate investors access to conventional funding through banks for real estate projects has become difficult to obtain. Banks have tightened up their requirements for lending, and any blemish on your record can disqualify you for a loan. Additionally the amount of paperwork required to obtain a conventional loan has become paramount, taking weeks to months to complete the process. Many time critical investment deals are missed due to the length of the funding process. Many of these real estate investors have turned to hard money lenders to fund their real estate projects. Since hard money loans are secured based on the value of the property, credit scores are not as critical. Although credit scores are part of the assessment, the entire credit portfolio of an investor is considered when making a decision. A blemish or two will not hurt your chances, if you are still deemed credit worthy. The major decision factor for lending is in the assessment of the property. Good levels of equity in the property will result in a positive financing decision. As banks crack down on their lending practices, hard money lenders are filling the void for real estate investors, and local economies are benefiting from their involvement.

The continued flow of money for flips as well as new construction projects has kept the local economies moving. Real estate investors are still investing in properties and obtaining construction loans. This in turn has kept construction workers, building supply shops, plumbers, painters, etc. employed in this tough economy. This also trickles down to retail, grocery stores, and restaurants, keeping these establishments in business as well. All of this continued business activity results in a healthier local economy and adds to the local tax revenue. The buying and selling of houses keeps the real estate market active, and provides a new supply of renovated houses for homeowners. More homeowners in the community means more dollars spent locally as well as additional tax revenue. These are all good things for the local economy. Hard money lenders are changing the real estate investment landscape from credit based financing to equity based financing. Many projects that were not financed previously due to credit decisions are seeing new light. Also, equity based financing helps parse out the good deals from the bad resulting in better financing decisions overall. With new money being invested in profitable projects, everyone from the real estate investor to the local restaurant owner are benefiting from a stronger local economy.

About Author
Jason Balin www.hardmoneybankers.com

A Great New Niche for Mortgage Brokers aE” Hard Money Lending With the subprime crisis of a few years ago, and the recession of the past couple of years, the demand for the services of mortgage brokers has diminished. These facts along with tighter lending standards, has led to tough times for mortgage brokers, with many having difficulty finding enough clients to maintain their business. Although lending standards have tightened, real estate investors are still finding ways to fund their real estate projects. Many are turning to hard money lenders to obtain the financing they need to flip a property, invest in a foreclosure, fund a new construction, and other real estate projects. These hard money loans are asset based loans, using the intrinsic value of the property as collateral for the loan, rather than relying on the investor’s credit worthiness. Mortgage brokers, who find themselves short on clients, can look to hard money lending to expand their clientele. Lending to real estate investors will allow them to take advantage of this growing segment of the market. Those who have jumped into the hard money lending arena find that they have little competition with other brokers, and have many clients looking for a broker to help them with their financing needs. An added advantage is that real estate investors, unlike individual homeowners are repeat customers. Most will make multiple investments in a year, seeking new financing for each, thereby increasing your business two, three, and even four fold per new client. Helping real estate investors find proper financing is an underserved market, and a broker who teams up with the right hard money lenders can quickly capitalize on this need.

A broker wanting to expand into hard money lending should research the market as well as the availability and reputations of the hard money lenders in their area. Start by doing an internet search on the hard money lenders in your area, and assess their offerings, experience, and dedication to hard money lending. Then set up interviews with the firms that stand out. You want a hard money lender who is very knowledgeable about the local real estate market, who strictly deals with hard money lending, and is well capitalized, with many financial backers. They should be very professional, organized, and of course ethical. Hard money lending can be a very profitable niche for mortgage brokers who team with the right hard money lenders.

About Author
Jason Balin www.hardmoneybankers.com

For real estate investors there are numerous benefits and advantages to private real estate money versus hard money loans or mortgage loans to fund your real estate investing business. Knowing the advantages can mean the difference between making a real estate deal work or losing a good deal to your competitors.

As the credit-bubble continues to unwind, traditional sources of real estate financing are drying up and real estate investors need to find alternative sources of capital such as private real estate money.

Advantage #1: Speed and Cash Flow

The ability to close a real estate deal in less than two weeks is a huge advantage over having to wait weeks or even months for a typical bank loan approval. The importance of speed cannot be overstated in a competitive market and quick cash gives you a big edge over other investors.

Imagine if you are the seller and someone comes to you to buy your house and has a two or three month escrow period before closing plus several financing contingencies versus another investors who will close in two weeks with no contingences.

Not hard to tell which offer the seller will accept. And the real power of this offer is the seller may accept a lower price to close quickly with no contingencies. So not only do you get the deal from the other investor, but you get it at a lower price. The power of private real estate money is the ability to close quickly and drive better deals terms to your advantage.

Advantage #2: Simple Paperwork

Have you ever gone to a closing on a traditional mortgage loan and had to sign 2 inches of paper work. Now image going to closing and only signing two or three documents (yes that is not misprint).

Private real estate money deals are incredible simple and the total paperwork is normally less than 10 pages and includes two or three simple documents. The documents included in a private real estate money transaction are a mortgage (Deed of Trust), an installment note and possible a disclosure statement. The only other required paper work is to name your lender on your property insurance as you would in any normal loan situation.

Advantage #3: You Control Terms and Conditions

One of the incredible advantages of a private real estate money transaction is you control the terms and conditions of the loan. For example, you can offer a very short term loan of only 6 months if you know you are going to flip the property for quick profit. Or you can offer a 5 or 10 year term if you plan on holding the property for a long term rental.

You can also control the conditions of the loan such as not allowing a prepayment penalty for early prepayment. Most normal mortgages and hard money loans require a 1% to 10% prepayment penalty to pay a loan off early. With private lending transaction you control the conditions and can simply add a clause that allows an early prepayment without a penalty. That can mean a huge savings down the road.

Advantage #4: Reduced Fees and Costs

Private real estate money is less costly than mortgage loans or hard money loans. For example, most hard money loans can ultimately have total interest cost of 20% or greater by the time you factor in all the fees, points, interest and other costs. Even mortgage loans can be very costly with fees and upfront points factored in and the high interest rates most investors must pay versus home owners. Loans from private real estate money sources usually have no points and very few costs. The total cost of most private loans is somewhere in the 9% to 15% range with little upfront or back-end fees.

Advantage #5: Flexibility

Private real estate money provides tremendous flexibility for both you the borrower, but also for the private lender. The private lender can invest small amounts of $5,000 or less in deals or large amounts to fund larger apartments or commercial property purchases. You can also work with lenders to structure a term that fits the lenders needs.

Welcome to Real Estate Investing Today brought to you by hard money loans arizona. My name is Ryan Wright and I want to tell you about the dirty secret of real estate investors and what the dirty secret is; real estate investors that are successful know that the first thing they need to worry about is finding a good deal that if they find a good property they will find the funding. Funding is not as important as finding a good property.

There are so many real estate investors that are hesitating or deliberating or waiting on making an offer or finding a good deal and they are trying to figure out where they are going to get the money from before they find that great deal. Successful real estate investors know that if they find a great deal, they will find the money and the money will come if they have a great deal.

Luckily you are connected with the folks at Private Money Lenders, who provides 100% financing regardless of credit score, job history or anything else. They can provide funding on so many different real estate projects. But it is important that you go out with confidence and you make offers and you secure a property and the dirty secret is that if you find a good property they will come and they will come in with rows and there is money available to help you be successful as a real estate investor.

One of the other dirty little secrets that real estate investors have is that lots of time they are able to get 100% financing on their investment property. So it is important to realize to find a good deal. Now, I am sure you want to know about good deals. A good deal is basically defined if a person is able to buy a property for a specific cost or if he is able to resell the property at that particular time with some profit. You can find many good deals, if you search around but the main thing is that you have to give time to your search rather than just rushing into it.

Although, there are few sellers who could tricked you and can gain benefits from the buyers. Another trick these sellers use is that they try to make the deal very attractive and therefore, one has to be careful, otherwise the deals could turn out to be a failure. Therefore, a good deal always require a lot of research, education and experience. So, get experience first or dwell with people who are experienced in helping you find a good deal like Hard Money Loans because this is a very important step in real estate investing and the money will come.

Here’s a short list in which many investors are utilizing to close the deal on real estate investments day in and day out. Would you like to get your hands on it? Well below you’ll find the list in which many potential investors would kill for or you ready to do the same?

Winging It – virtually every real estate course made available online or in the offices of real estate investors advises potential investors to practice the “fake it, ’til you make it” strategy and to just go with the flow even without a plan. This is one of the many ways so many people are swindled out of hundreds and thousands, and sometimes millions of dollars. You never want to go into a business without a plan.

The Absence of a Professional Team – if you’re seriously considering breaking into the business of real estate; good luck. The important thing to remember is to not go at it alone. It’s important that you build a team of professional that have your best interest at heart. This may be difficult from the offset but with research and information it can be accomplished.

Breaking the Bank on a Deal – never enter into a business deal with the intent of purchasing a home without first knowing the worth of the property. There’s never a bad time to invest in real estate regardless of what the media is saying.

Building Business Entities without Your Name – to many people end up losing everything they own for this very reason, don’t become a victim of this. If you’re in the business of gambling, it would be best to go to Las Vegas. It’s important that you do extensive research in order to get a better understanding of how corporate entities work.

The Wild, Wild West Mentality – if you’re under the impression that you can do whatever you like when facing homeowners in dire need, it would be best to take a look in the mirror and rethink your assumptions. It’s all about following the rules if you want to be successful in this line of work.

Title Researching or Not – this can lead you into an abyss with no possible way of getting out. Title searching is important and should not be taken lightly, so it would be smart of anyone investing time, money and life into real estate to learn how to search titles wherever necessary.

Cash Reservations – in the real estate business it will always be about the money, no matter what. It’s not always about using your money to find deals, land deals or close deals; however, it will always take money to make money in real estate regardless of what anyone may say.

Your Education Should Not Go Ignored – education has always been the gateway to success and it doesn’t change in the business of real estate, and education should not be based upon some infomercial you saw last night. Educating yourself can come in various forms but don’t waste money on education that you could be using for handling deals. Too many people spend hundreds and thousands of dollars on real estate classes only to have nothing to show for it. Let your education speak for itself through the closing of MASSIVE DEALS.

Crunching the Numbers Correctly – this is one way many people learn the hard way about real estate investing because they end up misjudging either their purchase figures or their fixer up and/or holding cash. This is one mistake that could end your career before it even gets started.

Last but not least, it goes without saying, real estate is not a get rich scheme – GO FIGURE!

Author: Chris B. Jenkins
Article Source: EzineArticles.com
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More and more people it seems have been getting into the market for real estate investing, but the most successful will be those who can create a winning real estate business plan.

This real estate business plan will serve a number of different purposes, and it is important for any would be real estate investor to understand just how important such a plan can be.

Attracting Capital To Close The Deal

On the one hand, a well thought out, professional and polished real estate business plan will help the real estate investor to attract the capital he or she needs to close those once in a lifetime deals.

The secret to success in the world of real estate is that so many of the transactions can be done using other people’s money, and that is where the real estate business plan comes in. The real estate business plan will detail to all those would be investors and money lenders just how the business is destined to succeed.

Using Your Business Plan To Help Guide The Business As It Grows

In addition, a well written real estate business plan can also serve as a blueprint and a guideline as the real estate business moves forward.

It can be quite difficult to get such a business off the ground, especially when a slowdown in the market makes the world of real estate a bit more challenging. Having a real estate business plan at hand will help to guide the business as it grows.

Getting Help From Qualified Professionals

Preparing a high quality real estate business plan is well within the means of most real estate investors, but it is a good idea to ask for help from qualified professionals when preparing such an important document.

For instance, having an accountant or other tax professional take a look at the real estate business plan can provide some much needed insights.

In addition, having the real estate business plan reviewed by a qualified real estate or business attorney can ensure that the document is legally sound and that it contains no errors or omissions. After all, this real estate business plan will form the cornerstone of the new enterprise. It is important that it be a quality document.

Author: Shaunta Pleasant
Article Source: EzineArticles.com