Are you interested in flipping houses, developing commercial real estate or another related investment opportunity? If you’re currently unfamiliar with commercial real estate investing basics, you may still be well aware of the reasons to invest in commercial real estate.
Depending on your personal situation and projected project, such as a major renovation, you may be interested in obtaining information on one or more of the following types of financing:
- Renovation financing
- Hard money rehab loans
- Secured short term loans
Are you aware of the difference between a private hard money loan and a traditional bank loan? If you already own one or more properties with 30%-to-50% equity, you may be interested to know that a hard money loan would be secured as a result of this property equity.
While most hard money loans are secured in this fashion as a means to protect the lender’s investment, there may be other options available to you. If available, when you contact a hard money lender, they may be able to provide you with additional options.
Hard money loan rates may start between 15%-to-18% or more. While these interest rates may be higher than traditional bank loans, they tend to possess a lower loan-to-value ratio.
The time you have to pay off a private hard money loan is also different than with a traditional loan. With a private loan, you may have five years to pay in full, while with a traditional loan, you may have from one to twenty years to pay it in full.
Another difference between traditional and hard money deals is the turnaround time. In many cases, for example, a hard money loan may process within one-to-two weeks. This is one of the many reasons why hard money deals are a popular choice for real estate investors.
If you have considered borrowing from a bank, you may be interested to know the following about typical bank borrowers seeking business loans:
- They must have been in business for two years or longer..
- They must have a minimum annual income or revenue of $250,000.
- They must have good personal as well as good business credit.
- They must be cash-flow positive.
Do you meet the above criteria? Even when you do, you may still prefer choosing a private hard money loan given its additional benefits, such as turnaround time.
In 2014 alone, there were a considerable number of home repossessions. At that time, 327,069 homes were repossessed. If you’re seeking renovation financing in order to flip one or more repossessed houses, then you want to check local listings for current repossessions on the market.
In addition to renovation financing for repossessed houses, you may also be interested in rehabilitating commercial properties such as apartment buildings and shopping centers. As you learn more about hard money loans for real estate investors and join the ranks of investment property owners, you will learn more about your opportunities.