Should You Get A Hard Money Loan For Your Real Estate Flip?
Posted on: 21 December 2020
Are you planning on investing in real estate that you want to flip for a profit? If so, you'll need to find a lender in order to pull it off. Here are some things you need to know about using a hard money lender.
Hard Money Lenders Offer Funds Fast
If you need to close on a deal quickly and do not want to go through traditional lending sources, a hard money lender can fund your project quickly. Since hard money lenders use their own money to invest in various projects, there is no approval process that they need to go through to give you the loan that you need. It certainly helps the whole process happen quickly.
Hard Money Lenders May Not Offer All The Money You Need
Be aware that it is not common for a hard money lender to put all of the risk on themselves by giving you all the money they need. It is common for them to look for you to contribute some funds to the investment so that they know you have money in it as well. This helps motivate you as the person doing the flip and helps hedge the risk for the hard money lender as well.
Hard Money Lenders Are Great For People With Bad Credit
If you do not have the best credit history and are looking to get into the business of flipping homes, you will find it difficult to get the money you need from a traditional lender. The good thing about using a hard money lender is that they are more likely to take a chance on you and your personality.
Your goal will be to sell them on yourself and why you are a good investment; explain how you are going to flip the home and make a profit off of it. This could be due to your own contractor skills and how you plan on doing the work yourself, or you might have people lined up already to work for you. Anything you do to sell yourself is going to help you get that loan.
Hard Money Lenders Have Higher Interest Rates
In exchange for all of the positives of working with a hard money lender, you'll find that they also have higher interest rates. Since you are working with an individual that is putting their own money on the line for you, that means they are looking to maximize their investment as much as possible.
Share