One benefit of private money loans is there are many types available to fit a wide variety of needs, whether you need a land loan, a construction loan or you want to rehab and flip a property.
Learn more about the Hard Money Loan programs available.
Hard money rehab loans allow investors to realize fast profits. Banks do not like rehab loans, which is why real estate investors who find a great deal turn to non-traditional financing. Rehab loans allow investors to make repairs, buy more properties and realize profits faster. A single loan can even be used to cover the purchase and repair costs plus closing costs to buy investment properties without using your own money. Rehab loans can be made on commercial properties along with single-family homes, multi-family homes and apartment complexes.
Construction loans are difficult to obtain through traditional lenders. Hard money lenders specialize in offering construction loans. The location of the loan and the experience of the investor is very important in determining if the loan will be approved and how much -- if any -- down payment is necessary. A hard money construction loan can be customized to even leverage one or several properties with a term of up to one year.
Fix and flip hard money loans allow investors to buy distressed homes, commercial properties or multi-family units so they can repair the damage, improve the value of the property and flip it as fast as possible for a profit. Flippers want to minimize costs, maximize the home's value and hold the property for as little time as possible. Fix and flip loans allow investors to make all-cash offers and borrow up to 75% of the project cost, including the purchase and rehab.
Hard money commercial loans have become more popular than ever as traditional lenders have moved away from loans for commercial properties and apartment complexes. Common forms of commercial private loans include commercial acquisition loans, multi-family purchase loans, land development loans, office and apartment financing and retail property loans.
While not as common as they were during the recession, distressed properties still represent an excellent value for investors. Investing in a distressed property, however, can be challenging, as the homes often do not qualify for a traditional loan. Hard Money Loans can be used to finance the purchase as well as rehab work of homes that are sold as-is.
While some investors choose to fix and flip homes, others prefer to buy, rehab and hold properties for passive income. This strategy involves buying a distressed or undervalued property to eventually sell when its value goes up, but in the meantime use it as a rental property. A buy and hold loan allows investors to secure financing to buy the property, whereas traditional mortgages are usually restricted to owner-occupied homes.
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