Investment Property Loans

Uses For A Hard Money Loan in 2020

By on March 23, 2020   /   Investment Property Loans  
Uses For A Hard Money Loan 2020

Hard money loans are a type of loan that is usually not issued by a bank but by a private money source. Hard money loans can be very helpful in short term investments or real estate endeavours. They are usually know for their fast funding, higher interest rates and no hassle quick loan approvals. If the interest rates are higher, you would think people would not want to get a hard money loan right? That’s false, below are 6 reasons to use hard money loans when you can’t get financing from bank or other lenders.

Hard Money Loan Uses Include:

  1. Ultra Fast Funding: Sometimes the perfect real estate opportunity comes up at the drop of a dime and you don’t have time to wait for a bank loan. When bidding on a property you are going to need either cash or hard money lending in place of that cash. You don’t want to miss a profitable opportunity when it comes.
  2. Fix & Flip or Rehab Properties: Banks usually wont fund fix and flip or rehab properties because they pose too much risk. Often the most profitable real estate opportunities require repairs, cosmetic rehab and past due maintenance. The only way to make these costly repairs quickly and easily is to either have the cash or be funded by a hard money or private money lender.
  3. No Credit or Bad Credit: Do you have no credit or bad credit and want a traditional bank loan? Good luck! Banks don’t want to lend you money unless you have some already to cover the loan just in case you can’t pay it back. Now, if you had the money you would of already funded the project yourself right? Of course you would but you don’t and that why hard money lenders are your saving grace! The don’t care about credit as long as you have equity or collateral for the loan. Even people with a bankruptcy or foreclosure on their credit history can still get hard money loans.
  4. Construction Loans: Whether you’re a home owner or contractor and planning on building your dream home, building a four plex, borrowing to finish and unfinished home, remodeling your existing home or building a 5 spec home, hard money loans can help at any stage of construction to help you get these projects completed when bank won’t fund your construction loan.
  5. Unable to Get Traditional Bank Loans: Traditional lenders have very tough criteria to meet in order to receive a loan. Traditional banks usually won’t offer loans for: People with bad or no credit, fix and flip opportunities, finishing or building new construction or buying or purchasing land. Hard money lenders will fund all of these endeavors and more.
  6. Land Loans: There are many different forms of land including Raw Land, Developed Land and more. From a single lot of land to a subdivision. If your land is surrounded by commercial buildings or other houses you will find a hard money lender much easier. This will give the Land lender good insight about the value of the property.

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

Back to Top

Defaulting On A Hard Money Loan

By on February 24, 2020   /   Investment Property Loans  
HArd Money Loans, COVID-19, Arizona

Residential Hard Money Lending

The source of hard money is private individuals who want high interest returns on their cash loans. Investors utilize these loans to purchase properties that banks do not normally offer loans on. The loans often carry interest rates in excess of twelve percent, however.

Loan Structure

The entire property is used by hard money lenders as collateral. Usually only sixty to seventy perent of the after rapair value of the property us covered by the hard money loan. The borrower would come up with the balance.

Terms

With interest rates ranging from twelve to eighteen percent, these loans are high interest but over fifteen to thirty years still have a baloon paument usually after the first or second year. At just 6 percent interest the montly payment over 30 years on a $100k loan is just $599.55 but trade that for a an interest rate of fifteen percent andit cleaps to $1,264,44. You can also expect  to pay between two and four points on the loan as well.

Default

Hard-money loan contracts typically contain a default interest rate clause that significantly raises the interest rate in case of default. For example, the rate may jump from 15 percent to 29 percent in some states, sending the monthly payment from $1,264.44 to $2,417.11, which could make it impossible for a small-business owner to cure the deficiency.

Foreclosure

Hard-money lenders are quick to foreclose when the borrower fails to cure the loan. Since the entire property was used as collateral, any portion of the loan amount that was paid back is forfeit. For example, if a business owner paid back $50,000 of a $65,000 loan, he lost the entire $50,000 paid.

Deed In Lieu

Hard-money lenders can offer a deed in lieu of foreclosure, which allows the borrower to give back the property and avoid foreclosure. The advantage is that no foreclosure appears on the business owner’s credit report or in the public records that would negatively affect her ability to get future loans. Business owners must be sure the lender will agree to sign a release of lien at the same time. Otherwise, the borrower remains responsible for paying back the loan even though the property was given back to the lender.

Source: https://smallbusiness.chron.com/happens-default-hardmoney-loan-61461.html

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

Back to Top

Hard Money Loan Rates

By on January 13, 2020   /   hard money loans, Investment Property Loans  
Are Down Payments Needed

The average interest rate for a hard money loan is 11.25% with rates varying from 7.5% to 15% for the US in 2020. Hard money lenders also charge “points” and each point is the equivalent of one percent of the loan. These points help to cover the expenses of the loan and mitigate the risks the lender is undertaking. Points are normally paid upfront as opposed to interest that is paid back monthly.

Interest Rates And Points

Depending on the area of the country wherre you reside and from lender to lender, points charged and interest rates will differ. In many cases competition plays a large part in the rates offered. In a heavily populated area of the country where there are many hard money lenders – competition will drive interest rates and points charged to a lower total cost than in more rural areas where there is not so much competition. Obviously there is greater risk taken by hard money lenders when they lend money compared to hwne a bank does so – hence the interest rate will be higher than conventional bank loans. As well as interest rates in the ten to fifteen percent range, you can expect the points to be somewhere around three percent with variances from around two to ten percent, depending on the ratio of the loan to value.

Value Ratios

The Loan to Value (LTV) is decided by the ratio of the amount of the loan divided by the value of the property. Often hard money loan lenders will lend up to around seventy percent of the properties current value. Some hard money loan lenders will lend money based on the ARV or After Repair Value – that is to say the value after improvements to the property have been completed. However, this is a riskier loan proposition from the perspective of the hard money lender, because they are putting more money upfront and therefore will come at a higher interest rate. Some hard money lenders will even finance the rehab costs and lend a higher percentage of the ARV but as these loans are far more risky, you can expect far higher rates of interest in the region of fifteen to eighteen percent and five to six points when the lender is fundinga loan with little or no down payment from the person who is borrowingthe money. However, if the borrower can still make a profit at these interest rates, they may decide it is their best option.

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

Back to Top
Translate »