Why do you need a Hard Money Loan?
You have decided it’s time to do something different. The J.O.B. is keeping you right there. (Just Over Broke) You have a desire to do better and need a means to a better end. You find that Real Estate Investing is your new medium to that financial freedom you’ve been looking for. However your financial position isn’t quite what you need it to be to make it work. A Hard Money Loan is in the future for strategy.
At this point you could either be a:
-Mentee (working with someone that has or is actively investing successfully)
– Investor (Whether beginner or Seasoned)
There’s a good chance you’ve been out scouring the market place for a good “deal”. You’ve run your numbers and everything looks good…until…the offer gets accepted. Then the reality hits…”Where am I going to get the financing for all of this?”
Hard Money Loans can be used by anyone…if you know how
Ok, so this is really aimed at the beginner investor, the student and the Mentee. These three may be the least informed about what a Hard money Loan can do for them. Done correctly it can hugely lessen the financial load that the seasoned investor can handle. (by the way, even they continue to use Other People’s Money, it lessens their financial load as well)
Let’s say you have a home that you are going to buy for $80,000.00. Then there’s about $20,000.00 in repairs needed. That’s $100,000.00 total. Easy to Calculate right? Not an easy amount to just come up with unless you’re Warren Buffet. (And I’m pretty sure even he would look to leverage financing elsewhere before placing his own capital into a project)
Here’s how to figure out what can benefit more out of each Hard money Loan
Let’s keep with that number above and let’s look at how a Hard Money Loan can benefit your project.
Using $100,000.00 as the total amount needed, you can garner via a hard money or Private Money Loan up to 65% of Loan to cost.
Aside: There are many that believe that you can get 100% financing on the After Repair Value(ARV). While this may be true, those lenders have a tendency to “cherry pick” and I’ve yet to see the harder cases that come through our doors get financed on that higher end of Loan to Value. Remember, if you have challenged credit the likelihood of you finding a 100% or even 80% Lender will be slim. If you plan out the numbers well enough a 65% LTC will work well.
Think about this too; when you have skin in the game, there is less likelihood that you will have to give up any income on the back end (sale of the property) of the deal. Yes you make your money when you sign the deal, however the income isn’t realized until the property sells.
With a Hard Money Loan, you have more to expect on the back end, and better net profit available to you and an easier level of stress to deal with, with regards to completing construction or repairs.
If you have any thoughts of getting there faster, using a Hard Money Lender like Private Lending Group is a great way to establish a truly credible business that knows how to leverage Financing to advantage their income.
Remember, this is your business. Don’t let another lender get their hands into your profit in the name of being an “Investor”. You work hard for it, Let the lender make their interest income, and you make the net profit.
Hard Money Loans are the way to make your financial future more stable.