Hard Money Loans to Rehab and Sell Fast!
By Kimberly Hoffman
Hard money loans offer a simple way for those looking to fund, rehab, and place on the market to earn rapid returns. Typically, hard money loans are used for properties that need minimal repairs and renovation that last only a few months.
Hard money loans are granted based on the value of the property with a loan to value ratio of 65 to 75 percent of the property value. For example, if a purchased property is valued at $200,000, the loan amount you will be granted from a lender is somewhere between $130,000 and $150,000.
Watch Market Trends
Make sure that you keep an eye on shifting housing markets. Like the stock market, you want to buy low and sell high. Consideration must be given to renovation costs in addition to the purchase price before you commit to a project. Prepare for the market to fall slightly and leave enough room in financing to cover, not only, rehab expense but the expense for your property to sit on the market for a few months. Waiting too long to resell may reflect on your purchase price and ultimately your profitability.
While most traditional lenders demand burdensome financial information and reserve requirements to make any loans, Hard money lenders funding process can be a quick and simple one-step application process. There are usually minimum credit score requirements, document requirements, and minimum income checks required. Qualified commercial properties include:
- Five family units and higher
- Retail properties
- Industrial properties
- Non-owner occupied 1-4 family properties in a Corporate or LLC name