Are you looking to invest in real estate, but don’t quite have the funds? Hard money lending is here to your rescue. A hard money loan gives you quick access to the funds you need for purchasing, renovating, and fixing your properties.
A hard money loan is a short-term asset-based financing option. It is popular with investors looking to increase the monetary worth of properties through various means such as fix and flip, or buy and renovate. They're lent money based on the property under consideration rather than the credit-worthiness of investors. Your non owner occupied property is your loan collateral.
Since funding for such distressed properties involves a higher degree of risk, the lending rates are somewhat higher than your full doc loans, and the financial terms are much shorter. So then why should you opt for a hard money loan? Read on below to learn the benefits of hard money lending.
Hard money lending puts more weight in the value of your property and your experience. They are real estate investor friendly loans. For most hard money products you won't need to qualify with tax returns or other documents to prove income. The loan is also made to your LLC or Corporation so it doesn't go on your credit score. Even with a poor credit score, hard lending can be a viable option.
Hard money lenders provide instant access to the funds with a shorter processing time as long as the borrower pledges collateral property against any default. Specialists in hard money lending are well versed with investment real estate. For this reason, they take shorter processing time to approve applications and provide funds for your property.
We know timing is of the essence when investing in real estate, especially REOs, auction properties and short sales. We, at Gauntlet Funding, endeavor to close deals within one to two weeks time, with the ability to close within 1-2 days.
We can hand craft your loan to meet your needs. Some of our real estate investors have a good amount of capital to invest and are looking for lower rates, while other investors are chain flippers and are looking for MAXIMUM leverage. We can also fund up to 100% of the renovation costs so you keep your cash to help with new opportunities!
Hard money loans are a great way to finance your next fix and flip to capitalize on the worth of the property at the time of selling. Alternatively, it is also a quick source of funds to undertake some much-needed repairs to make a property marketable.
A borrower applies for a hard money loan and submits all the required information along with collateral. The information required varies from one hard money lender to another. You can also get pre-approved for a loan when you apply online!
You should prepare all information ahead of time to make closing the loan easier. Although information varies depending on the hard money lender, the following is required:
When your application is approved, you'll need to put down a certain amount of money, called a down payment and the rest of the purchase money will be funded by the loan. If you have a repair reserve where we fund all or part of your repairs, you'll get access to your funds in installments as you complete the work. Hard Money lenders will send an inspector our to review the work completed compared to your scope of work and you should receive funds within 24 hours or the report being complete!
The duration for hard money loans are typically 9-12 months, but can vary for certain types of project. Most hard money loans are short-term loans where rates are generally higher than other qualified loans or loans where you have to prove your income.. Hard money lenders sometimes called private money lenders get their funds from a variety of sources including individual investors, hedge funds and bank line of credits, who then lend the funds along with their own to real estate investors.
Hard money lending often involves underwriting and servicing the loan. This includes screening borrowers for the ability to perform, validating experience, evaluating investment value of properties, dispersing funds based on progress, and collecting revenue for themselves and their investors.
John finds a run-down property that he feels has great potential but needs a complete renovation. It has a great location with a good neighborhood and is likely to attract buyers quickly. The property has deteriorated from the lack of maintenance over the years. John is keen to purchase and renovate the property, otherwise know as a fix and flip. He thinks he can turn this property into a beautiful home for some great family and make a profit with the appropriate funding for the renovation. Here, John can apply for a short-term hard money loan to help him undertake this real estate investment and make himself a profit, too! Hard Money Loans are a cost of doing business and help you make a better return on your money.
Are you considering a hard money loan? We specialize in hard money lending for real estate investments and distressed assets and strive to gain a comprehensive understanding of your unique requirements. Call Gauntlet Funding today at (631) 465-2161 to speak with our experts in hard money lending.
How Does Hard Money Lending Work | Gauntlet Funding-Melville, NY