Interested in obtaining funding with an alternative loan but unsure if it’s for you? Continue reading to learn more about how you can be successful with hard money, and if it is right for you.
Hard money loans are offered by untraditional lenders. Untraditional lenders are usually private companies and investors. Normally, a traditional loan can be obtained from a bank or credit union. However, because traditional lenders have qualification standards, not everyone can receive traditional loan funding. This is why many turn to Texas Hard Money Lenders, and why you may be interested in learning more about hard money yourself. Hard Money Lenders utilize the property’s potential when approving borrowers for loans. The value of the property, its potential profits, and collateral are the overall determining factors. And while financial history is important, it doesn’t play as big a factor as the property’s value will.
Qualifying for hard money loans will certainly be exciting, especially if you have been turned down in the past by other lenders. Though before moving forward, you will need to consider a few things before accepting and signing the terms to your loan agreement.
What to Know if You’re Eligible for Private Hard Money
Private lenders have high interest rates and loan fees that accompany the terms of private hard money. The rates can be as high as 15 percent and meant to protect the lender for possibly risky loans and unreliable lenders. It is not uncommon, either, to see ill-intentioned individuals hide under the premise of these loans. Doing your research and feeling confident in the reliability of your lender is going to be as important as proving yourself a reliable borrower. It’s not unheard of to have lenders pull deals out at the last minute. Understanding their past success with previous clients will give you an idea if you make a good fit with the kind of work they are intending to do, but you should also be aware of common situations when hard money is completely ideal.
Is Hard Money Right for You and Your Situation?
The short repayment period of hard money loans usually means it is most ideal for short-term projects. Examples of this include: renovating a fixer upper, obtaining money fast to prevent a home from foreclosing or to grab it quickly off of a competitive market. Fixer uppers are great for hard money because the loan can be used for renovations before the home is sold for a profit, in a very short-term scenario. Using the loan for something like the necessities of a rental property, which involves a profit after obtaining a tenant long-term, would not be ideal. 12 months are usually given for the repayment period, unless another deal is compromised with your lender. Timelines are extremely important. It’s one thing to obtain funding, but it’s another to not be able to work with the given circumstances of the agreement. Knowing how the timeline of hard money functions within your own personal timeline will determine if you will find success with hard money.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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