Tuesday, March 18, 2008

A Hard Money Real Estate Lender Will Help You Act Fast & Acquire Your Property Before It\'s Too Late

A hard money real estate lender can provide more options for the rehabber than banks and other financial institutions. By, rehabber, we mean someone who buys a house, repairs it and resells it, in order to make a profit. If this describes you, then you should find the information provided below is interesting and it could help you increase your profits, buy more houses and get them fixed up faster.

Hard money real estate lending may be a term with which you are already familiar, but just in case, let's first look at what it usually refers to; funding provided by a private individual or group for the purpose of purchasing and repairing a house. When you read this, you may see that this type of lending matches perfectly with the rehab real estate investor. Hard money lenders make loans for other purposes, but the majority of the loans that they make today are to people like you.

In order to protect as much of your capital as possible and keep your cash flow liquid, you need money for both buying and repairing the home. If you go through a regular bank, you will need to take out two loans or establish a line of credit for the repairs, meaning that you will either pay more interest, more closing costs or both. Since the guidelines that banks follow are different from those of the hard money real estate lender, you can get all of the money that you need from one place, at one time. You may even be able to add in the closing costs.

Hard money real estate lending is the only practice that could allow you to buy a property without spending any money out of your own pocket. It is also the fastest way to complete a project or close a deal.

Because a hard money real estate lender is either a private individual or a small private company, they are not bound by the same rules and regulations that govern conventional loan makers. Fewer rules and regulations means less red tape, so approvals can be made quickly and loans can be processed faster, often in as little as two weeks. A bank would take at least a month. You probably realize how important a few weeks can be to the motivated seller. Almost all of them want to close as quickly as possible.

Just to be clear, those who provide hard money real estate lending are not loan sharks. The services that they provide are legal and they charge reasonable fees. They do not make loans to people who do not have collateral, but they are not hoping for a foreclosure. They want you to be successful. There are some scammers out there, so you have to be careful, but the legitimate company will require that you provide proof of your ability to make your payments, so that foreclosing on your property is unnecessary.

The best companies offer a variety of repayment plans and do not charge a fee for early repayment. Quick turnovers are primary goals for the rehabber, but rehabbers are penalized by conventional lenders for early pay-offs. If you have tried to complete a project using conventional bank financing, then you probably know what we mean.

Hopefully, you can see the advantages to using a hard money real estate lender for your rehab projects, but just to recap; quicker closing, lower fees, less out of pocket expenses, all adding up to higher profits and quicker turnovers. You might want to learn more about this type of unique financing.


James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Real Estate, a comprehensive resource for those looking to secure funding for real estate projects.

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