A Guide to Hard Money - Introduction

Looking at your next real estate investment? 

If only getting a loan wasn't so hard and complicated.

Well it doesn't have to be! Hard Money loans are a great way to get fast funding for the deals you need and we all know that sometimes the ability to fund and close quickly can be the difference between your offer getting accepted versus the seller taking a different offer.

Not only that, getting a conventional can be troublesome. You need two years of employment history in the same industry, a debt-to-income ratio under 43%, a down payment of at least 20% if you want to avoid mortgage insurance, and you can expect it to take an average of around 45 days to close.

With these limitations in mind, sometimes a hard money loan may be the better option.

1. 1. Faster funding - with funding in as quick as 5 days sometimes depending on the lender.

1. This can be extremely beneficial in negotiating with the seller as they will be able to receive funding much faster than with someone using a conventional loan, often times making your all cash offer using a hard money loan much more enticing than an offer another buyer uses with a conventional loan. 
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3. Because of this, some developers use our financing as a bridge to construction loan so they can buy the property fast, then get permits, and refi with a conventional bank. (Since banks may only do a construction loan when it's shovel ready)

1. 2. Loan is based on asset and not DTI - Loan is based off asset and not Debt to Income ratio thus giving you the ability and bandwidth to be able to invest in more properties and not be limited based on your debt to income ratio since each property is individually looked at. This in turn means you can buy more properties thus giving you more leverage versus using traditional conventional loans.

1. 3. Usable for fixers and rehab - Hard Money can also be used to help rehab your fixers as well. Lenders can often cover renovation costs and sometimes require as little as 10%, both of which are not possible with a conventional loan.
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4. 5. Flexibility with terms - Private lenders can be flexible with terms. At Conventus, changing your loan amount or loan duration may only require one text with your Loan Officer! Want to add a renovation loan to your existing loan? No problem. Private lenders do charge a premium for the loan, but they will personalize the loan for you instead of the other way around

So overall, who is Hard Money for?

• 1. Fix and flip real estate investors 

• 2. High Volume Real Estate Investors for Long Term Rentals

• 3. Buyers who need fast funding for a deal
• 4. Developers who need a bridge to construction loan
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• 5. Investors who want personalized financing with flexible terms

Do these criteria apply to you or do you think you can benefit from some of the pros of using a hard money loan? Feel free to get in touch with me here through BiggerPockets and I would love to see what I can do to help make the process of getting a hard money loan as smooth as possible!

Also feel free to ask any questions as I know the topic of hard money can be pretty expansive and intimidating at first! :)

You can email me at [email protected]

Website: www.brendatchen.com

IG: @brendachen.re