The Moment Money Matters - How Hard Money Really Works
Hard money is a very generic term that most real estate investors have heard of. There is a right way to use it and a wrong way. A lot of the effectiveness in the use of hard money comes from the person borrowing it as well as the ease of the company they are borrowing from. The cost ranges of hard money tend to be from 10%-16% annualized and the points in the Philadelphia market are about 2-6 pts depending on the company. The real trick is the borrower focusing on exiting the money in the shortest timeline possible. When a borrower is able to complete and finish a project within 5-6 months, the money product is very cost effective. Holding it to term will end up being quite expensive.
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