Hard Money Lenders
These are often used to finance projects that are unconventional, great deals, or where money is needed quickly. Typically hard money lenders will lend 50-70% of the value of the property regardless of the sales price (unlike banks). They will typically close loans in 2–7 days. Credit scores and income are often overlooked by hard money lenders, however they may ask to see a business plan or exit strategy for the project. They may get paid via points (e.g. 1 point equals one percent of the total amount borrowed), interest rate (10-20% per year is common), and an equitable interest. These will vary based on the size of the project and the agreed upon contract. Hard money lenders are collateral based and typically require first position on the property.
True hard money lenders do not charge any front fees whatsoever; nothing for appraisals, app fees, credit fees or anything else. One common secret of many hard money lenders is that they want the property for themselves, and thus do not care if the borrower is unable to continue with their payments. After one or two missed payments, the hard money lender will file foreclosure proceedings and usually add the reclaimed property to their portfolio. They also do not care about exit strategies.
Read more about this topic: Creative Real Estate Investing
Famous quotes containing the words hard, money and/or lenders:
“It is as hard and severe a thing to be a true politician as to be truly moral.”
—Francis Bacon (1561–1626)
“In past years, the amount of money that has had to be been spent on armaments, great and small, instead of on productive industry and agriculture and the arts, has been a disgrace to all of us in every part of the world.”
—Franklin D. Roosevelt (1882–1945)
“Gratitude among friends is like credit among tradesmen: it keeps business up, and maintains commerce. And we pay not because it is just to discharge our debts, but that we might the more easily find lenders on another occasion.”
—François, Duc De La Rochefoucauld (1613–1680)