Tag Archive for: traditional lending

Hard Money: Why You Have Nothing To Fear

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Hard Money: Why You Have Nothing To Fear

Today we are going to discuss why you have nothing to fear when it comes to using hard money. Many believe that hard money lenders are loan sharks who are waiting to take their property from them. However, this could not be further from the truth! Hard money is there for the right investor and for the right property. It can help investors out when other lending options are not meeting their needs. No need to fear! Let’s take a closer look!

What is hard money?

Hard money is based on a hard asset and is not typically based on your income or credit. There is no need to fit into a box either. Hard money is an excellent choice because it may be in a second, third, or even a cross lien on the property. Don’t let the misconceptions prevent you from taking advantage of one of the most flexible lending options available! Just to clarify, a hard money loan is typically referred to as a bridge loan. A bridge loan is a short term loan that is used to quickly get you from where you are to where you’re going quickly. Normally these loans can range from 3 to 12 months.

Flexibility at a better rate!

In many instances, a hard money loan will have a better rate than a traditional loan. This is due to the fact that there is little competition for us as hard money lenders. There are very few people who do this, and there are more people who are looking for hard money. All of the lenders want in return is their money back and the interest on the borrowed amount. Do you need a loan that will fit your unique needs? Hard money loans will provide you not only the flexibility to meet your unique needs, but a better rate as well.

Protection for the investor and the lender.

One of our main goals is to make sure that everyone is protected throughout the process when providing a hard money loan. This includes having loan docs, liens, and everything in between to ensure that it is all written out correctly. Here at Hard Money Mike we also make sure that there is a third party involved in the process. In doing so, it will not only protect the customer, but the lender as well. 

Hard money vs traditional loans.

A traditional loan looks at three factors when investors apply for a loan. These factors include credit score, loan to value, and income. Let’s take a closer look.

Credit Score:

In regards to traditional lenders, if you don’t have a good credit score, you are kicked out. Hard money on the hand doesn’t take into consideration your credit score. Instead, they look at your credit to make sure that you are paying off your debt in a timely fashion.  

Income:

Hard money lenders are also not concerned about your income or if the property is making money. Instead, their main concern is whether or not you have good security for the loan. 

Down Payment:

Another thing we need to take into consideration is the down payment. If you bought a house for $200K, but it is worth $300K, then you got a good deal in the eyes of a hard money lender. Traditional lenders on the other hand are not interested in it being a good deal. They will only lend based on what the property is worth.

Uniqueness:

There are very few lenders who are going to do a second, third, multiple cross liens, or land purchases. Here at Hard Money Mike we call it the 911 credit score. We are giving people a private loan to pay off their credit cards by putting a  lien on a property. This in turn allows them to get their credit score up, and can result in a better loan later on. 

Getting our money back.

Another thing that we need to take inconsideration is whether or not we will get our money back in a timely manner. We don’t want to be involved in a transaction where someone can’t pay us back. This would unfortunately result in a legal process. Therefore, we want to make sure that we set both of us up for success. Keep in mind that as long as you have a good deal, good property, and a good exit strategy, a hard money loan is the easiest loan to get. 

We are here to help!

Hard money loans provide the flexibility you need without having to navigate the rigid criteria of traditional lenders. Contact us today to find out more about hard money and how it can help you get on the path to success. 

Watch our most recent video to find out more about Hard Money: Why You Have Nothing To Fear.

Bridge Loans 2024: Real Estate Investing Must-Know

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Bridge Loans 2024: Real Estate Investing Must-Know

Investors wonder what a bridge loan is and how it can help them achieve their real estate investing goals. Today we will discuss bridge loans and what every real estate investor needs to know before jumping in. To clarify, a bridge loan is a short term need for money until some other event happens. This includes selling a property, refinancing a property, and so much more! Start by asking yourself what you can use the money for and how can you make money?

Bridge loans for usage loan.

A usage loan is needed when someone has too much debt on their personal credit cards. Once these cards are paid off, the investors credit score will increase. We did three usages loans last month! For example, one customer used a bridge loan to pay off their credit cards. After their credit score went up, they refinanced with a DSCR. The money from the refinance was used to pay off credit cards. Bridge loans are an excellent tools that will open doors that were previously closed. They will also provide opportunities to get a better rates on long term loans.

Bridge loans for fix and flips.

Bridge loans are a great way to bridge the gap between fix and flip projects. It is important that they keep their crews working and their business going during this transition. In regards to the property that is listed or getting ready to list, it holds the equity that is needed to move onto the next investment. That is where a bridge loan can help. It puts a lean on the property that you’re selling in order to help you buy the next property. Once the property sells, the bridge loan can then be paid off and your next project is helping you to move forward. 

Bridge loans to finish a project.

Investors often need additional funds in order to finish projects. This could include a pop top, scraping, construction loan, or even a fix and flip. Whether the escrow won’t pay out until you hit a certain amount, or you just ran out of money, a bridge loan can help you achieve whatever you need.Once again, a bridge loan is a short term solution to get investors onto the next step. Don’t let your property stall! Remember you still have to pay your contractors, laborers, taxes, insurance, and interest on the first mortgage. We have done bridge loans for $11K to $180K. The loan amount is based on what the property will be worth in the end. Do you need to finish a project before spring season, but don’t have the extra money? Contact us today to find out more! 

Bridge loans to buy a good deal quickly. 

Many investors use a bridge loan to help them buy a property that is a really good deal prior to getting the financing lined up, or delayed purchase financing. In most cases investors are not getting their finances secured before the hard close date. Here at Hard Money Mike we can come in and do a 3 month bridge loan to ensure that they won’t lose the property. In this situation, a bridge loan would allow them to secure the property until they get their financing in order.

Not your traditional loan.

Unlike traditional lenders, we are not looking for appraisals or asking you to validate your income. A bridge loan’s primary purpose is to fill a lending gap to get you to a better spot. Don’t confuse this loan with a DSCR loan. A DSCR loan is a 30 year fixed loan, however, a bridge loan is a 3 to 6 month term. Do you need gap funding or down payment money for your next project? Find out how a bridge loan can provide the funding you need without needing to find a partner. Instead, we can use the other properties you have to get the bridge loan that you need. 

We are here for you! 

Do you need financial flexibility and a loan that can bridge the lending gap? A bridge loan could help you today! Contact us at Hard Money Mike to find out more! 

Watch our most recent video to learn more about Bridge Loans 2024: Real Estate Investing Must-Know.

Real Estate Investing: Busting Hard Money Myths

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Real Estate Investing: Busting Hard Money Myths

Today we are going to be busting the hard money myths!. While there are a lot of people who question hard money, it is still considered to be common sense lending. To clarify, common sense lending is a form of lending that does not focus on the same things that traditional lenders do. Instead, all hard money lenders are looking for a good return. Hard money lenders are not the loan sharks that many people make them out to be. Let’s dive in and explore some of the hard money myths that are bustling around the real estate community.

What will hard money lenders focus on?

Hard money lenders are able to do things that traditional lenders can’t. First and foremost, hard money lenders are not concerned with an investor’s credit scores or income. Their main concern is what the income of the property will be. Traditional lenders on the other hand, will be requesting your income verification from the past two years. Another big difference between hard money lending and traditional lending is that hard money lenders will look at the properties ARV instead of the amount that you are buying it for. To clarify, ARV stands for the after repair value of the property. 

Hard money lenders are taking a big risk, they must be taking more.

Since hard money lenders follow different criteria than traditional lenders, it leads many to assume that hard money lenders are taking more. For example, banks right now are charging between 8.5% and 10% on their short term or bridge loans. Hard money loans however are between 10% and 11%. In taking a closer look at origination fees, banks are at 1% or 1 point, whereas hard money can be anywhere between 1.5% to 2.5%. To clarify, a point is the amount that you pay the lender for their services. On a $200K loan at 1% you would pay $2,000. However at 2% you would then owe $4,000 in origination fees.  So while hard money lenders do charge more, they have less restrictions that could prevent you from getting the money you need for your investment.

We don’t want your property! We just want a good return.

While there are good lenders and bad lenders, the majority of hard money lenders just want a return. The last thing that we want is your property, because we would have to fix it up and sell it in order to get our money back. However, on rare occasions we do have to take back the property if investors don’t pay for 6 to 9 months. Unlike banks, hard money lenders are typically real people lending their money. This might be money from their savings or even their retirement plans that they are investing for a better return. They want a return so that they can live the life that they want, and give you the money you need to live the life you want by real estate investing.

Time is money!

Here at Hard Money Mike we have the ability to help more people than traditional lenders, as long as the loan makes sense. If the investor has a good property we won’t have to take 3 to 4 weeks to decide whether or not we will do the loan. Instead, we would be able to close the deal quickly without having to deal with the hassle. Another thing to keep in mind is how long it takes to get the money you need. We give you your money at closing so that you won’t have to wait for the first draw. Don’t wait! Make things faster and easier today by getting a hard money loan! 

Hard money will cost you less in the end!

While there is a slightly higher cost when using a hard money lender, they are able to finance more than traditional lenders can. The speed allows you to get you into a deal quickly by getting you your money quickly, and in turn allows you to finish your project in a timely manner. Remember, if you pay your contractors on time, they will continue to work on your projects and complete them within your timeline..

Which lender is best for you?

There is a use for both a hard money lender, as well as a traditional lender. Banks are a great source for investors who have time, money, experience, and two years of income. By using traditional lenders you would not only be able to save a little money, but you would also have a longer period for repayment. A hard money lender on the other hand is best for quick deals. They also lend based off of the ARV, so you would be able to get more money for your project. Which is best for you? Contact us today to find out more!   

We are here for you!

Do you have a project in mind that you need to price out? We would love to run through the numbers with you and see if the deal will work for your needs. Are there any hard money myths that need busting? Give us a call!

Watch out most recent video to find out more about Real Estate Investing: Busting Hard Money Myths.