Category: Reasons to invest in commercial real estate

Hard Money Loans What You Need to Know

    Finance Tips

Secured lending

Have you heard of house flipping? It is a term that has become more popular in part because of T.V. episodes that show exactly what it entails, albeit with better editing than real life. Commercial real estate investing is not as easy as these shows make it seem. What enables people to do so with some success is most often due to having investment property mortgage lenders backing them. In other words, someone else foots the bill. You shouldn’t be discouraged. To find out more about commercial real estate investing basics, read below.

What Are Some Reasons to Invest in Commercial Real Estate?

There are a few reasons real estate is seen as a good investment.

    1. Appreciation: Other than the odd bubble bust, property prices rise.
    2. Returns: people like that it is a tangible asset.
    3. Diversification: Your financial advisor will like that you are diversifying your assets.
    4. Inflation hedging.

Are you ready to seek out investment property mortgage lenders? You should know about the funding process first.

So, How Do You Get the Money to Buy Some Land?

As stated in Gone With the Wind, “Land is the only thing worth working for,…because it’s the only thing that lasts.” It seems not many would disagree, as owners of lots of land are generally regarded as very wealthy. Do you have to have money to make money, as the old adage goes? Not always, if you know the right people.

The typical business loan offered by banks has a few requirements: the borrower must have been in the business for at least two years, have great personal and business credit, be cash flow positive, and pull in at least $250,000 annually in revenue. There are plenty of people who fit that requirement, and double that who do not but would still like to buy, renovate, and sell a house for profit. Investment property mortgage lenders, or hard money lenders, can step in.

What is a Hard Money Loan, and Is It Even Legal?

There is nothing wrong with seeking a hard money loan, it is simply that most people would rather deal with a public lender, rather than a private one. The lender is putting up their own money for the house to be fixed up. Renovation lending, as it is sometimes called, follows the simple process of buying a cheap, somewhat run down house, and through renovation dramatically raising the value. These hard money loans are well protected, as the equity on the house must be somewhere between 30 to 50%.

Is real estate investing something that interests you? It is not outside the realm of possibility. Hard money loans are not for everyone. But they do make it much easier for many people to get into house flipping. Who doesn’t want to start making more money, that much faster?

Making Wise Investments in Commercial Real Estate

    Finance Tips

Real estate secured lending

Are you a first-time home flipper looking for renovation financing? Or have you been investing in real estate and flipping houses for several years? If either of these situations apply, then you’re probably aware that in 2014 alone, 327,069 homes were repossessed. Many of these homes may be in poor condition, so the need for renovation lending is apparent.

While there are a number of reasons to invest in commercial real estate, expanding your business and investment portfolio may be at the top of your list. If you have already been making real estate investments for quite some time, and are looking for real estate investment lenders for a new or ongoing series of projects, you may be interested in knowing more about hard money rehab loans.

First of all, the interest rates are higher with hard money rehab loans. They do, however, have lower loan- to-value ratios. A hard money loan’s interest rate might range from 15%-to-18% or more.

Secondly, there are faster turnaround times with a hard money deal. These may only take one-to-two weeks in order to process.

Thirdly, the payment period is also shorter for a private loan. When comparing these loans with traditional bank loans, private loans extend for up to five years, while a traditional bank loan payment period is from one year up to 20 years.

If you were previously considering a standard bank loan, then you are probably aware that there are several stipulations for this type of loan:

    You need to have been in business for two or more years.
    You need to have a minimum of $250,000 in annual revenue or income.
    You need to have good personal and business credit.
    You need to have a consistent cash flow.

When you apply for secured short term loans, one of the operative terms is “secured.” If you are interested in obtaining a hard money loan, most of them need to be secured by an existing property you own. More specifically, the property you put up to secure your loan will need to have approximately 30%-to-50%.

When you are looking for hard money mortgage lenders, remember to consider the benefits of these types of loans over traditional bank loans.