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Hard Money Loans Irvine
Delancey Street is a top rated Irvine hard money lender. We fund residential and commercial projects all over the state of California. Regardless of whether you need a residential or commercial property funded, we can help. As hard money lenders, the only thing we care about is your opportunity – and the chances of your project succeeding. We focus entirely on working with credible real estate investors who can deliver on their goals. The real estate investors we work with have a business plan, and can show us their strategy from beginning to end. Some real estate investors facing serious debt, outstanding balances, and a difficult time who need to borrow money but don’t qualify for a traditional loan might turn to a hard money loan as a last resort. That’s exactly what a hard money loan should be. It’s a last resort for those who cannot afford a traditional loan. But if you need it – you should work with the best.
What’s an Irvine Hard Money Loan?
A irvine hard money loan is not like a traditional loan. This is the kind of loan you only take if you have no other choice. A hard money loan is one you get without as much emphasis on your ability to repay. Whereas a traditional loan requires you have a great credit history, verifiable income, a long-term job, and a solid financial situation, a hard money loan is more about collateral. Hard money lenders put very little emphasis on your ability to repay based on your income, your job source, or even your credit.
Hard money lenders simply want collateral they can use to get money from you if you default on your loan. A hard money loan might take into consideration a piece of valuable property. The lender takes ownership of that item as collateral, gives you money, and you repay the money according to the schedule you sign. Fail to repay, you lose your collateral and it’s a win-win situation for the lender.
The Cons of Irvine Hard Money Loans
Hard money loans aren’t a great option because they are expensive. The interest rate on a loan like this is very high, and that might be even higher based on your credit score. While your credit might not prevent you from being given a hard money loan, it absolutely does affect the interest rate you’re given when you submit your application.
The other con is the length of time you have to repay. These are typically short-term loans, and they are typically only good for one to five years, and sometimes you pay more interest than you do for the actual loan. The property you’re using as collateral must be valuable enough to offset the loan. Typically, the loan should be 60-70% of the value of the property.
The Pros of a Irvine Hard Money Loan
If you aren’t able to secure a traditional loan for any reason, you can get a hard money loan fast. That’s the first thing you should know about these loans. They are much faster to provide you with the cash you need than a traditional loan. A regular loan could take anywhere from a month to several months of paperwork for you to see the cash you need. A hard money loan can have cash in your hand in a few days.
It’s also a lot easier to get an approval for a hard money loan than it is to get an approval for a traditional loan. Banks and other lenders are more careful about offering loans to consumers for real estate investments since the economy crashed in 2008, and that means you could spend weeks waiting for an approval. A hard money loan offers almost instant approval.
There is no set of standard guidelines with a hard money loan. As a result, they are willing to work with you, which means you have a greater chance of being approved for a loan with a hard money lender than you do with a traditional lender.
The process of securing an irvine hard money loan is typically far easier, better, and more profitable than it is to secure a traditional loan. However, it’s also a lot more expensive if you have less than ideal credit. Hard money lenders charge higher interest rates, and typically expect repayment in 6-24 months. In contrast, traditional loans are open to loans that extend from 5-30 years. Bottom line, hard money loans in Irvine can be a great way to expand your real estate empire – if used correctly.
You may be new to hard money loans, but you’ve heard enough about them to know they can be useful tool for real estate investors. It’s true: hard money loans can be extremely beneficial for people who want to invest in real estate but who don’t have a lot of upfront cash.
Getting a hard money loan can be a smart financial move, but if you’re not familiar with all of the ins and outs of this type of loan, it’d be easy very easy to get yourself into a bind. Following is a list of must-have info regarding hard money loans.
A Hard Money Loan is A Short-Term Real Estate Loan
Hard money loans are loans lent by individuals or groups of investors to investors looking to obtain short-term real estate loans. Investors use the loans to buy property that they will most likely rehab before selling again at a profit. Hard money loans are a great option since it’s usually quite difficult to get a real estate investment loan from a traditional bank.
Interest rates are higher with hard money loans.
Hard money loans come with higher interest rates than traditional loans. This is because hard money lenders are taking a lot of risk backing short-term real estate, so charging a high interest rate will help them absorb some of that risk. Interest rates can go up to 15 percent and higher.
Keep close tabs on your interest rates so that you’re fully aware of what you need to pay when the loan comes due at the end of the term. Some hard money loan companies don’t require you to make any interest or principal payments during the loan term, allowing you to make one giant balloon payment at the end. Some people prefer to keep making interest payments all along so that they pay less at the end. Figure out what makes sense to you based on your specific circumstances.
Many types of real estate can be purchased with hard money loans.
Hard money loans can be used for different types of short-term real estate deals. They can be used to buy multi-family residential buildings, commercial buildings, single-family residential buildings, industrial buildings, and even land. Choose your hard money lender depending on the type of deal that you’re trying to do. For instance, you may find a hard money lender who specializes in lands deals. Stick with that type of person if you are purchasing land. Specialists know the ins-and-outs of their category, and they can help you avoid major issues down the road.
Understand the the hard money loan to value ratios
The loan-to-value ratio is the amount of the loan that the lender is able to lend to you, and it’s determined by the value of the property. Most hard money lenders will lend anywhere between 65 and 75% of the amount the property is worth when you purchase it and before you repair it. If they lend you money based on the value of the property after you repair it, that’s a loan base do the “after repair value”, or ARV.
Look carefully for a hard money lender to work with.
It’s really important that you work with a reputable hard money lender. The industry isn’t federally regulated, which means that unscrupulous lenders are out there. In order to avoid being matched up with the wrong lender, visit real estate investor club meetings in your area. Speak to people who have worked with hard money lenders before and find out who they recommend.
Have a contingency plan in place if your property does not sell at the end of the loan period.
Hard money lenders expect that you will pay a full balloon payment at the end of the loan period. Hard money loans have six month to three year periods,after which the loan comes due. The assumption is that at the end of the loan period, you will be selling the property and paying the lender back. If you haven’t sold the property by the time the loan is due, you’re going to have to either refinance the loan or come up with some other option. Have your contingency plan in place before you move forward.