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Los Angeles Hard Money Loans
Best Los Angeles Hard Money Loans
Delancey Street is a trusted, and well known, Los Angeles residential hard money lender. We provide hard money loans to entrepreneurs looking to buy a residential home, and then make improvements to eventually flip it. We understand doing fix and flip requires money. As a premier fix and flip lender in Los Angeles, we are specialists in providing asset based residential fix and flip hard money loans. We offer loans to borrowers in Southern California, and also for a variety of ventures, ranging from rehabbing, to remodeling, including condo purchases. We can help you get the financing you need for your next Los Angeles fix and flip job.
We have provided over $50 million in both commercial and residential loans. We help entrepreneurs with poor credit, no credit, bankruptcy, or foreclosure, get funding for their next fix and flip loan. If you are in Los Angeles and need money immediately, we can provide you with the financing you need to make your goal a reality. We provide Los Angeles fix and flip hard money loans with super easy terms, and low interest rates starting at 8%
Real estate investments can be some of the most lucrative of all investments. If you invest in the right property, and have a good lender behind you, you can truly get things done in this industry. Fix and flip loans make it possible for anyone, even those with bad credit, to benefit from real estate investments. A traditional fix and flip loan is a hard money loan that helps someone, regardless of credit history or income, buy a bargain house, fix it up, and sell it back for a profit. Unlike traditional real estate purchases where someone buys a house so that they can live in it, a fix and flip buy is done solely for the purpose of making a profit when you put the house back out on the market.
Short-term mortgages cost money, as does the repair and home improvement projects of a fix and flip venture. These two things are what a hard money lender like Delancey Street will help you with. The application process is incredibly simple and introduces us to the basics of your project and your personal or business information. No matter what your plan is, there’s a great chance that we can help you get a fix and flip loan that will feature competitive interest rates and great customer service/guidance along the way. That’s because we know a LOT about these loans.
No Credit Check Fix and Flip Loans
There aren’t many loans in the world that you can get even if you have bad credit and limited income. Most lenders want to know that you already have the money to repay them, regardless of how your enterprise goes along the way. With hard money loans, things are different. You’re not going to be approved because your credit rating is great or because you have a huge income. In fact, you may have very little income but still need a large sum of money to purchase the house you have your eye on for a fix and flip. With hard money lenders, we use your property – in this case your house – to approve you for the loan. That makes us a part of the venture and it means that we will be able to add in our guidance to you along the way. And that’s not a burden to you. We love partnering with people who have great fix and flip ideas and who trust us to be with them every step of the way. It’s why we’ve been successful in our own business. Our keen eye for winning ideas is what keeps us enthusiastic about all of our business ventures, and while things can always get muddled along the way, a fix and flip can be done the RIGHT way, and it will rarely fail if the proper planning has been done. We truly believe in this model of real estate investment.
Since you don’t have to have a great credit rating or minimum income, it’s easy to get you set up and approved for this loan IF you have the initial business plan and planning for your fix and flip venture. It’s our job to ensure that your plan is solid, and we will certainly talk with you at length about just why your fix and flip is going to work. We strongly believe in the power of people to achieve their dreams, and we’d love to help you achieve yours.
Why You Should Call Today
As we always mention, Delancey Street is a firm that believes in the go-getters. We love people who love to “do” in the world, and anyone who is thinking of fixing and flipping a house certainly has a full agenda ahead of them. This can be an extremely hard venture to research, as houses on the market today tend to be value priced quite often. This is the opposite of the old days when many houses were priced at higher values. Now you can get a bargain every other day. That doesn’t mean that some bargains aren’t still well-suited to the fix and flip model of investing, and we’re here to make sure that YOUR specific fix and flip enterprise is going to land you a tidy profit.
Call on the folks at Delancey Street today to get started on your fix and flip loan application. We’ll take the time to answer all of your questions, listen to your concerns and comments, and let you know just why we’re the right lending agency for your specific fix and flip job. If you like what you hear, and everything is all set in the application, we’ll start a long and fruitful partnership that will work out well for both lender and borrower.
What Factors Go Into Determining a Home’s After Repair Value?
When an individual buys a home with the intent to flip it, it is important to know how much it will be worth after repairs are made. This is known as the after repair value (ARV), and it can determine how profitable a project may be. It may also determine how much a hard money lender may be willing to give someone attempting to flip a property.
Location Is the Most Important Factor
Much of a home’s value is based on where it is located. Homes that are located in trendy neighborhoods, in affluent suburbs or by schools are generally worth more than those outside of these areas. If a property is located close to an entertainment spot or relatively close to a major highway, it may also be worth more on the open market. However, it is important to note that a property may be worth less if it is located too close to the highway as there may be a constant noise.
The Size of the Home May Influence Its ARV
In many cases, homes are priced per square foot. Therefore, a house that is 3,000 square feet is generally worth more than 2,000 square feet. Assuming a property will be appraised at $100 a square foot, a 3,000 square foot house would be worth $300,000 while the 2,000 square foot house would be worth $200,000. Before deciding to build the larger home, make sure that there is demand for that extra space as well as demand for homes at the resulting price point.
What Types of Features Will the Home Have?
The value of a home after it has been repaired depends on the types of features it will have. Properties that have decks, pools and hot tubs may be worth more than homes that don’t have such amenities. Finishing a basement or adding central air may also increase the value of a house assuming that surrounding properties don’t have these features.
However, it is important to note that those who live in colder climates may not necessarily care if they have central air or a pool. Those looking to rehab a home should research the potential return on investment of these features before adding them. This may be done through an online search or by talking to a local real estate agent.
How Strong Is the Housing Market?
When there is a strong demand for housing, the potential value of a given home may be higher. This is partially because there may be fewer available homes on the market. It may also be because investors may be willing to pay more for the opportunity to rent that property at a premium rate.
It should also be noted that houses that are repaired during times of strong demand generally don’t stay on the market long. If a property is not sold within 30 days, potential buyers may start to wonder if there is something wrong with it. This may result in the need to reduce the price or make other concessions to sell it.
Look at Recent Home Sales
In any housing transaction, sales from the previous six to 12 months can be a barometer for how much your home will be worth. Therefore, you may want to look at recent home sales involving properties that are roughly the same size as your home and will have similar features. It is also important to only compare sales of homes in either the same neighborhood or the same area of town where your property is located.
Use Your Best Judgment
In some cases, determining an ARV takes some subjective reasoning. For instance, you may think that a neighborhood is about to become the next trendy place for young people to live. However, a hard money lender may not agree with your assessment. In such a scenario, it may be a good idea to get an appraiser who does agree with your assessment to write a report solidifying your position.
It can be challenging to project the value of a home after repairs before any work has been done on the property. However, taking factors such as location, features and square footage into account can give you a good idea of what the property will eventually be worth.
Los Angeles Residential Rehab Loan Lenders
If you have a property you need a rehab loan for, we can help. Our Los Angeles residential rehab loan company can help you. Have you decided you want to rehab, and flip a property? Excellent. We can help you get with a Los Angeles residential rehab loan. We are lenders who can provide loans for all types of loans. We’re happy to help you. One of the best ways to ensure we can help you, is by reviewing our criteria below. We want you to be profitable, and we want to give you funding as soon as possible.
10 Things To Consider for Los Angeles Residential Rehab Loans
The property should be something you are looking to purchase. We cannot lend against an asset you do not own. We lend on all sorts of properties and land – ranging from houses, such as single family residences, to duplex, 3plex, 4plex, warehouses, and even land.
The property should be no less than 900 square feet. This is self evident, because anything smaller – and it’s not going to be worth your time, or our time to fund.
The property should be profitable. As a Los Angeles rehab lender, we specialize in high-margin properties. It’s harder for us to lend, if you don’t have a high margin property. If you don’t have enough margin, you’ll just drown in debt because the property doesn’t sell.
The property can’t be owner-occupied. Like many lenders, we don’t lend on owner-occupied properties. This is because of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Lending on owner occupied properties increases risk, and it’s something we want to avoid.
The property can’t be manufactured, mobile, or a recreational property. Manufactured means, something prefabricated housing, which is then transported to the site of the land. Mobile hands are those made prior to 1976, when HUD code governing standards for factory-built homes was set forth. Recreational properties mea – agricultural property for farming, lake, river property with a cabin, or ranch land to raise animals, or country living estates.
The property shouldn’t require more than 75-100k in repairs. This goes hand in hand with property value. If you have to spend a lot on repairs, and the value of the property isn’t immense – then it’s probably not a good deal. We want to keep you invested in the deal, and want you to make money on the deal.
The property shouldn’t have meth, mold, or any fire damage. Properties with meth us/manufacturing are impossible to rehab. When meth is cooked/consumed, very toxic chemicals are released into the air – and saturate the walls and ceiling. Exposure the byproducts of meth can result in injuries to your brain. Houses that have mold or fire damage are also difficult to rehab because you have to gut and rebuild them.
The house cannot have foundation or truss problems. Foundation problems can destroy a house quicker than anything else. It costs a lot to fix. Truss problems are dangerous, and costing a lot to fix.
The property shouldn’t be in a rural area. Hard money lenders stay away from lending in rural areas – because they attract a limited number of buyers. Often, there are no properties around to compare.
Mortgage lending can be complex, especially when you are unable to quality for a conventional loan. If you find yourself in need of a loan for the purchase of real estate, there are alternatives that might be a good solution. The information below sheds light on hard money loans, including the different purposes for which they are used.
About Hard Money Loans
For starters, hard money loans are primarily for the purpose of real estate investing and they are made based on the value of your collateral. This is different than traditional loans that consider your ability to pay the money back. Further, hard money lenders are private companies and individuals. The decision to fund a hard money loan is made based on the unique circumstances of each potential borrower. There are different types of hard money loans, such as the construction loan, bridge loan, fix-and-flip loan and owner-occupied loan.
Here are a few more details about these specific types of hard money loans:
Construction loan: Enables a real estate developer to start a new construction project. The goal for this type of loan is generally to refinance or sell the property right away.
Bridge loan: This kind of loan lets you buy a property fast, then resell or refinance it. You can also buy a new property now, before getting the cash down payment from the sale of a property that you currently own.
Fix-and-flip loan: Aptly named, this loan is for someone who wants to buy and resell a fixer upper, at which point the loan will be paid off.
Owner-occupied loan: Although less common, this hard money loan is for consumers who are unable to qualify for more traditional loans.
The reason hard money lenders shy away from consumer loans for the purchase of private property is because they require adherence to more regulations, such as the Dodd–Frank Wall Street Reform and Consumer Protection Act, which requires a certain debt-to-income ratio so that borrowers are not overextended. Hard money lenders would also have to satisfy additional licensing requirements when providing consumer loans.
How Hard Money Loans Work
The term for hard money loans is typically less than a few years, but often about 12 months. Instead of making equal payments toward the principal and interest, you would make interest only payments. In fact, there are some hard money loans that do not require you to many any payments. The application process for these loans is simplified compared to more traditional loans and can take less than a week.
Hard money lenders require you to have cash that will be based on either the Loan-To-Value (LTV) ratio or the After-Repair-Value (ARV) ratio of the property. When it’s time to pay the loan off, that will occur in the form of a balloon payment that covers the principal, interest and fees in order to reach a zero balance.
Is a Hard Money Loan Right for You?
While there are advantages and disadvantages to hard money loans, deciding whether this type of loan is right for you might depend on whether there are other options. The obvious advantages are your ability to get money fast, relaxed requirements and flexible terms. Some of the disadvantages are the fact that the interest rates are high, fees are also high and there is a lack of governmental oversight for these types of loans. It can also be difficult to refinance because of traditional mortgage lending requirements.
If you’re trying to make a decision about moving forward with a hard money loan, you’ll have to weight the pros and cons. Many people use these loans because they have no other option. Others simply find that the pros of hard money loans outweigh the cons, especially the ease with which these loans can often be acquired.
If you have had challenges securing a traditional mortgage, then you might be interested in learning about hard money loans, which are primarily for the purpose of real estate investing. A simplified loan process and lenient requirements are just two of several reasons why some people choose hard money loans. The information below provides an overview of this loan product, including what you need to know before making a decision to pursue a hard money loan.
Types of Hard Money Loans
When it comes to hard money loans, there are options that accommodate the needs of different real estate investors. Common examples include the construction loan, bridge loan and fix-and-flip loan. There’s also the owner-occupied loan, which is a non-investment version of hard money loans. This loan product is unique because the lenders are private individuals and companies that make decisions based on criteria that varies to a large degree. Hard money lenders often fund loans that traditional lenders probably wouldn’t touch. Here are more details about hard money loans for investment purposes:
Fix-and-flip loan: Allows you to buy a fixer upper to quickly sell and pay the loan off.
Bridge loan: Enables you to buy a property fast, resell or refinance it. You can also buy a new property before you get the cash down payment from selling a property that you already own.
Construction loan: Allows a real estate developer to start a new construction project, then refinance or sell the property.
In some states, it’s been reported that 90% of hard money lenders don’t provide consumer loans. This is mainly because they involve a lot more regulations. For instance, hard money lenders of consumer loans for private properties would have to comply with the Dodd–Frank Wall Street Reform and Consumer Protection Act, among other regulations. They would also have additional licensing requirements.
How Hard Money Loans Work
One of the ways in which hard money loans are drastically different than traditional bank mortgages is that the term is usually for a couple of years, and often just 12 months. Instead of making equal monthly payments comprised of the principal and interest, the borrower would make interest-only payments. There are some hard money loans that don’t require you to make any payments at all.
The financing process for hard money loans is streamlined and often takes about a week or less. Generally, you will be required to put cash down, which will be a function of the property’s Loan-To-Value (LTV) ratio or the After-Repair-Value (ARV) ratio. At the end of the loan period, you will make a balloon payment to zero out the balance, which includes paying the principal, interest and all fees.
Benefits of Hard Money Loans
There are pitfalls associated with hard money loans, such as high interest rates, short terms, high fees and lack of governmental oversight. However, there are also advantages, which is the reason why a lot of people choose this option.
One of the main reasons why real estate investors choose hard money loans is because it provides them with fast access to money that’s needed for an investment opportunity. It’s access to money that they would not otherwise have. Other reasons why hard money loans are considered a viable option is because the terms are flexible and lenders take into account the prospective borrower’s specific situation. This is unlike most bank products that are stringent and don’t allow room for customization.
Essentially, hard money loans are resources that real estate investors can use as part of their strategy. Sometimes hard money loans are simply a solution for someone who doesn’t have any other option. However, some investors realize that the pros of hard money loans outweigh the cons.
Los Angeles is a city on the move, with many great real estate deals making themselves available to those interested in investing. If you are in the area and looking to move on a property, you might not have a lot of time to get in on the ground floor of a great deal. There are also times when you just do not qualify for a conventional mortgage. You might think that there are not any options left for you in such a case, but a hard money loan offered by Delancey Street could be your ticket to closing the deal.
What Types of Hard Money Loans Are Available?
There are actually quite a few different types of loans available using this type of lending. The loan that works for you will depend on a variety of factors and on the type of real estate deal that you are hoping to close. A hard money loan typically has less stringent requirements than other types of mortgages as approval will depend more on the collateral you will have in the building that you are hoping to purchase.
There are four major varieties of hard money loans that you will want to make yourself aware of. The details for each are included below.
- Owner Occupied Loan – These are harder to get, but they will provide you with the money you need to buy a home or building that you intend to occupy on your own. This is useful if you cannot get approved for another type of financing, but the short term nature of the loan often makes it difficult.
- Bridge Loan – As its name implies, this is a short term need for hard money that will get you a property quickly. In return, you plan on either selling it within the year or refinancing it in order to pay back the loan. Alternatively, you might plan on using the proceeds from another property you are selling to raise the down payment you need to qualify for a conventional mortgage.
- Construction Loan – This is the loan you need if you are a developer looking to get a project off the ground quickly. You need access to funds fast because you plan on selling the building just as soon as it is finished. Alternatively, you may refinance the loan within the first year.
- Fix and Flip Loan – This is a popular type of hard money loan that is geared for investors who enjoy buying homes that are a value, and then quickly fixing them up for a fast sale. Once sold, the proceeds are used to pay off the loan.
While these are the main types of hard money loans, there are other varieties as well. You will just want to talk to Delancey Street to determine which type of loan best fits your particular situation.
Why Consider a Hard Money Loan?
This type of loan is geared for the real estate investor who needs access to cash in the short term in order to meet certain obligations designed to build their property portfolio. Because of this, you will find it difficult to get this type of financing if you are wanting to buy a property in Los Angeles to live in on your own. However, it is possible to do so and this is why you will want to speak to a loan specialist about your particular situation.
A hard money loan is different from other types of property financing because of its short term nature. You will only have a few years at most to pay back the loan. During that time, you will only be asked to make interest payments. Some lenders do not even expect that. You will need to have the loan paid off by its maturity date, which could be as little as 12 months.
When a traditional loan will not work, a Los Angeles hard money loans provide an alternative means of financing a real estate purchase. However, hard money loans are not for everyone. Before you finance your next real estate purchase, learn the difference between traditional loans and hard money loans.
Traditional real estate loans are based on your credit history, your earnings, and the likelihood that the lender will get its money back. The loan terms often stretch over many years. By applying for a traditional loan, you open current and past financial history up to close scrutiny.
In essence, your reputation is the collateral for the loan. The entire process may take over a month to finalize, and many banks will not lend money for renovation projects. When you sign the loan papers, you are agreeing to a set interest rate and repayment terms. This is the type of loan your parents probably used to pay for the family home.
Hard money loans are based less on creditworthiness and more on the ‘hard’ collateral you put up to guarantee repayment. The collateral may be real estate or other assets that the lender can sell and recoup its money in the event you default on the loan. Hard money loans are typically finalized in just a few days with a minimum of paperwork, and borrowers are expected to come up with a smaller down payment than with a traditional loan. The rates are often flexible and tied to a specific project, such a home build or renovation.
The reason this type of loan is not for everyone and every real estate project is because a hard money loans terms usually cover only on a few months, typically less than two years. Additionally, while hard money loans may be easier to qualify for, they typically come with a much higher interest rate, making them a poor choice for the average homeowner looking to keep the property, and loan, for a long time.
Types of Hard Money Loans
You will find three common hard money loan types. Each is designed to fit the needs of a specific subset of borrowers.
A bridge loan is designed for borrowers who have multiple real estate projects in process at one time. They are typically awaiting the sale of one property to purchase a new one. The loan ‘bridges’ the short interim until the first property sells. This type of loan is also referred to as:
- Interim financing
- Swing loan
- Gap financing
Most commonly used by borrowers who buy properties, fix them up for resale, and ‘flip,’ or sale, them quickly, the acquisition loan finances the purchase of the property.
When a borrower needs to finance new construction, he may apply for a hard money construction loan. The construction loan usually has a term of six months to a year. It may require interest-only payments during the term. The borrower may not receive all the funds at one time. Instead, the funds are doled out intermittently based on the percentage of construction that is complete.
Lenders make hard money loans on all types of real estate, including:
- New construction
- Multi-family dwellings
Hard Money Loan Acquisition
The first step to applying for a hard money loan is narrow down your project ideas to a specific investment property. Once you submit your application, it will go through an approval process that may or may not require the submission of financial statements and proof of insurance. Once all of the required paperwork is submitted, the process can be approved quickly, and you will meet with the lender to close the deal.