Hard Money Loans San Antonio
San Antonio Hard Money Lenders
Unlike traditional bank loans, hard money loans have very lenient requirements with flexible guidelines. For example, a traditional loan may have a minimum credit score requirement for the borrower. For a multi-unit commercial property, it may have a specific debt service coverage ratio and occupancy rate that needs to be met, and historical income numbers may need to show a history of stable income and expenses. These are only some of the many requirements that traditional lenders have for residential and commercial loans, and any deviation from these requirements may result in the loan being declined.
While hard money lenders have flexibility to think outside the box when reviewing your loan, they typically still require the deal to make sense in some way. For example, they will not simply lend on any property that is underperforming or in poor condition. There needs to be a clear turnaround and exit strategy in place. Hard money lenders may also have specific requirements regarding your financial situation, other aspects of your personal situation and the property itself.
Your Personal Finances
Traditional lenders may lend up to 95 percent or more of the sales price. In contrast, a hard money loan typically has a much lower loan-to-value. You should expect to make at least a 30 to 40 percent down payment on the project regardless of the property type. Some San Antonio hard money lenders may require even more money invested by you depending on the specifics of the loan request.
Hard money lenders analyze your financial situation to ensure that you have enough money available to make the down payment. In addition, hard money lenders generally have higher fees than a traditional lender. For example, you may pay an underwriting fee of four to six percent of the loan amount in some cases. Bottomline, you should have enough cash available to pay for this and other related fees.
Other Factors That Influence Our Decision
Hard money lenders review the entire loan to determine its strengths and weaknesses. There are specific requirements regarding liquid cash, but there are no minimum credit score requirements or income requirements. Furthermore, a borrower doesn’t not need to have experience with real estate investments or with renovations. While these are not specific factors that would result in an automatic denial, remember that the loan request must have strengths. For example, if the applicant’s income level is very low, it may be best if he or she had a huge cash reserve in bank and investment accounts. It may also help if an applicant has a proven track record of success with other similar types of projects. If multiple applicants are applying, the strengths of one applicant can balance out the weaknesses of another one in some cases.
As you can see, there is considerable leeway for a hard money lender to examine the financial strengths and weaknesses of applicants provided they have enough cash reserves to cover the down payment and loan costs. Likewise, a hard money lender can get very creative when analyzing different property scenarios. The ability of the applicant to show a positive picture of the property’s potential is important. In addition, the applicant needs to back this up with research and facts. For example, do not simply state that you plan to lease office space for $2 per square foot after a renovation. Instead, back up your statement by providing research showing actual market rental rates as well as market occupancy statistics. Remember that these should be for “like” properties. You cannot use market data for a Class A office building to support your projections for a Class C office building. Likewise, do not state that you can renovate a building for a specific amount of money.
Instead, get a contractor’s written estimate for all of the work that needs to be done.
There are no hard and fast requirements for a hard money loan other than the down payment requirement. However, each lender is unique, and some lenders may have specific factors that they look for in each loan that they approve. Generally, hard money loan requests are reviewed on a case by case basis.
What to do next
Delancey Street is a premier San Antonio hard money lender that can help with your next residential or commercial property. Regardless of the loan amount, we can help you get funding. The only way to know if you’ll qualify is to contact us. We have experience handling tough potential deals. We understand the intricacies involved in underwriting “potential,” opportunities that need nurture.
If you’re in the market for a real estate loan that can help you dip your toe in the real estate investing pool hard money loans could be the way to go.
A hard money loan is a short-term real estate loan that is provided by organizations and individuals to investors looking to buy property for short-term periods. The loan term lasts anywhere from six months to 3 years, making them perfect for people who are buying property strictly for investment purposes. Before you dive head first into the process, there are certain key facts you should know about hard money loans. Arming yourself with knowledge will help ensure that you end up coming out ahead.
Credit is not as important with hard money lenders.
When you go to a bank for a traditional loan, the bank will be looking at everything from your credit history to past foreclosures and bankruptcies to help ensure that you’re a great credit risk. With hard money loans, your credit is less important. The hard money lender is primarily interested in the collateral that you’re bringing to the table. That collateral will be either the property that you’re intending on purchasing or property that you already own. If you’ve got the collateral, you’ve most likely got the loan.
Hard money loans can be used for different types of real estate
There are many different types of real estate deals that can be covered by hard money loans. They range from single-family and multi-family residential properties to commercial and industrial properties and land. Different types of lenders specialize in different types of deals, so choose a lender that has extensive experience working with the type of property that you’re interested in investing in. Specialist will have the exact experience that you’ll need, and they’ll be able to recognized and guide you away from any pitfalls that come with your property type.
Hard money loans should only be used for quick real estate deal
The very nature and structure of hard money loans make them ideal for short-term real estate deals it’s usually last anywhere 3 months to 3 years, making them ideals for investors who are only intending to purchase the properties for a short period of time.
Hard money loans should only be used to fund quick real estate deals.
The very nature and structure of hard money loans makes them ideal for short-term real estate deals. Their loan terms usually last anywhere six months to three years, making them ideal for investors who only intending to purchase the properties for a short period of time. They’re not a good option for people who are looking to purchase owner-occupied residences due to the loans’ short term periods. Hard money lenders don’t like to lend to consumers looking for owner-occupied residences that they’ll live in themselves because the lenders will then be forced to apply stricter lending criteria.
Real estate investors who want to jump on quick deals with benefit from hard money loans.
One of the best things about hard money lenders is that it takes virtually no time to get your money once your application is approved. Once the lender has approved their loans, borrowers usually get their money in as little as a week. This makes them an awesome financing tool for investors looking to jump on fast-moving real estate deals. This is particularly useful in markets where buyers with very little liquidity frequently lose out to all-cash buyers,l
The industry has no federal government oversight.
Hard money loans are not overseen by the federal government, making it easy for predatory lending companies to pounce on unsuspecting borrowers. Do your due diligence, and research the companies that you’re interested in carefully, making sure that there aren’t any complaints lodged against them by former clients.