Suffolk County Hard Money Lenders
Hard money loans have been in use for decades, but many real estate investors are still unfamiliar with them. Some investors do not know what they are or how they work. Others may have heard that they have a short term and a high interest rate, and don’t see how they can be advantageous in an investment situation. The reality is that investors who understand what hard money loans are, have successfully used them to create real estate empires.
Who Funds Hard Money Loans?
One of the first differences that you will notice about hard money loans is where you obtain them from. With a typical real estate loan, you may apply online with a local or regional bank. You can also walk into your credit union’s branch office down the street. Traditional real estate loans usually offer a permanent financing solution for commercial and real estate properties, and this financing is available through a financial institution. A hard money loan may also be used for residential and commercial properties, but the source is different. A hard money loan is a type of private loan. This means that either a private lending company or a private individual is funding the loan.
How Are Hard Money Loans Unique?
The source of funds for a hard money loan versus a bank creates substantial differences between these two options. Banks have minimal, or no leniency for requests that fall outside of their lending guidelines. These requirements are usually burdensome, and they may involve a minimum occupancy requirement and minimum cash flow level for the property, a property that is well-maintained, an applicant with a minimum credit score or more. If even one requirement is not met, the result is usually a denial. Because hard money loans are funded by private companies or investors, they set their own requirements. In most cases, the main hard money loan requirement is that the property value supports the loan amount. Applicant requirements are minimal at best. In addition, the loan terms are also different than bank loans. The loan-to-value is lower, and there is usually a very short loan term with a final large balloon payment. While these loans are often interest-only loans, there is a high interest rate associated with them in most cases.
Who Uses Hard Money Loans?
The loan terms for hard money financing may sound less than ideal, and you may wonder how they could possibly be used by an investor to achieve incredible profits. Many real estate transactions that involve repositioning are very lucrative. For example, a property may be offered for sale well below market value because its occupancy rate is low or the property has substantial maintenance issues. These properties could be fixed up quickly and leased to quality tenants. In fact, they could be improved so much that they outperform the average property in the area. Selling a property after it has been repositioned is a great way to turn a profit in a short period of time when the right property is selected, and hard money financing is ideal for this situation. This is only one of many scenarios when hard money financing makes sense. Because a hard money loan may close weeks or months sooner than a bank loan, hard money loans can be used when a closing must happen without delay.
If you’ve decided getting a hard money loan is right for you – then the next step is to contact us. Delancey Street is a New York based hard money lender with experience handling residential and commercial projects. No loan amount is too high for us. We specialize in handling unique loans that other lenders turn down. We believe that every entrepreneur deserves an opportunity to succeed. We fulfill this belief by offering no-nonsense loans to real estate investors. Tell us your opportunity, we’ll tell you what we think – and give you the advice you need to make it a success story.