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5 Myths about Phoenix Hard Money Lenders

Sometimes, a traditional bank cannot meet all of your financial needs. Perhaps your credit isn’t in the best shape, or you already have a loan through your regular bank. No matter the reason behind a bank not being the best choice for accessing the funds you are in need of, a hard lender can often be a better option. And even though you may hesitate at first to borrow from a hard lender, you should be aware that not all of the bad things you’ve heard about these lenders are true. Let’s take a quick look at five myths related to hard lenders and why you shouldn’t fall for them.

Myth #1: Hard lenders only provide money for commercial properties

Sure, a commercial property can access funds through a hard lender, but this isn’t the only way in which the money can be used. In fact, there are many hard lenders that will provide single families with access to a loan so they can purchase a residential home. In fact, even if you have recently gone through a foreclosure yet have equity you can access through other assets, a hard lender may be very suitable for purchasing another home.

Myth #2: There are no reputable hard lenders

A reputable hard lender can be found just about anywhere, you just have to do your research. Sure, there are lots of hard lenders out there that aren’t reputable, but if you search in the right places, reputable lenders are easy to come by. One of the best places to start your search is through a trustworthy real estate agency in your area.

Myth #3: Hard lenders always have high interest rates

You may not be able to secure a loan through a hard lender with an interest rate as low as what a traditional bank can give you one for, but you can still avoid sky high interest rates. In fact, many hard lenders have loans with an interest rate of only about six to seven percent higher than what you can get a loan for at a bank. When searching for the best rate, make sure to shop for a hard lender in an area with lots of hard lending competition; this helps keep rates low.

Myth #4: Hard lenders give you access to what the collateral is worth

As you shop for a loan through a hard lender, remember that these loans are considered risky. Because of this, whatever collateral you are using, you will likely be able to access up to about 65 to 75 percent of its worth.

Myth #5: All hard lenders are shady

This simply isn’t true. Hard lenders want to collect the money that they lend out, and they want to provide affordable loans to good people. If you have the financial responsibility to meet the terms of your loan, you shouldn’t have any problem with the hard lender you access funds through.

Fix and Flip Your Property with a Hard Money Lender

The concept of the “fix and flip” property loan is one that has grown substantially in the past few years. This is because more and more people are looking to invest in real estate and take advantage of the additional income opportunities this provides. However, these loans are different than the ones given when a property is bought with the intention of selling it one day.

Understanding Fix and Flip Loans

A fix and flip loan mean that the property that is being bought is typically distressed or run down. The investor is purchasing it with the intention of renovating it and then selling the property for a profit.  The lenders providing these loans are at somewhat of a higher risk, since there’s no guarantee the property will sell for a profit, but there are more and more lenders coming into this space due to the demand that is now there.

Finding a Fix and Flip Loan

It can be extremely challenging to get funding for a fix and flip property the traditional way. Also, paying for this type of property out of your own pocket is also pretty risky. The majority of banks aren’t going to provide any type of long-term financing option for fix and flips, nor will they provide short term loans because the returns aren’t very good. The majority of fix and flip properties are sold within 12 months or so of being sold. As a result, a hard money lender may be the best option for obtaining the funding needed to purchase the property in question.

Why Use a Hard Money Lender for a Fix and Flip Loan?

The fact is, hard money loans offer competitive rates. Even better, there aren’t any requirements regarding bank statements, tax returns or a person’s credit score. AS a result, the company is able to help the investor with their fix and flip project.

Finding a Hard Money Lender

In some cases, the real challenge is finding the right hard money lender. Not all of these service providers are created equal and it is necessary for you to take your time to find a reputable company to work with. This is the only way that you can feel confident you are protecting the investment you have made.

If you are thinking about seeking out a fix and flip loan, then don’t rule out the possibility of working with a hard money lender. The fact is, these companies make it easy for you to make the investment and then earn a profit. Just make sure to chose the right company to work with before moving forward with the project at hand.