Hard Money Lenders and Hard Money Loans

Why A Hard Money Loan.

The reason real estate investors choose to use hard money loans is that they are a source to purchase and rehab property to make a substantial profit that they may not have without the use of this expensive money. These short term loans are expensive and even if they were legal for a home owner to borrow from the private lenders offering these loans it would never be advisable. So how hard are these short term loans, you ask? The answer is threefold. They are restrictive in loan to value, they are high in rate and high in fees.

Restrictive in Loan to Value.

The maximum loan to value for most private loans range from 50% to 75%. No deals are done at the higher loan to value for two reasons. First the hard money lender requires lots of equity in case of default they can list and sell the property quickly because they will in theory be below market value. The reason I say in theory is because there are so many REO's, Short Sales and foreclosure properties on the market today that what was normally considered an exceptional deal is common place. Therefore, private lenders are more particular about the properties, borrowers and loans they choose to fund.

Secondly, any real estate investment that has less than 30% equity are not good investments for the investors unless they are purchasing the property for the cash flow. In that case they are long term investments and not suitable for the short term nature of these expensive bridge loans.

High Interest Rates.

Whether as n real estate investor buying and or rehabbing commercial or residential investment real estate the interest rates are much higher than conventional commercial or residential investment lending. The rates are higher much because the risks are much higher and there source of these funds are limited. Risk and Reward. Supply and Demand. The risks are higher because these loans are not underwritten based on the standard conventional guidelines and there is a very limited or no secondary market for private bridge loans. This is generally not an issue because the borrowers know these are only short term loans. The terms range typically from 3 to 24 months. Therefore, the higher interest rate is of minimum importance because both lenders and borrowers know that the borrowers have an exit strategy to quickly payoff these high interest rate loans. Most lenders require a viable and verifiable exit strategy before they make will the loans.

Higher Points.

Because these loans are short term in nature the hard money lenders always charge discount points. They may charge 1 to 5 points. In addition the private money brokers will charge 2 to 5 points. An average a borrower will 5 to 10 points. Plus closing costs. These are high fees. They only make sense when an real estate investor will make substantially more money and they have no other way to fund the deals.

Why Use Hard Money Lenders.

Simply to make money. As a real estate investor you have choices in financing your deals. You can choose conventional financing that requires at 30% to 35% down payment for properties that are in good shape. There are many other conventional mortgage criteria including credit, cash reserves, seasoning of funds and property. These all make conventional financing almost impossible.

Another option is to use your own funds and not finance a deal at all. But, most astute real estate investors know that if they can make a net profit of $25,000, $50,000, $100,000 or more using a hard money loan they do not like the fees but they we pay them versus not making any money because of lack of financing.

Louis Jeffries has been a Mortgage Banker for over 20 years. A Investor Rehab Specialist Louis will help you fund you next rehab or construction project. Contact Louis louisj@alldominionmortgage.com 708-299-3244 Visit The Blogs Investor Rehab
Hard Money

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Something to Consider Before Considering a Loan

Cash loans and credit cards are necessary in many scenarios however you must keep in mind that due to the interest you'll pay on these loans, whatever you purchase by using a credit card or money from a loan will cost you much more than the amount on the price tag. If you are simply looking for some extra cash to spend on non-necessary items, do yourself a favor and seek out other ways of earning the cash before turning to a personal loan. Whether you get a secured loan or an unsecured loan the risks involved are not worth the effort if you can generate the cash in some other way. Even if you can not generate the amount you need, it can at least decrease the amount of a loan making payments easier and the hit to the wallet that much less.

One idea is to borrow the money you need from a parent, sibling, or a friend. Family members and friends will not usually ask for interest on their loans however you may want to offer them a little interest to sweeten the deal. Even if you pay them $10 extra for each $100 borrowed that would be nowhere near the 5 or 6% you would pay on a normal personal loan from a bank. If you do borrow from a friend keep in mind that nothing can ruin a relationship better than money.

Sell some stuff. Go through all that clutter in the basement or hallway closet and put it on EBay or have a yard sale. Like they say "one man's trash is another man's treasure" and you just never know what someone may find useful until you put it out there. CDs and books, especially old college textbooks will probably do well on the internet while clothes and old nick-knacks will have more luck in a yard sale.

Of course there is always the second job. There are telemarketing opportunities and there are even teaching and tutoring jobs available depending on your area of expertise. If you are a writer, there are a ton of opportunities on the internet, people are always looking for reliable copywriter to create short, keyword driven articles to help promote their businesses. If you are in any way akin to sales there are lots of opportunities available. Mary Kay and similar companies are always looking to increase their sales force. Tupperware, gourmet food, and cosmetic companies all have multi-level marketing schemes that enable anyone with a little motivation to make extra cash.

One of the best ways to conserve the income you do have is to create a budget for yourself. Make an inventory of all your monthly expenses, all of them. Go through this inventory with a fine tooth comb and make note of all the unnecessary and somewhat necessary expenses you have. Make note of which of these expenses you could either eliminate or cut back on. Add them up and see if it is worth the effort. You may be surprised. Things like meals out, gas, tobacco, alcohol are all very expensive luxury items that can be cut from your budget by making your own lunch, public transportation and a bit of self-discipline. This kind of stuff really adds up and if you have a solid goal to keep your eye on, these cut backs can seem a little easier.

Cutting back on extravagant expenses and finding new ways to generate cash are always good for the body and soul. If you can do these and avoid financial emergencies that may require taking out an expensive cash loan then you have done yourself a great favor. Granted, there are plenty of situations when a cash loan is completely necessary however, that's the way it should be because no one really wants to be in debt.

Find out more about the cash loan and the many other types of loans available to you at loans for beginners.

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How to Grow Your Dental Practice With a Specialist Dental Practice Loan

Opening a dental practice is the goal of most new dentists entering the business after college. There are many aspects to this unique industry that you need to know before you can open your very own doors. Some of these aspects fall within the expertise you have already spent years honing, and some aspects will be newer, and possibly unfamiliar to you. You want to ensure that your new dental practice has all the tools it needs to be a success.

Accessing dental practice financing is one of the important first steps. Having the capital to secure your location, buy the expensive equipment you will need, and set up your office means your vision can come true. Managing a dental practice is more than dentistry know-how. You have to have a good grasp of, and control over, the business end as well. Finding a dental practice broker can help you get the funds you need at a very competitive rate.

The good news is that banks generally see dentists as a good investment. Even in our current rocky economic climate, where credit is being continually tightened, the dental industry has not been a casualty of this. Banks and other lenders still need to make money, so finding solid, reliable businesses to loan to, is something they are always on the lookout for. As a rule, dentists are viewed favorably in the banking world. They are considered good credit risks, because, on a percentage basis, dentists account for very few defaults on loans. Dentists usually also have a better personal credit standing, which makes them appealing candidates for loans.

However, in instances where a dentist has had a poor personal credit history, it is recommended that he or she work up to a better personal credit track record before trying to secure a business loan. Dental practice loans can top out around the $350,000-375,000 range, so you want to be in good shape with regards to your credit history so that you will be eligible for attractive loan rates and terms.

Another exception to this rule is in the case of cosmetic dentistry practices. Like so many other things in our current difficult economy, people are cutting back on luxury, non-necessity items. Cosmetic dental practices are being viewed with less certainty by the lenders, because these services are presently less in demand. This doesn't mean that you won't get financing for this type of practice, you just might not be able find 100% of the capital you are seeking.

After you have been in business for a time, you might want to consider how you can achieve dental practice growth. Using an additional dental practice loan can help you expand your business into a larger space, invest in new technologies to make your practice more efficient, and allow you to offer additional services to your clientele. With your additional space, you could hire a new dentist and/or have more dental hygienists working, increasing your revenues.

An additional use of loan money would be to take advantage of someone else's dental practice liquidation. This could enable you to find more equipment, office furniture, filing cabinets, etc at bargain prices.

Someone who brokers dental practice deals can get you access to higher levels of credit to start your business and at better rates than you could find yourself. You are an expert in your field, so let someone who is an expert in theirs, get you access to the necessary capital to open your business. You have a lot of other matters to focus on, so you need to ask yourself where your valuable time is best spent. Accessing the necessary amount of capital at a great rate with favorable terms can help your vision be achieved.

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Chris is a highly sought-after self-made millionaire with a knack for creating passive income investments. Having started his first business at the age of 12, Chris knows what it takes to build a successful business that will generate passive income and financial wealth. Chris now shares the secrets he has learned with business owners and investors across the country. His cutting-edge program provides proven strategies to get access to capital and then invest that money wisely.

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Knowing What an Investment Property Loan Is

Do not get confused, the term investment property loan simply means a loan for investment of properties. These properties to be invested on are deemed to be profitable in the future that is why people loan to buy them. Presently, the real estate industry has become a lucrative business. A lot of realtors have testified on how they have come from rags to riches after getting into the real estate business. Depending on your talent and the circumstances, loaning to invest on a property may provide you with a good chance of building equity while nurturing the potential of capital gains as the value of the property appreciates over time. If you have the ability, it is definitely not a bad endeavor to try.

An investment property loan can be generally classified into two: residential and commercial. A residential loan is associated with investing residential properties like apartments, condos, buildings (with at least 5 units), stores, or warehouses. They are usually bought for expected future appreciation and rental income. On the other hand, a commercial loan is the one associated with investing on business and commercial areas. They are often more costly since bigger income is also expected to come from them.

Individuals are not the only ones loaning to invest on properties though. Quite a number of real estate investors in the U.S. make use of investment property loans in acquiring real estates too. There are two basic advantages on this. They can benefit form capital growth and tax deductions. Another important benefit comes from "negative gearing".

In essence, the word "gearing" means borrowing for investment. A negatively geared investment means it is a property purchased using a loan where the expected income (after all the expense deductions) from the investment is less than the annual payable interest. This gives the investor a substantial tax benefit since they may deduct the cost of owning an investment property from their income which is taxable.

An investment property loan can come in different shapes and sizes depending on the requirements of the investors. They may be offered as interim, long-term or short-term loans. If you are interested in engaging into this kind of investment, you should make sure that you are knowledgeable of the terms of the loan. Make sure that you understand the interest rate and the time period of it. You must also keep track of the schedule. You want extra profit and not bigger credit.

There are quite a number of reputable investment property loans in the U.S. Most of them do not provide any limit on the number of properties you could own. They also offer adjustable mortgage rates and they have low down payment options. This is a great help because you can simply use the spare money to repair or renovate the property for future profitable use like reselling it or having it rented. A lot of loan providers also offer application online meaning you will not have to waste time setting an appointment with them or going to their office. Their online service allows quick and easy processing of your application for loan.

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