Posted by Russ Sims on April 28, 2000 at 11:21:47:
A hard money lender will loan you money based on the value of your real estate purchase…that’s no different than a regular bank; except that hard money lenders will typically loan only about 60-65% of the market value of your target property.So if you can get a $100,000 property under contract for $60,000, chances are hard money lenders will beat a path to your doorstep. Since their loan to you is amply secured by the property, your credit is of little importance. The lender knows that if you default, they’ll be able to foreclose on you and quickly get their money back out of the property (property worth 100K, they loaned 60K, they foreclose and do a quick sale at 80K and come out ahead). Don’t mistake hard money loans for being zero down loans. There will probably be points to pay and closing costs to bear. A goog HM lender may be able to suggest ways of minimizing these costs.
If your target property needs work, a HM lender should be able to loan you the repair money, based on the after repaired value of the property. This is a real good way to make all cash offers on properties, rehab them, and resale for retail prices. The key here is flipping the property pretty quick, because hard money loans are expensive! 11-14% interest is common.But do your math on a purchase, and you should come out okay.These loans are hard to beat because they require little if any credit, and you can close in just a few days.Some peopleon this board use hard money almost exclusively for their investments. Good Luck!