Hard Money Loans for Investors

Residential Hard Money Loan

You have decided to be a real estate investor or you are already a real estate investor and you need financing for your next project. In this era of tighter credit it seems that no one wants to lend money to residential real estate investors who do not have a large down payment and perfect credit. So how do we take advantage of a market full of great real estate investment opportunities? The answer is through a residential hard money loan from All Dominion Mortgage. These real estate financing programs would allow you to potentially invest in residential real estate with no money down and without having perfect credit.

What are the Qualifications for a Residential Real Estate Investment Mortgage?

Standard conventional residential real estate financing qualifications require 30% or more for a down payment, 6 months or more for liquid cash reserves, a very high credit score and the property must be in acceptable condition prior to funding a loan. Another factor is the market value of the property is the lower of the purchase price or the appraised value. Therefore as a residential real estate investor you must have lots of cash for down payment, rehab and substantial reserves before your loan is considered. Your income must also be high enough to cover the debt service of the mortgage because even if it is able to be rented immediately the lenders will only accept a small portion of the rental income if any at all on a conventional residential real estate mortgage. But with all these negatives a conventional residential real estate mortgage is still the best financing because they offer the lowest rates for residential real estate. So if you want to hold the property for long term cash flow it is important to position yourself to qualify for this financing.

What are the Qualifications for A Residential Hard Money Loan?

To make money now and take advantages of opportunities investing in residential real estate quite often not only is a hard money loan the best option even if you could qualify for a conventional real estate investment mortgage. A residential hard money loan from All Dominion Mortgage may be the only option. This is not a bad thing. If you can finance an investment property for little or no money down not based on your credit, cash reserves or even ability to service the debt their could be a great financial reward in doing so. Not only will you finance the acquisition of the property, but also the rehabilitation of the property. So how do you qualify, someone asked. The major qualification is the After Rehab value of the property. Many programs have a various guidelines but they most important factor is the after rehab value of the property. If the after rehab value is 50% to 70% (depending on other factors) you may qualify for a residential hard money loan from All Dominion Mortgage. These programs are strictly for real estate investors with no owner occupied properties accepted.

Close Your Deal Today.

So if you have an opportunity to purchase and or rehabilitate a residential investment property and you want no money down financing options contact All Dominion Mortgage and Financial Services today.

louisj@alldominionmortgage.com

Hard Money Loan.

You may have heard of a hard money loan also known as a bridge loan and wonder what it is and why do people use them. The first though in many peoples mind is that a hard money loan is a juice loan. That is not the case. When you deal with legitimate businesses that specialize in making high risk loans to businesses then these are Hard Money Loans.

What Makes It Hard.

Standard conventional underwriting for residential hard money and commercial loans require that you verify income, assets, credit and collateral. A borrower must meet the minimum criteria in each of the categories to qualify for conventional financing, which is generally the best rate and fees because of the lower risk. When a borrower does not meet any of these criteria they no longer qualify for financing and the loan request becomes “hard” to do because of the higher risk.

It is considered “hard” from the borrowers perspective because of the increased cost. All bridge loans have higher rates and higher fees and therefore are short term financing. As a business person these higher rates and fees only make sense when the potential reward or return on investment is high enough to offset them. That is why these loans are only for businesses.

Why Can’t a Homeowner Get a Residential Hard Money Loan?

Hard money loans are for business purposes only. Because of the higher fees and cost they would be a violation of usury laws and predatory lending laws the limit the rate and fees that can be charged on a consumer mortgage. Truly they should not be for the consumer in another sense. Residential Hard money loans are only for investment purposes and though your residence is a personal investment it is primarily your home and not a speculative investment.

Why Would You Use a Hard Money Loan.

As a Real Estate Investor or any investor, what makes an investment worth while is your return on investment. If you meet all the criteria of a conventional residential investment or commercial loan the long term return on investment will always be more favorable. But in the short term many times you will be able to invest less (some times nothing at all) and receive a high return even with higher costs. For example: If you could buy a property for $150,000 and spend $150,000 to totally rehab the property assuming the value would be $600,000 after rehab this is how the returns would compare. Conventional financing may require 30% down payment or $90,000 plus closing cost of $5,000. With a return of 300,000 on your 95,000 investment would be very good at 315%. That same scenario for a hard money loan may cost you 30,000 more but you would have upfront  investment except closing cost of 15,000 (which can often be rolled in the loan) with a return of only $270,000. for a $15,000 investment you would net a 2,000% return on you investment. Which would you prefer to invest $95,000 to earn  $300,000 or $15,000 to earn $270,000. As a matter of fact with the leverage of a bridge loan you can theoretically do 6 projects for the same $95,000 to receive 6 times the return. In reality you would just do a larger project for a larger return.