Hard Money Loans for Investors

What is the Credit Crunch?

During these economic times hard money loans have flourished. All Dominion Mortgage has been successful in helping investors meet their real estate investment goals because we know how investors can make money in commercial and residential investment real estate using hard money or bridge loans. While sub prime lending has all but gone away hard money loans have gathered more steam. The reason is that banks and other financial institutions the offer conventional financing have suffered record losses and many of them have gone out of business. This is primarily due to the fact that they were lending at or near 100% value of the property. When there is no equity in a property there are limited options during a down turn in value and ultimately banks and people lose. The more that banks and investors in the financial markets loss, the tighter financing became. This tight financing reduces the profits for lending institutions because they make money originating loans which is not happening now. This then leads to more tightening and ultimately the credit crunch.

Hard Money Loans.

The private investors that lend these equity loans work on different criteria. First, these loans are short term in nature. The commercial and residential real estate investors who use bridge loans to finance the acquisition and rehab of their properties generally go into the loan with an exit strategy. With most bridge loans being only six months to three years in length the borrowers are prepared to refinance or sell the properties moving them from the books of the hard money lenders. Secondly, the key to bridge loan lending is the after rehab value. If the lenders are only lending from 50% to 70% of the after rehab value then if there is a problem there is plenty of room for a quick sale to other real estate investors and the lenders do not lose money. At these equity points even the real estate investor is protected because they have options they would not have if they were doing a high loan to value loan.

Credit Crunch and Hard Money Loans.

So whether you are financing commercial real estate investments or residential real estate investments the low or no money down bridge loans for investors are a viable option for you. Those deals that may have been financed through conventional lenders are being turned away because of limit funds and tighter credit policies, the hard money lenders are thriving. Many people believe these equity loans are only for people who are not of the highest quality, but that is furthest from the truth, especially during tight credit times. The bridge loans are based on the equity of the properties and the ability of the borrower to complete their project within a reasonable budget and stated time. When those keys are in place, regardless of credit, the properties become viable investments for hard money lenders.

For all of your real estate investment financing needs contact All Dominion Mortgage and Financial Services today. Email us at louisj@alldominionmortgage.com or leave a comment below.

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

No Money Down Loans.

Many Real Estate Investors find opportunities to buy property below market value and rehabilitate them to bring them into code and make the property leasable or saleable. In those instances when you can acquire a property below value and increase its value to true market value creating true equity in the property there maybe no money down loans available to you. The conventional residential investor or conventional commercial real estate guidelines require that the borrower and the property qualifies based on convention mortgage guidelines. These guidelines do not allow for these no money down loans for real estate investors.

Hard Money or Bridge Loans.

Hard Money or Bridge loans are generally based on the after rehab value of the property. Lenders for this type of mortgage are usually private investors who make their own guidelines versus having them based on conventional real estate guidelines. One such conventional guideline views the value of the property as the lessor of the purchase price or the appraised value. Furthermore, the appraised value would not be considered as the true market value for financing purposes until it has been seasoned for one year. Seasoning in this case is the length of time the property has had its current ownership. Therefore, the appraised value becomes the market value after it has been owned for one year by its current owner. This seasoning requirement for conventional financing is not an issue with hard money or bridge loan lenders.  By using the after rehab value we create opportunities for no money down loans for real estate investors.

After Rehab Value.

To qualify for these real estate investment opportunities most lenders will lend between fifty per cent to seventy per cent of the after rehab value. The determining factors are different from lender to lender depending on the other loan criteria. If the lender is just looking at the property and does not qualify the borrower then the loan to value would be sixty five per cent or less. When the lender considers the borrower the loan to value may increase to seventy per cent, again based on the lenders criteria.

Finally.

The key to these no money down loans for real estate investors is their costs. These hard money or bridge loans have high fees and high interest rates. They make sense only as short term loans to real estate investors who can sale or refinance them quickly based on the value of a newly renovated property. Who wouldn’t pay higher fees and rates to make a substantial return when they may have to even have a down payment to realize a substantial return on the real estate investment opportunity. A Hard Money Lender can help you meet your real estate investment goals.