Accredit Licensed Money Lender – Look At This Post..

It’s not uncommon to learn mortgage industry insiders refer to hard money lenders as being a final option. While this may be true to the extent that numerous borrowers who solicit loans from hard money lenders do so as a last option, there are lots of cases in which a hard money lender may be sought before a regular banking institution. Let’s take a look at some scenarios where Accredit Money Lender might be a first stop as opposed to a last resort.

Commercial Real Estate Property Development – Let’s say a real estate developer has sunk $ten million into a development deal and originally planned to market units in January and would then commence to recoup their investments dollars from the project. As is the case with a lot of such endeavors, delays may push back your first step sales date or the project might go over budget, leaving the developer having a cash negative situation. The developer now must take out a bridge loan in order to get through his cash poor period in order to “survive” till the project actually starts to realize a cash positive position. With a traditional loan, the bank would not push through the borrowed funds for your borrower for four to six weeks. The developer would default on his original loan or would not have funds on hand to end the project. The developer needs cash today and oftentimes needs the bucks for just a 2 to 4 month period. In this scenario, a tough money lender is the perfect partner simply because they can offer a loan efficiently and quickly.

Rehab Investor – Another example of a hard money scenario is actually a rehab investor who requires a loan to renovate run down homes which are non-owner occupied. Most banks would run using this loan simply because they would struggle to verify the rehabber will be capable of promptly sell the units to get a profit — especially with no current tenants to supply rent to handle the mortgage. The difficult money lender would, in all likelihood, function as the only lender willing to battle such a project.

Flipping Properties – Another group who might use hard money lenders as a starting point instead of a last resort are property investors trying to “flip properties.” If the investor locates a property they deem to be a great value, they might need fast and secure financing to adopt buy, renovate then sell the property quickly. Anyone seeking to flip property fails to wish to hold onto the property for a long time and the short term loan from will accommodate this need. The pdkfqq can also be structured as interest only, keeping the expenses low. After the property comes by the individual who is flipping the house, the principal is paid back and also the profit is kept or reinvested in to the next project.

A Borrower In Foreclosure –

One final scenario of hard money involves somebody who finds themselves in foreclosure. After a homeowner falls behind on the house payments, most lenders is not going to provide them with a loan or restructure their current loan. Occasionally, someone who is facing foreclosure will obtain a hard money loan to prevent foreclosure proceedings and use time to sell the property.

The question remains why would hard money lenders loan money in case a traditional bank wouldn’t even consider this kind of g.amble. The reply is two fold. First is that hard money lenders charge higher rates than traditional finance companies. The second is the fact hard money lenders require the borrower to get at the very least 25-30% equity in real estate as collateral. This insures that when the borrower defaults on their loan that this lender can certainly still recoup their initial investment.

A hard money loan is basically a married relationship between a borrower in a tough spot (either coming from a time sensitive perspective or due to their poor financials) and that is risk adverse and is also willing to take a risk for a higher return. While hard money loans might be a final option for many, there are many scenarios when hard funds are the only way to go.

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