Properties that can be funded by a hard money lender funding include residential non-owner occupied properties and commercial properties, including multi-family, retail, multi-use, office and others. Is your investing concentrated on these types of deals? Typically, private hard money lenders are willing to fund 60% to 70% loan to value. They are seeking properties that have a heavy quick sale value, meaning that the property itself could be quickly sold at market at a monetary value near the principal amount of the loan. The quick sale value can be one of the most important factors that a private lender weighs when considering approval of funding.
Highly desirable properties have several key qualities such as , they are in neighborhoods with comparatively low vacancy rates, and they are properties that are desirable and in demand by home buyers or commercial interests. Not every property is practicable for a private hard money loan. thus the investor seeks properties that are uniquely situated from a value perspective and have a low loan to value requirement for funding. In other words, investors seek properties with minimal risk and substantial return. The investor’s exit strategy details how the property equity will be monetized. Today’s investor typically seeks deals with a minimal of $10,000 net profit potential. Some profits can be realized in a per deal profit of more than $25,000 on some of today’s bank owned and goverment owned property.
Private hard money loans are made in the main for the function of purchasing property for resale. Many investors use private hard money lenders to fund these deals for a period of up to 12 months. Lenders sometimes have programs to fund properties that need repair or rehab work and provide excess funding for that purpose. Otherwise known as rehab hard money the funding is designed for the reason to help an investor complete a property rehabilitation project.
There are various means of repayment. Some private hard money lenders allow the investor to make interest-only payments and some permit the investor to make no payments for the length of the loan, although interest is accumulated. Many investors who are doing a rehab are able to take advantage of the no-payment option and to instead concentrate additional finances into the repair or rehab expense budget. The private hard money lender evaluates the investor’s loan package to determine the feasibility of the loan from a risk and return viewpoint.
The investor’s exit strategy is carefully reasoned to insure that the private hard money lender is able to have the principal and interest of the loan returned within a reasonable time-frame and with minimal risk to the lender. When an investor submits a loan package that is incomplete or inadequately documented, the lender cannot approve the loan for funding . Therefore it is in the investor’s interest to ensure that the loan package is properly prepared and complete prior to submission. By some lender accounts, approximately 50% to 70% of all loan packages are either uncomplete or improperly documented. It is not difficult for an investor to remedy this problem if they follow the proper guidelines for loan package preparation.
The Private Money Lenders Source has become the preferred resource for investors because it details the top 300 private hard money lenders who loan on residential and commercial investment property, nationally, regionally,and locally. Investors are able to evaluate and match their deals to the lenders programs and deal direct with the lenders. The Private Money Lenders Source is the most cost-effective method to identify prospective funding sources for both residential and commercial hard money, saving investors literally hundreds of hours of time. In addition, other resources are available to help investors source REO, bank-owned property and prepare loan packages as well as develop multiple streams of motivated buyers, including home buyers, commercial buyers and wholesale investors.
