If you’re a real estate investor you need to know about hard money loans because they can help you invest! As a service to investors, here are 4 situations where hard money loans are ideal.
Real estate investors know: it can sometimes take money to make money! In other words, if you want to acquire a property, fix it up, and generate a return, you sometimes need some extra money to help you acquire the property or make repairs. But what if you don’t have money or don’t want to spend your own money? That’s where hard money loans come in – they’re loans for real estate investors to help them invest. Here are 4 situations where hard money loans are ideal…
4 Situations Where Hard Money Loans Are Ideal
The first step of any investment is to acquire the property! However, this can tie up your capital in the property for a long time before you’re able to generate any returns from cash flow or the resale. Why tie up all your money in a deal when you can instead just borrow a hard money loan and acquire the property you need. Hint: this is a great way to scale if you need the capital to buy larger properties or more than one property at a time!
If you buy houses and fix them up to sell at a higher price, you might describe yourself as a “flipper” or a “rehabber”. As you know, this kind of investing ties up a lot of money – first there’s the money needed to acquire the property and then you have to spend even more to repair the property! Investors discover that they tie up a lot of money before seeing a cent of profit in a sale! A hard money loan can help cover some of your renovation costs so you can fix and sell even faster.
#3. Credit issues
If you have a low credit score or limited credit history, you may have difficulty obtaining a traditional loan. In these cases, a hard money lender may be willing to provide financing based on the value of the property being used as collateral.
#4. Post-Tenant Repairs
Cash flow investors know that tenants don’t always leave at a convenient time, nor do they always leave the property in pristine condition. If your tenants trashed your property before leaving then you may want a hard money loan to cover repairs so you can make quick repairs and get it rented again fast (instead of trying to finance the repairs yourself).
If you want to invest, you’ll probably discover that you need more money than you want to pay out yourself. Fortunately, hard money loans can help. Hard money loans are tools used by many investors to help cover different situations they face. If you’re an investor, these are 4 situations where hard money loans are ideal – so make sure you take advantage of hard money loans when they’re available.