Most likely, when you are amid a fix and have no liquid cash, you consider taking a loan. While banks hold loans for an extended period, hard money transactions use a short turnaround time. Hard money loan extends from short term to real estate investments. Usually, the processing period does not exceed 72 hours. The interest rate depends on the hard money lenders and the conditions involved.
Before involving yourself in a deal with any hard money lender, consider the factors below:
Choose a Lender Specializing in Hard Money Lending
As much as it appears to be so obvious, most people don’t know the difference between private investors and hard money lenders. If you need a hard money loan, make sure you seek the services of a firm that lenders hard money. Companies that lender hard money professionally always ensure you meet the origination and servicing requirements. While hard money loans may seem simple, a proper arrangement is essential for a well-facilitated process.
Consider the Default Rate
The fact that hard money lenders have easy an application process is so appealing. Don’t fall for the trick. Before striking a deal, learn about the default rate. High default rates could mean a wrong signal or predatory company principles.
Choose a Genuine Company
Before accepting any offer, read through the paperwork, and understand. Some lenders could lure you into unpleasant deals using reasonable rates. Fortunately, you can easily escape the trap by paying much attention to the deal’s terms and transparency through each process.
Have Your Needs in Mind
There are various categories of real estate investors. Some buy houses at low prices and sell on profit while others focus on commercial properties. To fall in the right lenders’ hands and secure the best rates, you should classify yourself in one of these categories. Some lenders purposely give loans for commercial real estate while others cater to a series of investment opportunities.
Choose a Local Lender
All eyes will be on your property equity when taking the hard money loan. The equity serves as security if you default payment; thus, inspection is mandatory before rewarding the loan. For a less complicated inspection process, choose a local lender. Besides, you will have the privilege of enjoying more specialized services.