Find out a hard money lender is not a tough work. The internet can help you most about it. The tricky part is finding out a hard money lender that has low rates, a lender in your local market and is experienced. Many lenders charge more than 15% so it is important to find out a perfect one.
There are great hard money lenders available, but they are not always very easy to find. There have many companies that call themselves hard money lenders and most do very small lending. Maximum lenders are also localised to one state or even one area where they understand the market. However, there have some bigger lending companies that work in many regions and have smaller rates that a typical lender may have.
How does It work?
These loans are not coming from banks. In this loan situation, a company borrows fund from investors and then lends that amount to other investors searching too but real estate at a higher rate. The investors who lend money to the lending company wants to see a good return because of the risk. The lender then has to charge the real estate investor a higher interest rate to make any fund. With a hard cash lender, you will find rates in the 14 to 18% range, along with they will charge from 2 to 5 points on the loan.
Why Investors Pay So Much?
The reason investors are showing interest to pay such high rates on this type of loan is that they have no other option. It is very difficult to get short-term financing from a traditional lending company like a bank, and that is what this loan is for. The loan program is very good for six months to 1 year, where bank lending may be good for around 30 years. Many lenders will also allow investor put less than 20% down payment on properties where banks will not.
How Find A Cheap Lender?
Many of hard money lenders will charge 15% or more, but still there are many lending companies offer affordable rates for debtors. The reason these companies can charge less to the real estate investors is that they are getting more money from larger investors who do not need as high of returns as the smaller individual investors. Many hard cash lenders have rates as low as 11% with 2 to 4 points. Getting bellow 12% with any lending company is going to be difficult. Below are hard money lenders that lend in many states and have good rates for hard loans.
Find A Local Lender
If you like to work with a local lender, you should be careful who you deal with. Referrals are the best option always to find a reputable partner. Here a few process to find some good hard fund lenders. At first, you should ask around at a local real estate investor meet up. Many times lenders will sponsor as well as speak at the meeting. You can ask your real estate agent or a lender if they know any lending company. There also have a chance they don’t know any lender, but it does not hurt you if you ask. You can also check online to find out a real estate investor. When you are searching online, be careful because there has many fraud lending companies are available in the market.
This loan program can be an excellent way to flip houses and expand your returns when flipping by using less of your fund. Hard fund can also be used to buy a rental asset and then be refinanced. Finding the right lender can be challenging work, and if you select the right one, it can cost your deal.