Hard money loans are commonly used for short-term needs such as real estate acquisitions. Hard money loans are usually available for 30 days or up to two (2) years. However, on distressed or vacant real estate, it is difficult to obtain a traditional mortgage. For this reason, hard money loans are often used by real estate investors for new acquisitions, Construction, Rehab and more.
Hard money loans are an Asset based loan; meaning the loan is based on the Value of the Property; not on your credit or other negative personal issues such as: credit, bankruptcies, foreclosures or need to close in a hurry. Hard Money loans can close in as little as 10 days.
Keep in mind that Hard money loans can be used for:
Raw land, Gas Stations, Office Buildings, Hotel Motels, C Store, Car Washed, Retail Centers, Assisted Living, Self Storage Facilities, Senior Living / Assisted Living, Apartments/Multifamily and more.
Raw land is one of the most difficult to finance as it does not produce any income. Hard money loans provides one of the few financing sources for raw land, generally at 50% LTV.
But to give you some context, here's an example:
-Say Mike, a real estate investor finds this apartment complex for sale.
-This complex is in complete disrepair and vacant but Mike did his homework and saw that there’s a huge potential for upside profit..
-Now comes the tough part, Mike needs money and cash quickly but It’s a bit difficult to get a mortgage on distressed or vacant real estate.
-Mike has two options:
1. Get a loan from a partner, friend, or family member.
2. Or Mike can use a hard money loan to buy the property. The hard money loan will also cover cost for repair need to this apartment complex.
-Once the property is rehabbed and ready for rental. The real estate investor can obtain a conventional mortgage to repay the hard money loan.
This is a good example of a short-term loan used to acquire a property but not intended as permanent, traditional financing. For those who are new to hard money loans, remember that these loans are to be utilized for short term plays, not long term holds but keep in mind that a hard money loan is way more flexible and it can be used in different situations depending on your lender but there’s an upside as you are borrowing from a person who’s willing to talk and not a huge bank with strict procedures and guidelines to follow.
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HARD MONEY LOANS are available in all 50 states from $500,000
TEXAS HARD MONEY
Hard Money Loans in Texas for most types of Commercial Properties from $500,000.
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