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Private Money Exchange
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Why Hard or Private Funding?
We're sure, from either personal or second-hand experience, that you're well aware banks aren't lending right now. Unfortunately as the freeze on funding continues, the real estate market is heating up! Markets that used to be impenetrable are thawing at lightning speed and investors are chomping at the bit to get a slice of this profitable pie!
So what can an investor do?
Hard and Private money is fast becoming the best and only solution for many investors to take advantage of today's market. It overlooks black eyes on credit reports and gives knowledgeable investors, who may have leftover debts from the mortgage meltdown, the ability to come back from the housing crisis abyss.
So, what is hard/private money?
Hard Money has stricter terms and a clearly defined repayment schedule. Terms for these types of loans will vary from lender to lender and will depend upon the experience level of an investor, as well as the length of an investor's relationship with a particular lender. Therefore, there are really no hard and fast rules to hard money. You may be quoted a certain rate or acceptable loan-to-risk ratio one week and find that the terms have changed drastically the next.
Generally, a hard money lender will provide a loan for 50-75% of the acquistion price of a home at an interest rate of 12-18% for a period of 6 months to five years. They will also charge between 5-10 points as an upfront financing fee. As you can see, the spread is generous and the terms are dynamic and change on the various aspects of the loan:
- The investor's background
- The investor and lender's previous relationship
- Property details
Some will only charge interest while some will amortize their loans. Some will lend repair money; others won't. Some will place the repair money in escrow to be drawn out as the work is completed; others will let you leave the settlement table with it. Some will lend closing costs; some won't. Ultimately, when finding hard money lenders, you will need to determine their terms and how they might fit into your plans as an investor.
Remember, there are no clearly defined standards or regulations with Hard or Private money and therefore, being educated is your best tool in this field. Know who you’re talking to, what their parameters are, and what you’re willing to do as a lender, borrower, or broker. Knowledge is your best safety net!
Exploring the Vault May Help Give You That Safety Net!
| © Copyright Private Money Exchange, Inc.All Rights Reserved This offer is not valid on owner-occupied real estate. In Alabama, Idaho, Illinois, Minnesota, Michigan, Oregon, and Utah this offer is only valid on commercial property and residential property containing 5 or more units. This is not an offer to sell securities. Private Money Exchange, Inc. and its affiliates are not licensed securities dealers or brokers and as such, do not hold themselves to be. |