Why Real Estate Investors Need Hard Money Loans

In real estate investing cash flow is king. Most occasions, the property you’re purchasing may warrant a different type of loan rather that a bank loan for example if the home needs repair and is going to be re-sold in the next few months. More importantly, If you are wanting to buy multiple properties you will run out of cash very quickly. Your only options are to have partners which you may have to give away 50% of all net proceeds or wait until you can raise or save more money in order to purchase another property. This could take months or years to save up for the next hot rental or fix and flip house. You could lose multiple opportunities if you have to wait until you have save enough money on your own to purchase the next real estate rental or rehab property.

The solution is hard money lenders. Private or hard money lenders go as high as 80% loan to value which would only require you to come in with 20% down payment plus closing costs. So on a 500K house such as in Southern California that would be 100K with prevailing private money rates of 8-10%. Hard money financing is typically a two to three week process and funding the loan does not have all the issues a conventional bank loan typically has.

Therefore if you had $500K you could use all of this for one purchase of a 500K property or you could do three to four separate purchases with 80% hard money financing. In addition your cash on cash returns is much higher when you borrow money on a hard money loan vs an all cash deal.

 In conclusion here are six reasons you should consider hard money

1.      Quick closings (2-3 weeks)

2.      Unlimited hard money lenders that want to lend you all the money you need for multiple purchases…results are you will not have a limit on how many properties you can purchase

3.      No income documentation (No tax returns, W2’s or paystubs)

4.      Unlike a bank loan it will not show up on your credit report

5.      Bad credit is okay with hard money including bankruptcies, foreclosures or credit card lates

6.      Cash on cash (return on investment, ROI) is much higher when you borrow on a loans vs all cash

Written by Alex Haiek. Mortgage consultant and direct hard money lender of 21 years.

American Financial Lending, Inc. Managing Member

www.Americanfinancialoans.com  phone:213.465.0877