Real estate investing is a great way to bring in income and is easily customizable to your lifestyle.
If you enjoy finding property, renovating, or managing tenants, it could become a full-time gig. Otherwise, it could just be a profitable hobby.
However, you choose to do it, investing in real estate provides a great bang for your buck. Hard money lenders make investing and profiting even easier with their common-sense lending.
Consider purchasing your first investment property, and we’ll show you how hard money loans can make it easier, quicker, and less stressful for you to profit.
What’s your loan scenario?
Why use hard money loans for an investment property?
One might use a hard money loan for financing an investment property because of the same great benefits that hard money offers in any scenario.
Hard money lenders know that you want to secure your deal quickly, and because they have fewer loan qualifications than a traditional lender, there’s far less paperwork. Investors could get approval for their loans in as little as seven to ten days.
These lenient qualifications work for those without the credit score or cash reserved for a large down payment, often required of investors borrowing from traditional lenders.
As an investor, whether you’re financing a rental property or flipping a home, you’ll be seen as a greater risk to a traditional lender. It’s often harder to get these investments financed through traditional means. Especially, if investing is your main source of income, it can be difficult to prove on paper in a way that satisfies traditional lenders.
Other options, such as joint venture or equity partners, involve 50-50 split partnerships. It’s up to you to run the numbers of how much you’re putting in versus how much you’re getting back after the profit split. These options are definitely much more expensive than a hard money loan. You should look at a hard money loan as a much cheaper partnership alternative.
As a property investor, developing a working relationship with a hard money lender could mean better pricing and terms for you in the future. Hard money lenders want to work with people they’re familiar with so they’re often willing to develop a mutually beneficial partnership.
The benefits of hard money loans
Hard money loans are based on the value of the investment. They want to see that the deal makes sense to everyone involved.
As mentioned before, developing a partnership with them is important for your future approvals or better rates.
When the investment is done properly, a deal backed by a hard money loan can be lucrative to everyone involved. For example, you find a discounted property in need of rehabilitation. You secure a hard money loan to quickly purchase the property and make the necessary renovations. You then either rent it out or sell it for much more than what you put into it.
The hard money lender gets their loan repaid with interest and you keep the remaining profit. If you plan to keep the property as a long-term investment, you can also eventually refinance it for a lower rate.
Hard money loans will provide you with the capital you need when you need it, without all the hassle.
The benefits of property investment
There’s a reason that hard money lenders are willing to invest in seemingly risky, non-traditional deals. It’s because real estate is an industry where big risks can pay off even bigger.
Unlike stocks, anyone can use leverage, or borrowed capital, to purchase property. The market can also still be profitable for owners and sellers, even as conditions change, unlike the stock market.
Property tends to appreciate in value over time and provides many opportunities for profit streams.
The property owner can rent out the space to tenants. Depending on their comfort level, they may hire a property manager to handle the on-site interactions. Or they could perform landlord duties themselves. Either way, they profit from the tenant’s monthly payments.
Renovating the property is another option for increasing its value. Quickly turning it over and getting it back on the market can yield great profits, especially if the property was purchased at a discount or for far less than what it’s worth.
If you’re willing to put some effort in, real estate can be a worthwhile investment to increase your assets and diversify your portfolio.
How to get a hard money loan
Hard money lenders want to know more about the project and not as much about your personal finance. Once you find a lender you want to work with, whether by networking or through personal research, you’ll submit a proposal for the project.
This loan scenario should be clear and honest about your goals. Include details such as a timeline for the project, your requested loan amount, and how you’ll use the money.
Other materials to include in this proposal are photos of the property, and any documentation that the private lender requests. Again, the success of these deals depends in part on your professionalism with the lender. Label, organize, and prepare everything properly to make a good impression. If the lender benefits from working with you, and it isn’t a hassle for them, they’ll likely continue to work with you.
Marquee Funding Group is ready to take a look at your deal. To give you the best opportunity to take on that next big project, we close in as little as seven days and provide same-day approvals.Submit your loan scenario today if you’re ready, and we will be in touch soon. We look forward to working with you as you increase your property investments.