Investing in real estate can be a great way to make money. Right now, the real estate market is booming, an it’s a great time to invest. So, how is it that you “spend money to make money” in regards to real estate? One of the most common practice is that of flipping homes. When you flip a house, you buy a home, often one that needs renovations, make those renovations, and sell it, making a profit in the process. Often, the homes that are bought by house flippers are foreclosures or repossessions. With 2014 alone seeing 327,069 home repossessions, there are many opportunities to make profits. Due to their circumstances, these houses are usually sold at low prices. As of March 2016, the average price of an American home was $186,000, meaning that foreclosed or repossessed homes could go for much less. Still, even when low prices are factors, you’ll need to get a loan to help finance your house. The fact is that often, it can be difficult for people to get home loans in this day and age. The factors blocking you from getting the loan you need may not even be your fault. With that being said, let’s look into hard money loans for real estate investors, and how they can open up opportunities.
Why Can’t I Get A Home Loan?
Don’t think that being denied a home loan by a bank means that you are an irresponsible person, or that you shouldn’t be investing in real estate. Real estate investment lenders who deal in hard money loans are aware of how difficult it is for the average person to get a loan in this day and age. Due to the housing crisis in recent history, many traditional lenders have become even stricter about real estate loans. Their standards can be impossible to meet, especially if you are a young person with student debt — that is to say, if you’re like almost every college graduate today. Real estate loans aren’t the only ones that are difficult to get. To be approved for a business loan, a typical business owner has to have been in business for at least two years, have at least $250,000 in annual revenue, have good personal and business credit, and be cash flow positive. These standards can be ridiculously difficult to meet, and even if you have a good credit history — if it’s not enough of a credit history, you won’t be approved.
What Are Hard Money Loans For Real Estate Investors?
Hard money loans for real estate investors are essentially loans in which the funds you need are secure through property, rather than through a certain type of credit history. Typically, they are issued through private hard money mortgage lenders and companies, otherwise known as investment mortgage lenders. Hard money loans for real estate investors are in many ways due to their very nature perfect for those looking to flip houses. Of course, you may be wondering about how these work out for the investors. When this kind of renovation lending occurs, the loan is secured through a property with 30% to 50% equity, which means that the lender is both protected and motivated. At the same time, those seeking out the loan are also secure and for that matter capable of doing what they need to do as far as securing their property and making the necessary renovations is concerned.
What Are The Benefits Of Hard Money Loans?
One of the main benefits of a hard money loan is its accessibility. You can actually get this kind of loan, even if you are a new borrower. With the way that mortgages work today — most lasting 15 to 30 years — people find the equity requirements associated with hard money loans achievable. The amount of equity will increase as time passes. Hard money loans are attainable and get you started on the right track — this is no small advantage.