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What Is A Hard Money Loan11/10/2017 The post What Is A Hard Money Loan See more on: MPG Deals Wholesale Properties If you are new to real estate investing you may or may not have heard of a hard money loan. You may want to start flipping houses, but don't have all of the cash necessary to complete the transaction. This is where a hard money loan might come in handy for you. In this short article we will cover what a hard money loan is and when to use them in your real estate investing business. What Is A Hard Money Loan?Joshua Dorkin wrote a post on Bigger Pockets that explains what a hard money loan is:
We thought that was a perfect explanation of what a hard money loan is, which is why we included it. Usually it's flippers (quick turn for retail sale) that want to use hard money loans because the cost of using this money is so high that it doesn't make sense to use it for a rental property. However we have come across some larger hard money lenders that can do a hard money loan on a property to complete renovations and get a property ready to rent, then convert the hard money loan to a conventional 30 year mortgage once the repairs are completed and the property is rented, thus bringing down the costs of borrowing the money and making more sense for the investor. Advantages and Disadvantages of using Hard MoneyRebecca Lake wrote an article on Investopedia that explains in great detail the Pros and Cons of using hard money loans to finance your investment property:
Really good comparison from Rebecca. One point that we really like about using hard money loans that she points out is that the subject property is collateral. This can be very beneficial for investors who have bad credit. This means that the lender is actually lending you money based on the numbers of the property. However, most of the time you will have to have some money to put down or use for repairs because these lenders want you to "have some skin in the game", otherwise the risk of you walking away maybe to high for them. Summing It Up Hard money loans can be very beneficial to investors. If you don't have enough cash to buy and repair a property to sell it retail a hard money loan maybe just what you need. Shop around, find the best deal you can and visit REIA's and connect with other investors and find out who their favorites are. If you are an investor looking for Atlanta wholesale deals for fix and flip, be sure and check us out!
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