If there is one thing that you have to be aware of regarding real estate investors, that would be the fact that they are relying on the properties they have purchased for the production of their income. If you think that all it takes for an investor to generate income is to rely on a strong buyer’s market, well, you surely are mistaken since, most of the time, it does take them a great deal of financial shrewdness to successfully and efficiently navigate their real estate investments. The reason why they have to be financially shrewd with regards to navigating their real estate investment is due to the fact that oftentimes, loans that are used to purchase residential homes are not available for them to avail. Due to the fact that it is impossible for them to avail this kind of conventional financing, they often resort on relying for the help of private money lenders, sometimes called as hard money lenders, to finance the purchases they will make.
Now, that we talk to you about hard money lenders, this time, we will introduce to you hard money loans, a financial product that they offer to real estate buyers who cannot avail the conventional financing and this type of loan is designed specifically to meet all the needs they have. Most of the time, what usually happens is that banks and other financial lending institutions will not finance real estate purchases since these purchases do not meet with the stringent criteria’s they have regarding the properties they are financing. On the other hand, another reason why real estate buyers are not able to get the financing they need from banks and other financial lending institutions is due to the previous credit problems they have or previous foreclosure concerns.
And since they cannot rely on the help of banks and other lending institutions, hard money loans is the one that can greatly help them in this time of need. Take note that before you apply to any of the hard money loans, you have to know as well as understand first the different options they have to offer.
The first hard money loan option that we want you to know of is the fix and flip loan. Based on its name, fix and flip loan is a loan offered to real estate buyers who want to purchase a property, rehabilitate the property and sell it afterwards for a profit. Almost all houses that are financed by the fix and flop loans are those that FHA financing are not accepting due to the amount of work that needs to be done. Many hard money loans that are designed for fix and flip properties are also used for financing the purchase price and the cost of repairs as well.
Another type of hard money loans that we want you to know of is the bridge loan and this type of loan is designed specifically for business owners as it covers the gap between their available funds and the expenses of their operating.