Hard Money loans are fantastic for short-term usage while investing in real estate. Depending on how it’s structured, a Hard Money loan can be available for as short as 3 months to as long as 5 years or longer. Traditional mortgage lending is often available for 10 years to up to 30 years. The real catch is when attempting to obtain a traditional mortgage on a distressed or vacant property. It is extremely difficult to qualify and you will have a hard time finding a bank who will loan in this situation. Enter Hard Money.
Here’s a good example:
- An investor finds a home they’d like to purchase for rental purposes
- The home is distressed and in need of major repairs
- A bank won’t lend on a property with significant problems affecting it’s value
- This investor has two options:
- Get the loan from a family member or friend.
- Use a Hard Money loan to buy the property. The Hard Money loan can also be structured to cover the cost of the repair needed.
- After the property has been fixed up and prepared for rental, the investor can obtain a traditional mortgage at conventional rates to repay the Hard Money loan.
This is a great example of a short-term Hard Money loan used to purchase a rental property that otherwise would require an all cash offer.
If you have any other questions or are interested in getting a Hard Money loan in Santa Rosa, Sonoma County, North Bay or really anywhere in California, call our office 707-523-2099!