Hard Money Lending Can Save Your Flip Project

real estate flipping & hard money loansThere are many components that determine the success or otherwise of a project. At the very top of the list in no particular order, you’ll find factors like the project team, management and planning, the right tools, timing and capital. Take one of these factors out and you are guaranteed a failed project.

Let’s say you have this project idea and you’ve got everything planned for a roaring success but there’s a problem – no money…

In the past, nine times out of ten, you would have to approach the banks or other conventional lending institutions. Otherwise, you could go cap in hand to family and friends to help out. These days, your choices are more. If you’ve never heard about or never really paid attention to it, let us introduce you to the concept of hard money lending.

Bank Loan Alternatives

Hard money lending is an alternative but highly successful type of project financing in which the lender provides low leverage, short-term loans of between one to three years with relatively higher interest rates. This practice is also commonly referred to as equity lending, private lending or trust deed investing. These loans are issued by private firms, individual investors or groups of investors, and are backed by collateral in hard assets. Real estate is the most preferred and common form of hard asset.

Is a Hard Money Loan the Right Choice For You?

hard money lending flip projectsIf you are resident in Nevada, for instance, and you need external financing, hard money lenders may just be your best option.

Note that not every property investment project would be an ideal choice for hard money funding. The peculiarities and expected timeline from start to finish will determine if your proposal will receive backing from the lender.

Generally, the shorter the project duration the better and more attractive to the lender. Let’s say you want to remodel an owner occupied property. Chances are high a hard money lender will turn you down. It would be best to look for other loan sources. But, if you have a time-sensitive commercial real estate project like a house flipping venture or a shopping mall construction then chances are high they’ll be willing to deal with you.

Many lenders usually prefer shorter term lending where they can close the deal in six months or less.

The Main Differences Between Hard Money Lending And Bank Lending

Loan Structure

The banks have been around for ages, we all know that. As a result, they tend to already have a larger infrastructure, more staff, and resources to work with compared to the private lenders. The private lenders on their part usually have fewer people and resources to work with so there’s higher speculation, higher risk but less paperwork. The fact that there’s less paperwork is very appealing to borrowers. As anyone that has ever successfully obtained a bank loan will confirm, the paperwork can be intimidating.

Risk Management

Banks will ask for your credit history and proof of income because they offer loans based on the borrower’s perceived ability to pay back at regular (usually monthly) intervals.

Hard money lenders are not interested in your credit rating. The only information they will ask for is some basic personal information and the value of the asset you are offering as collateral. This makes them a very popular choice among people with poor credit history. Such people stand no chance with the banks.

Speed Of Approval

One of the factors for a successful project mentioned at the beginning of this article is the importance of timing. When an investor is in need of money quickly but for some reasons doesn’t get it on time, the whole project could collapse leading to colossal losses.

Banks will take their time to scrutinize every single aspect of your project application. They’ll check your qualifications for the loan, go through lots of paperwork and then study the project itself too. It’s not uncommon for loan applications to take weeks or months before approval and disbursement of funds, if ever.

For business people working with a tight schedule, you’ll be well advised to leave the banks alone and go for hard money instead.

Hard money lenders are used to financing quick projects and they are already structured with that in mind. Their in-house specialists know what’s at stake so they are more flexible bearing in mind that their lending company is getting a higher rate in return out of the deal. The final decision to approve the loan will depend on the value of the property and the amount of risk involved in the venture.

Do you find yourself becoming increasingly frustrated because you are handling a project but can’t get funds from the banks? Or maybe you’ve already started the project but are having a funding issue and time is fast running out on you. Just present your collateral to a hard money lender and they just might save the day.

Flipping Real Estate – What You Need to Know

The act of fixing and flipping houses remains a popular form of real estate investment and is becoming something of a rage as the real estate market continues to recover and grow in value. This is most likely the most profitable form of fixed asset trading that yields large profits in the shortest time. But be warned, failure to do some background research can result in huge losses for the flipper.

The concept behind fix and flipping homes appears simple but experienced hands will tell you it’s not as easy as all those TV reality shows and mainstream media make it look.

successful real restate flippingThe investor, in this case, you, buys a house that needs some work, you fix it up, then sell it for a nice profit. The complications come in when you begin to consider the different things you’ll have to contend with. These include getting the right deal in a good location, finding the right contractor to handle the rehabilitation project, valuing the property, getting finance, getting the repairs done right and on time, then finally selling the property at your desired profit.

You can see that it’s actually a time-consuming venture. You can’t do this for a few hours weekly and expect to succeed. So, if you’re looking for a nice, quiet side job that will make huge profits while you work a day job, house flipping is not for you.

If we are being honest here, the expected profit is usually the greatest motivation for embarking on this exercise. However, many factors will affect the final profit you will get. Such things as the initial purchase price, cost of funds (loan interest rate), repair expenses, advert expenses etc. These expenses will vary widely depending on the location and value of the property. Many people naively expect to make up to six-figures with their first flip. Though not impossible, it’s extremely rare.

You could put some checks and balances in place to monitor the investment as you progress. Like discussing with more experienced flippers to know what to expect and to guide you along and determine if you’re going the right way or not. They can also advise you beforehand on the kind of profit margin you could expect after deducting all expenses from the final sales price. From our experience, for a fix and flip that cost you $200,000, when you factor in insurance, loan cost, purchase price, property taxes, selling cost, HOA and so on, the accumulative expense will be in the range of $30,000 and $80,000.

How many individual investors have $200,000 or even $100,000 cash lying around to invest? We guess not too many. Most will have some equity but have to borrow the rest. This is where hard money lenders can help. They frequently finance flips but have a higher interest rate than conventional lenders, sometimes up to 15%.

Finally, you must understand that every flip is unique. Taxes will vary from state to state so will insurance rates. Some houses are subject to the dues of Homeowner’s Associations, some aren’t. Some flips will be concluded in a couple of months, some will take up to six months not counting things like weather-related delays, logistics problems, and contractor issues.

If you can handle all this, feel free to take the first step. You’ll be glad you did.

5 Tips for Successful Real Estate Flipping

Never mind the occasional rise and fall, globally, real estate still remains one of the safest investment vehicles you can put your money in. Compared to investing in stocks and other financial securities, real estate continues to endure the test of time due to the following reasons:

  • Real assets rarely lose their value, in the rare event that they do, they always rebound quickly.
  • As the owner, you physically hold the assets.
  • Real estate is solid and immovable. Look at it this way, you know how you could wake up one day and your car is no longer in the driveway? Well, your property can’t disappear or get stolen like that.
  • The market is relatively predictable as things don’t just change overnight.
  • It remains one of the best forms of collateral if you’re seeking a commercial loan.
  • It’s easy to insure your real estate assets by purchasing homeowners insurance.
  • It’s a good investment vehicle for people with a long-term investment goal and a significant amount of funds to invest.

Successful Real Estate Investment5 Tip for Successful Real Estate Investment –  #3 IS Crucial!

If you’re just starting out in real estate investing, you’ll see that there are quite a number of factors you need to be mindful of in order to succeed. There are many different ways to invest in real estate each with its own intricacies. But we’ll start with the fundamentals. To that end, here’s our selection of 5 basic tips for investing in real estate.

1. Purchasing Units For Rental

This is one of the oldest and most recognized forms of real estate investment. You purchase a property, renovate it, if need be, and put it up for rental. It’s a very desirable source of steady monthly income. As a property owner, you will have to be involved in the running and maintenance of the premises or you can outsource the maintenance if you so choose. There are costs associated with routine maintenance, repairs, etc. but in all, it could be a good way to supplement or even replace your primary source of income depending on how valuable the asset is.

2. Purchasing Units For Sale

This is another old investment type but with more risks involved. You buy a property, modify or renovate it then sell it usually within a short time frame. This is commonly known as “house flipping” and you have to get your strategy right.

Though the financial results can be great, for reasons beyond your control you may find you’re unable to sell as quickly as you wanted to or to sell for a profitable figure. A good scenario for profit would be finding a rundown property in an expensive neighborhood and fixing it up. But remember to do your homework.

3. Location Does Matters

It’s always been location, location, location! A “bad” location may sink your investment dreams prematurely. Before you make any kind of payment make sure the location is good. The right location will yield excellent returns for you. Decide the kind of property you wish to invest in and exactly how it will generate profit for you. If, for instance, you are looking to flip houses, a good rule of thumb for quick profit here is “Best Street, Worst house.” Meaning great/expensive location but the house needs some work. This kind of investment decision beforehand will help you narrow down your search to the location/property that would make your investment goals a reality. You can thereafter decide if to source for funds through conventional or hard money lenders.

4. Study The Market

It could cost you dearly to just rush into real estate investing. The fundamental rule of good real estate investment is to know as much as possible about the local market you’re getting into and the forces controlling it. Take time to find the right property for your goals. You’ll be in a better position to make an informed decision and decide if that’s the right time to invest or to wait a while.

Don’t shy away from expert advice if you can afford it.

5. Research, Research, Research

You’re investing a lot of money so do your research. Check out the general area and the property itself. Have a professional carry out an audit of the property to confirm the general condition of the building. The audit can be as detailed as you want but should include a structural audit (roof, foundation) if you intend holding the property for long or you plan to make major changes to the structure.

Making the decision to invest in real estate is a good one just make sure you don’t rush into it. Find a form of investment that suits your personality. For a potential landlord, the steady income is good but can you stand the hassle of operating costs and dealing with tenants? If you want to flip houses can you withstand the tension that sometimes comes with it?

Understanding your personality will help you choose the option that’s best for you.

How You Can Make Money Flipping Real Estate

hard money real estate loansPractically everyone knows that there is scope of making money in the world. They also know that all they require is a little boost or help from someone who believed in their money-making capabilities so that they can make it in life.

If you are one of those looking for that one person who can help you, you’ll definitely not look at banks for support. You in fact are most probably sick and tired of the ways of these old-fashioned banks who don’t know that there are so many ways for people in today’s world to make money.

You’ll now be happy to know that it is now possible to avoid dealing with banks and still make money. This is because the helping hand you wren always looking for can be found in hard money lenders. It is these hard money lenders who will finally help make your money-making dream a reality.

Many people detest heading to the bank to ask for loans as they don’t want to go through the hassles of filling up all those papers, only to end up with their request declined. It’s even more difficult for you to get through the ordeal if you know you don’t have such a good credit rating.

However if you are looking for some financial help to buy property which you later aim to flip at a huge profit, you need not worry about, or go through the humiliation of dealing with banks. This is because you just need the name and contact information of a hard money lender living close to you so that you can start flipping properties.

These hard money lenders don’t bother with checking your credit rating, and are not bothered about your present occupation, the vehicle you drive or where you live. All they are interested in is giving you the money you need to start flipping houses, so that you can earn lots of money through it.

flipping houses and hard money lendingThere are quite a few people who are apprehensive about making money flipping houses as they think it’s rather risky. However if you concentrate on flipping houses, and do it correctly, you will soon walk away earning some profit.

The most important thing you need to remember here is that every home has a buyer. So while you may not make a profit flipping houses, you will at least not make any losses. Supposing you buy and renovate a property, and it does not get sold, you still have the chance of selling the property to the state.

You can then use the money generated to repay the money the hard money lender had lent you. You thus eventually end up earning as much as the property’s value which is a profit for you, even if you could not privately sell the property.

Looking at this, you wonder why you cannot try this as there’s no reason for your no using this opportunity. Many people dream of making it big in the hot real estate markets of Las Vegas, Nevada but are not that keen on taking such a high risk. The easiest method for a person, especially someone with a low credit score, to enter the real estate market is to borrow and invest money from a hard money lender.

So if you are tired of your 9 to 5 schedule, following your boss’s orders and sitting all day in an office or warehouse, there is now an alternative available for you. There are in fact very few people who actually work for someone else day in and day out, whiteout an end to their routine. You should consider trying your luck at the real estate business to put an end to this hell and routine. You will then be able to work at your convenience while following the rules you set.

How to Find Hard Money Lenders

how to find hard money lendersThere is one problem you may have; finding a local hard money lender. While this is a common problem, there are also many special tools you can use to simplify your search for this information from search engines.

Just go online and start doing your research by typing in the keywords hard money lender and your zip code’ and you will immediately receive some pages of results which you have to check.

If you wonder about the authenticity and safety of dealing with various Nevada and Las Vegas hard money lenders you find online, just check their local reviews. There are a few sites like Angie’s List which provides you with such relevant information.

These sites provide reviews not only for hard money lenders, but for all professional services provided in different areas. These reviews can be trusted as they are written by people and not robots.

The reviews offered on these sites don’t run into pages, but are concise and offer precise information. In fact, they usually answer all the questions you may have about different providers.

The best way to find reputable and trustworthy hard money lenders in Las Vegas is through personal recommendations. This means you have to contact friends, family and colleagues, tell them about your plans and ask if any of them have used the services of any hard money lender before.

You are lucky if they have used their services before, and are happy with the service rendered, as there’s no better referral you can expect. Your friends and family will obviously not recommend or send you to someone who isn’t trustworthy or reputable as they think.

You basically have to ask yourself the question of whether there is a need of your tolerating a job you despise, and living without the money you wish to have in your bank account. There are so many avenues for you to earn money based on your own earning potential and one of them is by entering the real estate market.

The present world economy is avoiding the recession it had faced a few years back which is why this is the best time for you to enter the market.

While the art of flipping houses seems so complicated, it isn’t as it’s not so complicated. You just have to locate and buy a neglected piece of property in a prime area, make necessary renovations to fix it up and then sell it as quickly as possible. You will then be able to repay the loan borrowed from the hard money lender and walk away happy with the earnings generated.

Remember, only you can decide what you want from life. If you wish to have sufficient money in your account to pay for things for your family, it’s time you started thinking about using someone else’s money to make money.

Make Money House Flipping

We all want to make money. The main hassle is the how and what of making money. Many choices exist but real estate investment remains one of the top most solid, and reliable sources for money making with the potential for great profit.

Let’s look at one avenue called house flipping…

How House Flipping Works

flipping housesBasically, you find a cheap house that’s up for sale. Put in some money to buy it and depending on the condition of the house, you spend some money and time renovating and fixing it up. Advertise it any way you choose and sell it for a tidy profit. House flippers have been known to make tons of money running into six figures with some perseverance and favorable conditions like location and so on.

Now, read up a bit about house flipping and you will see that many people shy away from it as they fear it’s too risky. We can tell you from experience that with focus and a good strategy, you’re very likely going to walk away from the transaction with enough profit to be worth much more than the initial effort you put into it. This is because after all said and done, there’s a buyer for every home. Granted, you may not always make a profit with every single deal but you will at the least not make a loss.

If you are looking for a way to escape the drudgery of a boring 9-5 job that you probably don’t have the passion for or you just want to get rid of your boss and manage your time on your own terms, the real estate business would be just the thing for you.

By now, you’re probably interested in this house flipping business. The catch is, in the real world, you must spend some money to make money. Real estate investing is no different. So, the next hurdle is: How do you get this money to invest? Do you have people with cash lying around that believe in your abilities and dreams? Lucky for you if you do because the majority of us don’t. The most common option would be getting a bank loan but that is no walk in the park.

The Problem with Bank Loans

What about the banks? After all, they have piles of cash and they’re begging for you to pick up the phone and make an appointment for a loan discussion. At least that’s what those endless media advertisements want us to believe. But, don’t be fooled because strangely they still cling to their old-fashioned ideas on how to make money. Banks have a flair for an unbelievable disregard to new ways of making money in the modern world and they could frustrate you out of a good idea especially when time is of the essence.

If you are searching for quick funds in a more responsive environment, you should seriously consider hard money lenders.

About Hard Money Lenders

Hard money lenders fill a special gap in the investment world. Most people are reluctant to approach banks for loans and this is understandable. The confusing ton of paperwork and high probability of being turned down is disheartening. If you have a poor credit rating, please just forget about the banks entirely.

This is where hard money lenders come in and turn your fast fading dreams into a reality. Have you spotted a good deal on a fixer-upper? Be sure that other people would have spotted it too and you have to act fast! Forget the degradation of approaching the banks. Just find the name and contact information of a hard money lender near you and you can start flipping houses for large sums of profit.

The Benefits of Using Hard Money Loans

  • They are not bothered by your credit score or your social status like your job, the car you drive or the kind of neighborhood in which you live. Their main concern is getting you the cash you need to flip that house or houses quickly and start making profit.
  • They remain the simplest way to enter real estate investment, especially for people with low credit ratings. Just borrow what you need and use it for the desired investment.
  • The speed and ease of entry when dealing with hard money lenders mean that you can take advantage of hot real estate markets right now. Think Las Vegas, Henderson market or even Upstate Nevada. Many investors are interested in these markets but are afraid of exposure to high risk. With the information here, you are already at an advantage over them.
  • If after all your efforts you’re unable to sell the house privately, no worries. You can sell to the state with no loss on your part and use the money to repay the hard money lender. You would have gained some experience in house flipping and who knows, your next deal may just surpass your profit expectations.

How to Find Hard Money Lenders?

Finding hard money lenders in your local area may be a bit of a challenge. This is a common problem if you don’t know how to search for them. There are special search terminologies you should enter into online search engines to get the information needed. Just type “hard money lender” and your zip code, and you’ll receive pages of results in seconds.

How do you know which money lender to trust? Read reviews and ask for referrals from real, human clients like yourself.

Find the Right Nevada Hard Money Lender

To get reassurance about the many Nevada and Las Vegas hard money lenders you will find online, check out the reviews for your own specific area.

Sites like Yelp and Angie’s List will help you with vital information in a straight-to-the-point, easy to read format. Plus, some of the questions you may want to ask are already answered by the reviewers and they are humans, not robots.

Las Vegas, Henderson, Boulder City, and North Las Vegas Hard Money Lending

flipping houses in nevadaThe key to find reputable hard money lenders in Southern Nevada would be to ask for personal referrals.

Word of mouth referral still remains one of the best sources of reliable information on goods and services in the market. Discuss with your family, friends and trusted acquaintances like your colleagues about your plans and inquire if they have patronized hard money lenders in the past. Satisfied clients will quickly give you referrals to the best money lenders you can find in this area as they won’t want you to be cheated or have a nasty experience.

Though flipping houses sounds complicated to a beginner investor, it’s not as hard as people perceive it to be. Find a house in a good location, fix it up and sell quickly. Settle your loan with the hard money lender, make a tidy profit and walk away or invest again in another house flipping deal.

With time, you will find that your money in the bank begins to grow all by using your abilities and other people’s money. Best of all, the global economy is recovering from the recession of the past years and as always, the real estate market will remain at its top spot in the investment world. If you can ride this wave and make enough money to take care of your family and possibly quit your undesirable job, what more could one ask for in life?