Hard Money
Lender
What do you picture when you think about buying property?
Do you want a three-bedroom, two-point-five bath house for
the family? Or do you dream about becoming the next Donald
Trump? Many people aspire to become real estate moguls. Buying
damaged or otherwise distressed commercial or residential
properties, fixing them up, then selling them at a profit
is a sound business model. However, if you're low on cash,
you will need to find the start-up money to fund your enterprise.
Most banks want a sure thing--it's hard to sell them on your
potential profits--particularly if it is a property that looks
like a poor investment at first glance. Your best bet is to
find a private lender with money to spare. This type of individual
is known as a hard money lender. They can be found through
brokers or by word of mouth--ordinary people like you or me,
who are willing to invest their money on their terms.
Hard money lenders will usually have strict guidelines, and
their loans are designed to be short-term bridge loans--usually
from six months to three years. Because they greenlight loans
that aren't up to bank standards, their interest rates tend
to be higher. But because they are private individuals, rather
than a government-backed institution, they make their own
rules. This means they can be more flexible if they are interested
in the investment you present.
The Benefits of a Hard Money Lender
If you have poor credit, a hard money lender can be easier
to deal with than a bank. Because the terms of the loan are
so favorable to the lender, they are usually more concerned
with the value of the property. If you have big dreams--and
little upfront money to work with--a hard money lender that
shares your vision can help you bridge the gap to success.
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