Residential Loans

Is a residential hard money loan a good solution for your investment project?

Eyeing a single or multi-family residence as a new investment project? All real estate investors know what it takes to get a bank loan. We don’t mean to rub salt in an open wound, but before accepting your request for a loan, any bank will require a significant pile of documents, including:

• proof of income
• tax returns
• credit history
• bank statements, etc.

They’ll also want your credit score to be 700+. If you manage to meet the criteria: congratulations, the waiting time for the bank’s decision is approximately 60 days! Oops….

If you are not in a position to spend time and nerves, then have a closer look at residential hard money loans.

In the world of real estate financing, residential hard money loans are referred to as non-bankable short-term loans that are backed up by real estate assets. Hard money lenders focus on equity and investors’ experience and are not concerned about financial history, credit score, and foreclosure.

Why does an investor’s experience matter?

Hard money lenders don’t ask for reams of documentation from investors. Instead, they ask for proof of experience. This is because they need to evaluate their risks and understand if the investor will be able to complete the project. If you have enough projects in your portfolio, you will most likely be able to pay back the loan.

The goal of hard money lenders is to avoid foreclosures of the investors. If that happens, they’d have to sell the property themselves to break even — that’s not their area of business. That’s why a true hard money lender firm is always interested in the financial success of its clients.

When a residential hard money loan is a good decision for a real estate investor?

When choosing the optimum financial solution for an investment project, it is important to understand in which situations a residential hard money loan is more appropriate:

• Impaired credit
• Urgency in getting funds
• Foreclosure avoidance
• Fix&Flip investment projects
• Foreign Nationals