What happens when you need $5000 for that tiny house in San Bernardino? What about that noir style house in Hollywood? Maybe the best option you have is a residential hard money lender. They are able to give you the capital that you may need for that perfect dream villa on the California coastline.
Real estate can be a very sticky situation if you do not have everything checked correctly. If you mess up on a certain form or your credit is not bank standard you could miss out on thousands of dollars. In the event, this happens who do you need to turn to? Your family members have already exhausted their finances bankrolling that café you said would catapult your barista career. Your best option is going with a residential hard money lender.
So, what does a private money lender do generally? Basically, they are non-institutional entities that are able to loan money for a property. Usually, they will require you to provide a note and deed of trust before you are able to receive your loan. Generally, they do not require you to have a great credit score, however, you do need to have a solid amount of collateral. The collateral is used to make sure the lender can be reimbursed of the borrower happens to default on said loan. We are not saying you are going to do that but it is nice to have a failsafe if you need it.
Often people that take on these types of loans if they want to flip the property fairly quickly. Most of the homes purchased with these loans are in the process of being foreclosed or have been foreclosed. Investors will usually get a small loan that could pay off extra costs that you may incur. For example, say you used a loan to purchase the home instead of your own assets; you could use any extra money for any mishaps that you might run into.
You do not need to be an investor to use these services.
Yes, you Joe Schmo, you can benefit from these services, as well. You have to act fast though a lot of these homes are flying off the lot. Seriously, though, these types of loans are great for people that need quick cash before they miss out on a property. In fact, this type of loan works great for people that are in danger of losing their home. Instead of losing it to a bank you could pay off whatever fees you may have and then flip it for a profit.
Residential hard money lenders often will help people that are in need more than an institution would. Most of the time these companies are small and have close ties to the community. They probably shop at the same stores as you, or they attend the same gym. You are at a much better advantage at finding someone that is willing to give you the money you need for your future property.
There a few drawbacks to using a residential hard money lender.
Most of the time borrowers have a problem with the interest rates that they have to pay back. The rates for these loans usually tend to be in the low teens. Depending on the climate of the market and how quickly homes are being sold this could vary. The reason they are so high is because of the risk that lenders take on. Flipping a home is very hard and it could take months before a lender receives a return.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.