Most people take hard money loan in literal terms, believing that it is something hard to seek and very tough to afford. On the contrary, hard money loans are way easier to obtain than conventional loans due to their flexible terms and conditions and means of access. Hard money loans are mainly used for commercial properties and anyone looking to establish or save real estate business can seek hard money loans without facing long waiting time and unnecessary paperwork.
It is important to realize that loan business is risky, whether you get it from a friend or a bank. You do not know if you will be able to make enough profit and return the loan the right way but with proper planning, evaluation of market trends and hard work, you can look forward to desired outcomes.
However, securing a loan is not easy especially when you approach a bank or a lending company. Banks and lending companies have a long list of things that they check when considering your loan application; from income details to credit history and existing debts to the potential of the deal, they check everything carefully and if there is even a little doubt, they reject the application as they want to secure their money. This often creates a lot of trouble for people who are serious investors and seek loans to save or grow their business and less income, lack of good credit history, long waiting time or rejection jeopardizes their deals.
On the other hand, hard money loans are easy to secure as the lender does not focus on these issues as banks. They are mainly used for commercial properties when things are serious and you can secure a hard money loan to save your business and turn your dream of becoming a real estate investor come true. All you need to do is search home or commercial property loans when you need them.
Hard money loans are not necessarily based on credit; the collateral that would be used for this type of loans is the property that you intend to purchase. It is necessary to know that these loans are funded by investors and not banks. The biggest difference between banks and investors is that investors already have in mind the amount of money that they need to make that would ensure a worthwhile deal. While banks make money too but hard money lenders get a higher percentage of profit as they are taking a bigger risk and provide help to business owners at a time when no one else is willing to trust them.
If you are looking forward to purchasing a property, turning it over and selling it for profit, hard money loan is the right option. Unlike home loans, the hard money loans rely on the potential sales price of a commercial estate property. The potential investor that is considering lending you the money will not focus on the appraised value of the property. Rather, he will look at what future sale price will be if this property is sold shortly after the loan is approved. Depending on the condition of the property, this loan will be typically between 50 and 75% of the appraised value of the commercial property and help to save the business if you do not have any other option.
An important thing that you need to know for seeking hard money loan is that you must know if you can turn the situation around in a few months. You must have a solid plan of success that will turn around the business in a short period as the investors want the money back, either when you return the money or when you fail to pay back and they take over the property and sell it.
You can look forward to saving your business and enjoy the benefits of hard money loans Houston by finding the right lender who is ready to make a profit from investing in your project. Before proceeding further or signing any paperwork, it is best to search thoroughly and look for the best deal, that is logically and strategically the best choice for business.