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Hard Money Lenders
It takes cash to buy a wholesale property. Many investors arrange for a home equity line of credit (HELOC) on their primary residence to allow them to use it for investing. A HELOC is an excellent source of cash. Another source is hard money. I can refer you to hard money lenders. Residential hard money is hard cash with a fast closing to seize an opportunity. It can also be used to rehab, fix & flip. What exactly is "hard money"? It's a real estate loan you get from a non-traditional lender, secured by the investment property and not by you. Hard money interest rates typically range from 10% to 20%. The lender also charges "points" (one point is one percent of the loan amount, usually financed into the deal), which can range from 1 to 10. A typical hard money deal might have a 16% rate plus 4 points for example. Why would someone use hard money? Because these lenders are concerned about the property you're buying, and not about you as a person. They are also able to close very fast to enable you to take advantage of a wholesale opportunity. The typical Loan To Value ratio (LTV) for hard money may range from 30% to 70% of the quick sale value or fire sale value of a property. Most hard money lenders will only loan against the "as is" value of a property and not the "future value" of a property after improvements. However, a few hard money lenders will loan you up to 65% of the after-repaired value of the property. Another benefit of using hard money instead of bank financing is that hard money lenders are not overly concerned about your credit rating or debt-to-equity ratio! They are much easier to work with than banks. If you do not have all the cash necessary to purchase wholesale properties, you will require the services of a hard money lender. Hard money lenders are often private investors and organizations that are not limited by the traditional rules of bank-made loans and can make loans quicker and outside the parameters of traditional loan requirements. Hard money loans are short term real estate secured loans with six month to 18 month terms and often with extension options. These type of loans are made for business and investor purposes only. I can refer you to hard money lenders. You need a hard money lender that specializes in working with investors and contractors. Some lenders are Las Vegas-based, others are out of state, but all specialize in Las Vegas residential properties. These lenders use money from individual investors to make short-term "mortgage" loans (Deeds of Trust) to builders, developers and other investors with real estate as collateral. These private lenders offer short term cash with 5 to 14 day closings. The best are able to close in 5 to 10 days. They charge anywhere from 10% to 20% and from 1 to 10 points. Generally they are not overly concerned with the borrower's credit rating, or with formal inspections. They are concerned with what the property appraises for in it's present condition. They look for 30% to 70% Loan-to-Value (LTV) of the quick sale value, but they will sometimes lend up to 65% LTV of the after-repaired value of the property. So why would you be interested in using a hard money lender? These lenders are concerned about the property you're buying, and not about you as a person or about your debt-to-equity ratio. They are also able to close very fast to enable you to take advantage of a wholesale opportunity. Even if you have sufficient cash for your first few purchases, you may wish to contact a hard money lender now. That will allow you to take advantage of future deals. If additional funds are ever needed, a relationship established in advance with a hard money lender will enable you to purchase wholesale properties with 100% cash that can close in 5 to 10 days to take advantage of a very advantageous wholesale opportunity. I will provide referrals to hard money lenders for investors who have registered for our Hot Cash Deals™. |