When you choose to invest in real estate in Florida it’s important to understand the local market, as well as how to get the money you need to effectively buy and sell homes. For some investors, hard money lending can be the most lucrative option to help them make money in real estate. In fact, it is often a better alternative to trying to obtain your typical bank financing for a traditional mortgage.
Cheaper Than an Equity Partner
For prospective investors who may not qualify for typical bank funding methods, hard money loans can be a lower cost alternative to equity partners. Instead of working with a partner who shares equity in your investment, hard money lending involves finding an individual or a small group of people who are willing to lend you the money to purchase a property. This loan isn’t based on your credit rating. Instead, it is based solely on the property you are intending to invest in. These lenders are more likely to give you a high percentage of the cost of the property. However, it’s important to know you can flip and sell the home or property quickly so you can pay it back in a timely manner.
Consider the Option Carefully
There are some cons that need to be considered before you choose hard money lending as your choice of funding for real estate investments. For instance, the interest rate on hard money lending is often much higher than your typical mortgage, which means it isn’t a good choice if you won’t be able to pay it back as quickly. While this type of loan isn’t based on your credit rating, that doesn’t mean it is easy to qualify for it. It is primarily an asset-based loan, which means you are only going to receive as much as the lender views the property is worth.
Choose Wisely
If you’ve been thinking about hard money lending for your real estate investing in Florida, it’s important to choose your lender/broker wisely. Be sure you look for a lender/broker who has a reputation of having good character and experience in the same types of properties you are looking to invest in. When they have already helped others who are in a similar position as you, it is easier to feel confident in the entire process.
If you don’t qualify for bank loans and are looking for a relatively easy way to get the money you need for real estate investments, hard money lending can be the right option. With this method of borrowing money to purchase real estate, you will be able to borrow based on the value of the property, rather than based on your credit score.
