Hard Money Construction Loans

Hard Money Construction Loans

Types of Hard Money Loans

Are you familiar with the term Hard Money?

Hard money is money loaned to you by private investors, these private investors can be from anywhere but normally the hard money lenders would want to work within their own state, so if you’re from california than you want to find an investor in california.

So what type of hard money loans the hard money lenders will do?

The first type of hard money loans lenders are offering is construction hard money loan.
In construction hard money loan the hard money lender will loan the borrower the money in stages, example:You own a land in los angeles california, on that land you want to build a house, you have the plans approved by the city of los angeles and you’re all ready to go, now you need a hard money loan because it will be easier to qualify and get the money you need for the construction, You will call a hard money lender and give your information, the approved plans, your financials, your budgets for the construction(you can get it from your contractor), then lets say the hard money lender agrees to loan you the money you need, but the way the hard money lender will Loan you the money is by stages, and the stages are:

When your Contractor will finish the foundation, the contractor will get paid after inspection that is done by the hard money lender $10,000 for the foundation work, Than when your electrician finishes the electricity in the house, than the electrician will get paid after inspection done by the hard money lender another $7000.
You understand the concept?
Everybody by the completion of the construction will get paid by the hard money lender.

Why the hard money lender do that?
Because he want to have control of the money, private investors know the risks they’re taking but they’re still willing to take these risks only if they have 100% control of the money.

Why hard money lender will choose to Loan money to investors and not homeowners?

This is a very good question that a lot of people should know the answer for.
The hard money lenders wouldn’t want to have to take a homeowner out from his home because he didn’t make the payments, but with investors it’s different, it’s 100% business and that’s what the hard money lenders want- Business.
What type of properties hard money lenders will loan money on?
A hard money lender will loan money to many type of properties: single family residents, condos, townhouses, apartment buildings, hotels, motels, office buildings, shopping centers and many others.
What hard money lenders don’t like, it’s land. It will be very hard to find a hard money lender that will loan you money on a land, and the reason is because there is no income to lands, maybe you can get a hard money loan on a golf course or maybe a land that you about to develop something on, but raw land- forget about it.

Today hard money lenders loan more money to commercial real estate investors rather then to residential investors and the reason is less risk.
Today the residential market is not going up, values of homes are actually going down by more than 30%, and every day more foreclosures are coming out on the market, so the hard money lenders are smart enough not to participate in taking risks with homeowners.

Commercial real estate is still very competitive, investors are still buying properties, remodel properties and build new properties.
The commercial real estate market is still alive just like it was in the residential market 3 years ago, and hard money lenders are still in the game, and now they’re busy more than ever because the banks don’t loan money that easy to borrowers.
So it’s commercial properties rather than residential properties, and construction Loans.
Good luck

About the Author

Yanni Raz is a mentor for many in the Real Estate Mortgage industry, Yanni Raz is been tutoring many homeowners in California and help some also to save their homes. http://fidelitymutualmortgage.com

Can a bank finance a property and a house loan all in one?

I want a house loan and a property loan on the same mortgage, but I was told that cannot be done. Now I am told that it can be done. Here is the scenario: I want to build our own house since my dad has a construction company, that would be cheaper then buying a house from someone else. I recently saw a property that I liked that is about 1.5 acres, the only problem is that I do not want to buy it all cash because that money could be used for the downpayment of the house loan. The more money i give down the better the possibility that I can get the mortgage, because right now it is so hard to get a loan. I have good credit, a good job, but the better the downpayment, of course the bank will want it. Please help.

You would need to apply for a construction loan.

Hard money construction loans