If you are a real estate investor, it helps to know about hard money loans & what they are because they can help you invest. As a service to investors, here are 4 situations where hard money loans are ideal.
Real Estate Investors know: it sometimes takes money to make money! In other words, if you want to acquire a property, fix it up, and generate a return, then you sometimes need additional funds to help you acquire the property or make repairs; however, what if you do not have any money or want to spend your own cash? That is exactly where hard money loans come in – they are loans for Real Estate Investors to help them invest. Here are 4 situations where hard money loans are ideal…
4 Situations Where Hard Money Loans Are Ideal
1. Acquisition
The first step of any investment is to acquire the property; however, this can tie up your capital in the property for a long time before you are able to generate any return on your investment from cash flowing via renting or reselling of the property for a profit. Why tie up all your money in a deal when you can instead just borrow a hard money loan and acquire the property you need. Hint: this is a great way to scale if you need capital to buy larger properties or more than one property at a time!
2. Fix & Flips or Rehabs
If you buy houses and fix them up to sell at a higher price, you might describe yourself as a “flipper” or “rehabber”. As you probably have heard or even experienced yourself, this kind of investing ties up a lot of money – Not only do you need money to acquire the property, but you also will need to spend even more cash to repair and rehab your investment! Investors discover that they tie up a lot of money before seeing a single penny of profit in a sale! A hard money loan can help cover some of your renovation costs so you can fix and sell even faster.
3. Turnkey Wholesaling
Turnkey wholesalers are a special breed of investor : they acquire a property, fix it, rent it, get a management team in place, and then sell the property. That can be a capital-heavy business, depending on the cost to acquire and the cost to repair. Hard money loans provide capital to acquire and repair properties so profitable returns can be achieved on the investment.
4. Post-Tenant Repairs
Cash flow investors know that tenants do not always leave your property in pristine condition nor do the leave at a convenient time. If your tenants trashed your property before leaving, then you may want a hard money loan to cover repairs so you can make quick repairs and have your property rented out and cash-flowing again, fast (instead of trying to finance or come out of pocket for the repairs yourself).
Summary
If you want to invest, you will probably discover that you need more money than you want to pay out yourself. Fortunately, hard money loans can help. Hard money loans are tools used by many investors to help cover different situations they face. If you are an investor, these are 4 situations where hard money loans are ideal – so make sure you take advantage of hard money loans when they are available. For more information on hard money loans or to see if you qualify for a hard money loan, click below or give us a call.