If you are a well-qualified buyer looking to take advantage of the myriad opportunities in the one-to-four unit residential real estate market, the private money market is the best partner that you could ever want. While banks and credit unions remain overly conservative about lending on investment homes, California hard money lenders offer loans at competitive terms that can get you ownership of today’s best property investment opportunities. Here are just a few of the things that they can do for you:
– California hard money lenders can move quickly. Since most private mortgage originators are private investors they do not have committees which can take weeks or months to decide whether or not they will give you a loan. Once you find a suitable deal and submit your application package, you can expect to close within the time frame of three weeks or less. This lets you write offers that can close more quickly, increasing the likelihood that you get the best deal.
- They can lend on assets that do not have proven cash flow. If you are looking to take advantage of foreclosed or vacant properties, you will find that many traditional lenders want to see the property generating a net operating income which is higher than the annual debt service. Private lenders look at your down payment and your ability to repay them.
- California hard money lenders offer rates and terms that, while more expensive than a bank; leave a lot of money in the deal for you. For instance, borrowing $120,000 on a $200,000 property would probably cost you around $19,000 in the first year. However, you are buying that $200,000 property to put $25,000 of work in and sell it for $350,000. At that point, you will have spent $124,000 between repairs, down payment and loan costs and cleared $205,500 after commissions, costs of sale and paying your loan off. In other words, your hard money loan lets you turn $124,000 into $205,500 after one year!
Why are California hard money lenders making such great opportunities possible for you? It’s simple. They have money on which they want to earn a healthy return. Since the banks will not pay them a reasonable interest rate, they turn to investors like you. While they give you the money that you need to do deals, you pay them enough interest that they can earn a reasonable profit. In other words, everybody wins!