|Small Business Information|
Hard Money Lenders -- No Money Down The Easy Way
Would it help you as a real estate investor to be able to "Close For Cash in Days," even if you're tapped out financially?
Hard money lenders are perhaps the best way to get 100% financing with easy qualifying, money for fix- up, and fast closings.
So what can hard money lenders do for you? Hard money lenders make relatively short term (12-24 month) loans to real estate investors for the purposes of acquiring the property and rehabbing the property.
These loans are often funded by pools of private investors that have been grouped together into a pool of capital by a lender.
The hard money lender is looking for maximum return, and is willing to take more risk for this return in the form of easier lending standards.
If you strike the right purchase deal, you can even borrow 100% of the purchase price plus some or all of your repair money by using hard money lenders. Here's how it works.
Hard money lenders typically loan 65% of the ARV or After Repair Value of the property when it is repaired or ready for resale.
That 65% loaned by the hard money lender is calculated based on the value of the property AFTER REPAIRS, not as it currently sits, and not based on the price is being paid for the property.
For example, Say that the owner is willing to sell me his house for $60,000. The hard money lender's appraiser agreed with my assessment that the home could be sold for $100,000 once it was fixed up. That appraisal would allow me to borrow 65% of the $100,000, or $65,000. I'm only paying $60,000 for the property, so guess where that extra $5,000 goes?
Unfortunately, not into my vacation fund!
The extra loan proceeds go into an escrow account held by the hard money lender, and I can draw it out as I do repairs.
Remember, hard money lenders are not concerned with your personal credit to the level that traditional lenders are. They're concerned with the property. They know that their loan is fairly secure if you default.
What's bad about hard money loans?
The fees are higher than conventional financing.
Hard moneylenders in my area charge 15% interest, and 5% of the value of the loan in closing costs ("five points").
Thus, on a hundred thousand dollar loan, there would be $5,000 in fees to the lender to close the loan, plus attorney's fees and other charges.
Secondly, the loans usually are only good for 12-24 months. After that time, you have to refinance. If you haven't sold it by then, you have to get a new loan, pay more fees, etc. These are not loans to buy rentals with.
Another disadvantage is the fact that most hard money lenders don't figure the payments on a 30-year basis. The longer the payments stretch out, the cheaper the payment. They figure these loans on 15 or even 10-year terms. Thus, the monthly payment that you must pay is much higher than it would be on a conventional 30 year amortization schedule.
Also, hard money lenders are often more difficult to find than traditional funding sources. As a gift, I have compiled a national list of hard money lenders at my site to solve this problem for you.
Finally, most hard money lenders require a pre-payment penalty that must be paid if you refinance or pay off the mortgage before a given amount of time. Fortunately, this time period is often fairly short. For example, the hard money lender that I use has a two month pre-payment penalty period. Even if I am not going to do much work on the property, and have a contract on it quickly, I can just set up the closing for after the pre-payment penalty expires.
In conclusion, hard money lenders present an attractive option for investors to succeed without having to resort to the late night TV creative hype that we've probably all been exposed to. If you can qualify for traditional financing, and your seller is comfortable with a longer closing window, you may want to stay with conventional financing.
However, if down payment money is tight and your credit is not perfect, or you need to close very quickly, hard money lenders may be a viable solution since they will allow almost anyone who can find a good deal to purchase a property extremely quickly, with less red tape, get money for rehab, and have virtually unlimited access to cash.
**Attn Ezine/Blog editors/ Site owners** Feel free to reprint this article in its entirety so long as you leave all links in place, do not modify the content and include the resource box. If you do use the material, please send us a note. Thank You!
David Wnisnant is a real estate investor and attorney in Atlanta, Georgia who teaches cutting edge real estate tactics specifically designed to increase the number of deals investors find, increase the profits from each deal with less risk. Download Dave Whisnant's FREE 50 state hard money lender list and forever banish the problem of where to find the cash for your deals! Go to http://www.realestateinvestingbrain.com/freehmlist.html
Predicting Business Retirement Satisfaction for Business Owners
Most business owners do not think of selling their companies as "retiring". Instead, these vital entrepreneurs see selling their business as a "transition." For most business owners this does not mean slowing down or endless days of rest and relaxation. Rather they see "retirement" as a new, active stage in their lives characterized by continued personal growth, personal reinvention and new beginnings in work and leisure.
Do You Want Your Own Fully Programmable ERP? - Part 2
In the first article we mentioned the main characteristics that should have a software to be used as a Front-End with some functions of an Enterprise Resources Planning ERP:
Why are Reverse Mergers Often the Victims of Short Sellers?
There is a great deal of abuse going on in the OTC Bulletin Board Market and a lot of money is being made as result of it. Regulators are trying to deal with the problem but are unable to put a halt to it, unless they take drastic steps which will be detrimental to the small and micro-cap market.
Creative Metrification - A Technique to Improve
Some things in business are relatively easy to measure ? these are the "hard" metrics such as sales volume and profit, production per man-hour, time without an accident, shipments without error, number of customers served, on-time delivery, etc. Other, "soft" metrics, are more difficult to quantify, but with a little creativity, measurement can be made of just about anything.
9 Things You Must Do To Maximize Your Chances Of Obtaining A Small Business Loan
To get approval for your small business loan application, you must be able to meet the lending criteria set down. Some organisations are more risk averse than others, and will therefore have more stringent criteria. To vastly increase your chances of a successful funding application, you will need to present the following information:
Incorporating a Small Business: S corporations versus C corporations
If you've been considering incorporating your small business, you've probably been confused about the difference between S and C corporations.
Virtual Assistant ? Questions Answered
What is a Virtual Assistant?
Franchising VS Business Opportunity; What is the Difference?
The modern Franchise business model and the much different business opportunity are much different and dissimilar. The definition of these two business models should be broken into completely different parts to better fit the two-different business models and have their own set of regulations, which would contain similar stipulations with regards to prohibitions, definitions or basic rules of law. The Federal Trade Commission is considering a redefining of these two models under their legal description.
Franchise Buyers from Hell
I ran a franchise company for many years, a car wash franchise, and we use to get the most ridiculous franchise buyers who thought they wanted a franchise. It seems we had to deal with these Kookoo birds because they have consumer rights and the Federal Trade Commission, which looks over franchising goes out of their way to let these consumers get away with these tall tales.
Small Business Opportunities And The Tens
You may find this Newsletter a little long winded but it's for a good cause: It's all designed for Your Success!
Marketing a New or Small Business on a Budget
There are almost as many opinions and views on marketing as there are companies to market. The big names and multinationals will have an extraordinary amount of funding set aside in which to convey their marketing message to the masses.
5 Steps To Success for Small Business Owners
Everyone wants to succeed in life. Most people want to succeed in business. And no one starts a business of any sort wanting to fail.
Private Franchising is not Real a Real Franchise
One major issue not being addressed right now in the regulatory definitions which guide consumers and lawyers in business opportunities and franchising is the new term being used; Private Franchising. The Federal Trade Commission decided it would revise its definitions of such opportunities in 1995, but failed to address this issue. The use of the term; Private Franchising has grown over the years.
Detailing Business Options
So you want to get into the auto detailing business and are not sure what options are right for you? It is a difficult choice indeed and there are so many options. Let me tell you a few having been in the industry some 27-years, we have seen a lot of businesses come and go and we have seen what works.
Franchises Offer Shortcuts, But Not Control
Q: I will be retiring this year at age 60 and intend to fulfill my lifelong dream of owning my own business. I'm too old to start from scratch, so I'm looking at several franchise opportunities, including fast food, auto parts, and an accounting service. What should I consider before choosing one? Anthony R.
Not Listening Can Hurt Your Small Business
Most small business owners seek advisors who can help them improve their businesses. They want advice from those who have the experience and really know what they're talking about. But they can only benefit from the sound counsel if they listen to the expert's guidance. Unfortunately, there are some entrepreneurs who aren't going to hear the professionals out or follow a plan no matter what. At that point, experts realize that they might as well save their breath and hope that the business owner will eventually see the error of their ways before it's too late.
Small Business Credit Card Advantages
Obtaining a business credit card enables the small business owner to separate personal expenses from business expenses. Offering business credit cards to their employees eliminates the need for employees to use their personal credit cards or cash to make company purchases. Employees using a business credit card will not need to fill out expense statements, wait for approval and reimbursement from their company. Transactions are itemized and reported on quarterly statements that make it easy for management to make changes if needed. Business credit cards can be provided to the employees with preset spending limit and helps in controlling employee spending.
Small Business Support Equals Survival
Support is critical for your small business survival. You may shy away from the thought of having an advisory board to guide you through your rough spots, but having a group of professionals who are willing to be your sounding board can mean the difference between success and failure.
The Beauty of Focus and Plan B
Did you ever have one of those days or weeks when you said "What in the world am I doing running this business?!"
Three Ways to Add Leverage to Your Small Business
Remember those drawings from science class of how a lever works?
|home | site map|