This is How “Hard Money” Loans Work (Banks for Investors) (Rookie Reply)
Summary
This BiggerPockets article discusses hard money loans for real estate investors, offering insights into loan terms and strategies for making offers more competitive. Hosts can learn about how hard money lenders operate and what factors can make their offers more attractive when buying a property. The article also touches on the importance of asking the right questions of lenders.
Key Insights
- •Hard money lenders often base loan terms on the cost of the deal (acquisition + rehab) and the after-repair value (ARV) of the property.
- •Hard money lenders may offer 90% of the total cost (acquisition plus rehab) or 65% of the ARV, whichever is less.
Action Items
- ✓Talk to multiple hard money lenders to compare terms, especially if you are new to investing.Effort: mediumImpact: medium
- ✓When making an offer, consider factors like purchase price, speed of closing, contingencies, and earnest money deposit to make your offer more competitive.Effort: lowImpact: medium
Common Mistakes
- ⚠Not asking enough questions about the details of a hard money loan, such as fees, processes, and refinancing terms, can lead to unfavorable financial outcomes.
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