The high purchase price of the apartments has made the investment in apartments a dream. The efforts made to get the apartment loan is far more challenging and a time-consuming process. There are some finance tools like hard money loans help the apartment buyers to easily access the necessary funds.
In previous blogs, we have discussed a lot about the benefits of using hard money loans for real estate investment. It is the best option to get the finance in the stricter lending environment. Although there is a stigmatic view of hard money loans due to the following reasons:
- The interest charged is quite high
- Loan repayment terms are short
- The loan is generally an LTV ratio
There is one more pitfall that’s hard money lenders less often loan the smaller amount, which becomes an advantage for the real estate investor who needs hefty sum for making an investment in the large Multi-family properties. It’s an excellent alternative to getting an apartment loan for acquiring an apartment, building the apartment, refinancing the apartment or stabilizing the apartment, instead of getting frightened from making the big deals.
The dollars that apartment hard money lenders would lend can be used to consolidate multiple loans such as repairs, seller-held second mortgage, or lines of credit. Besides, the cash-out refinance is also viable where the cash to make the down payment of new apartment can be offered.
Lending hard money has both pros and cons to get the finance for apartment deal. Cross-verify by yourself whether hard money financing is worth or not considering a few things. They are:
Make certain the apartment acquisition cost will be the purchase price, renovation cost and closing cost of the apartment. The initial investment must be around 50% of the acquisition cost.
The hard money loan repayment tenure lasts maximum to a year. So, you have to decide whether you can stabilize the property in such shorter span or not.
The exit strategy is a must-have. To qualify for the loan, it’s essential to have a solid plan that explicitly defines the property future sale.
Apartment building investment is huge, so if you are a novice player, then you have to showcase the experience into real estate buying and selling.
When you have narrow down the choice to hard money loans, the outcome will definitely be bright. Many real estate investment firms have witnessed the benefits. Now, take a look at what are the features with which the apartment building investors get profited:
No advance fee is charged
Quick turn around times
Accept all credit history
High range of loans is offered
LTV never exceeds 70%
Competitive Interest rates vary as per the repayment time slot
Enable apartment purchase, and cash out refinance
It’s overwhelming! If you are dreaming of an apartment king, the hard money lenders would certainly help you to get the most out of the logical investment. Don’t hang fire, get set and go!
The big apartment deals scare from rookies to the real estate moguls due to the large sum of dollars needed for the investment and that’s risky as well. The risk grows by manifolds when the investment in the deals is done through finance like hard money loans because the loan has to be paid along with interest in the defined time interval.
But, the benefits of hard money loans outdo the features that pull the legs. The smart investment into the deal after analyzing the project guarantees the lucrative advantages. So, the need of the hour is to look for the good deals and consider all the options to accomplish your goals.