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What Is A Hard Money Loan

A Hard Money Loan is a specific type of asset based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans, starting at 8% – 14%.

The loan amount the hard money lender is able to lend is determined by the ratio of loan amount divided by the value of the property. This is known as the loan to value (LTV). Many hard money lenders will lend up to 65–75% of the current value of the property. What is most important to the lender is the loan-to-value (LTV) ratio. The LTV is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. Most lenders will require 10% to 15% down payment of purchase cost while financing 100% of the rehab cost. Lenders that do not require a down payment usually fund at an ARV of 70%. The ARV is the after repair value and is what a home is worth after it is fully repaired. If a home’s ARV is $200,000 and it needs $25,000 in repairs, then the 70 percent rule states the lender will finance up to $115,000. ($200,000 x 70% = 140,000 – $25,000 = $115,000.)

Think About Becoming a Private Lender Today

What are you earning on your money currently? If you’re looking for an alternative way to participate in the real estate market, then consider learning about becoming a private lender. We are a Residential Redevelopment Company who buys and sells homes at reasonable prices and keeps communities beautiful. Due to the large number of properties that we buy and sell, we are always looking for short-term private lenders who are excited to loan money at attractive rates, and which will be secured by a mortgage or deed of trust. We can agree on the terms and a time frame that you’re happy with.

Returns On Your Money

Learn how you can make good returns backed by real estate and how you can leverage money that’s sitting in accounts you didn’t know you could access. Invest in one property or many -you decide what’s right for you and your money. Average Returns 8% – 12%.

Deal Example 

  • ARV = $325,000
  • Purchase Price = $200,000
  • Rehab Cost = $30,000
  • Borrow = $180,000  @  10%  Interest Only