The biggest benefit of using hard money loans is the facility to borrow a capital amount for renovation expenses. An investment property has a certain equity potential, but an average home buyer often gets discouraged by the bad condition of the property. A real estate investor creates a suitable margin that provides the sufficient funds to acquire and renovate a property. Financing the property, and making the needed repairs is a vital key to this real estate chain, and a hard money loan is a tool that offers it all to do just that.
In today’s real estate market, an investor acquiring a conventional bank loan is expected to pay around 20-25% down just to obtain the property, and then coming up with extra cash needed to complete the renovation process. Another alternative would be, making use of a hard money loan to finance the acquisition and repairs, while placing only 10% down of the total cost.
Once the property is acquired and renovated using hard money the real estate investor can employ a typical lender for permanent financing. As the renovations made to property presumably increases its value, the new lender may use the appraised value in calculating the maximum allowable loan value. Usually, a money lender allows up to 75% of financing on the appraised value. Considering the best case scenario, the appraisal amounts to be high enough that the investor is able to refinance the hard money, along with the closing cost of the property.
No matter what your investing goals are, hard money loans can be the best and most effective tool. Even with the imminent changes in the guidelines, hard money loans, to leverage a real estate investment is a great strategy to purchase, renovate and retain the property. However, keep in mind that going forward you will need a genuine and trustworthy hard money lender to finance the loan, especially when it is about to refinancing using hard money. You can also find a hard money lender online, using platforms like Syberloans.com. It is an easy-way solution to your problems of finding a genuine hard money lender, as it provides a detailed information about all the industry experts that have been serving for years in the profession of the hard money lender.