In today’s American economy no money is easy. The country is full of people who work long hours and who would never say that the money they make is easy money. In today’s financial and lending landscape, however, some loans that are not easy to get are actually called “hard money.” Investment property mortgage lenders offer hard money loans on terms that are significantly different from the typical commercial and residential loans that most Americans are familiar with.
Referred to as hard money, these type of loans offered by investment property mortgage lenders come with higher interest rates and lower loan to value ratios. In fact, some hard money interest rates can start at 15%, 18%, or higher. Available to property owners who have at least 30% to 50% equity in a current property, these loans keep the investor well protected because a property can be held as collateral. For the borrowers, these hard money loans are a way to get secured short term loans when needed.
For instance, even though a property owner may have significant debt, some opportunities are too good to pass up. If, for example, an apartment owner has a mere 30% equity in an increasingly profitable small apartment complex, that owner may not be able to get the typical financing if a second nearby property becomes available. Investment property mortgage lenders, however, see the 30% equity as ample qualifications for the additional loan. The apartment owner who wants to expand his or her holdings is willing to pay the higher interest rates for a short term loan so that they can gain the long term benefits of the additional rental property.
Commercial Real Estate Investing Basics Indicate That You Must Have Money to Make Money
It is often difficult for some interested individuals to get into the rental and investment property field. One rental house, for instance, produces an income, but often not enough to make a huge impact. Owning several rental properties, however, presents an opportunity that can more quickly provide the desired results.
Investment property mortgage lenders provide the finances needed for continued property purchases which can lead to very profitable opportunities. For many who want to get into the rental property market, the process can be slow and frustrating. Not having access to the funds that they need when another property becomes available keeps these rental property owners from expanding. Hard money loans, however, provide higher interest loans using current properties with 30% to 50% equity as collateral. With the promise of quick opportunities to begin collecting rent payments, hard money deals are often the option for borrowers who are looking for quick access to the cash that they need. In fact, some hard money loans can process within seven to 14 days.
Residential Loans Continue to Help Americans Reach Financial Stability
After being strapped with some of the biggest student loan debt in this nation’s history, an August 14, 2016, The New York Times article indicates that this group’s debt statistics have also shown an interesting and positive indicator. Data from the Federal Reserve, as reported by The New York Times, indicates that the percentage of Americans under 35 with credit card debt has fallen to its lowest level since 1989. The headline for the story indicates that perhaps these Millennials have been “spooked” by credit cards and the alarmingly high interest rates that they carry. And while these Millennials may run from credit card debt, they may be willing to run toward an opportunity to buy a home and the low interest rate mortgages that are available.
Far from the spooky credit card debt that previous generations have taken on, home mortgage loans with low interests can seem promising. With an option other than paying rent, many young professionals are literally buying into the home mortgage plan. With a couple of roommates to help make the loan payments, these opportunistic first time young home buyers may indeed become the next generation of commercial property investing success stories.
Having access to the money you need when you need it can be the turning point to a future in commercial real estate or rental properties. Are you ready to start?
