subject: Rehabbing And Private Money Real Estate Loans [print this page] Rehabbing is whole lot easier with private money real estate loans. Common people perceive these loans as reserved for the desperate but wise investors know better. They know that despite the high interest, this financial method is the best way to fund your real estate investing business, especially rehab projects. In case you are an investor and you chose to folly naysayers, heres what youll be missing.
Rehabbing as a business
This real estate investing method basically revolves on ugly houses. What rehabbers do is they scour nice neighborhoods for these neglected properties who owners are usually very motivated to dispose of the house. The ugly state of the property indicates that the owner is in some sort of financial problem. The owner then believes that to be able to break away from his problems, he simply needs to sell the house. But with as it is, selling an ugly property will be difficult. Home buyers want a home thats ready for occupancy, not one thats ready to be torn down.
But because investors have realized the profitability of this business, the competition for cheap homes has become stiffer. Because of this, the deal usually goes to the investor who can purchase the property the soonest. Because of that, rehabbers often use private money real estate loans and not loans from traditional lenders like banks, which take at least 30 days to process applications.
Private money financing
Also known as hard money, private money loans are processed in a shorter time because investors understand the dilemma borrowers are in. If the borrower loses the deal, then he wouldnt need the loan. Without the loan, the lender will not earn an interest and profit. But apart from its speed, borrowers use private money real estate loans when doing rehabs because they fit this business set-up.
When you fix and flip a property, you will need money to buy a house and repair it. Traditional lenders will only extend assistance for buying a cheap house. Private money lenders, on the other hand, can provide a portion of the ARV, or after repair value of the cheap property. The ARV is considered the value of the house in good condition, and is therefore bigger the value of the house in its ugly state.
If you get 70% of the ARV, thats usually enough for all of your rehab expenses.
Starting to see why hard money is perfect for fixing and flipping properties? Go to RehabHardMoney.com right now and see this all fits into place.
