If house rehabilitation sounds gratifying to you and you want to start your own real estate investment business with almost no capital, well this is the perfect time for you. With hard money loans, you can now start flipping houses in Las Vegas and start earning huge profits.
A hard money loan is a loan usually given to those real estate investors on a tight budget wanting to buy properties to repair, improve and resell for a much profitable price. This is a fast money to acquire properties that will not completely depend on the borrower’s credit score. As long as a borrower is credible in paying the loan then there will be no much problems. The property acquired is usually the collateral of private money loans and compared to normal bank financing, these loans come with higher interest rates.
How much is the interest of Hard money loans?
When talking about the interests of hard money loans, they are divided into two categories. The first one is the interest based on the purchase price of the property and the second one is based on appraisal value. The first category means that the interest you need to pay will be computed according to the purchase price of your property while the second category will depend the interest on the value of the property. The later one seems to be the best option, if you’ll ask me. It’s fairer and it will help you get a private money loan with no very high interest rates.
For example, the lender will loan you up to 70% of your appraised property’s value. In able to get this loan, you have to top it up with five points, $500 dollars for the closing points or the document fees and at 10% interest payable for 6 months. With these being said, you can assume that you will loan $150,000. They will loan you up to 70% and that’s exactly $105,000. In able to acquire this loan, you need to pay $5250 in points + $500 dollars for your escrow fees, document fees and notary stuff. And lastly, you have to pay an interest of $10,500 payable for 6 months or until the property was sold so that would be $1,750 a month. After few settlements and when both parties, the borrower and the lender have agreed upon certain loan agreements then the deal is made. You will then sign some documents and your money will be ready in a few days.
Hard money loans are good sources of money to invest in properties you can repair and resell. You just have to fully understand both the benefits and consequences of getting one so you can be completely eligible in paying and so you can pay the lender back with no problems at all.