Hard money loans are offered to real estate investors that can find good properties around Las Vegas. These loans are easier and are more efficient compared to normal bank financing. This kind of loan is the best option if you want to get the money you could use for investment and for getting a higher profit.
Hard money loans requirements:
Of course, all loans require a collateral and in case of hard money loans or most commonly known as private money loans, the lender needs a property as a collateral. Thus, it’s a must to look for the best Las Vegas property and show them that you can resell it in a very high price with huge profit. In that way, you are also letting them believe that you will be eligible to pay the loan and all the interests when the time comes.
Unlike bank financing, private money loans get approved easier and with almost hassle-free processes. However, you still need to present them documents to show your credibility to pay the loan you’ll make. Even if your credit score will not have much bearing, it’s essential to keep it handy whenever they ask for it. You should also present them statements of accounts to give them an idea on how you can pay them back. A good property as a collateral will do the trick but supporting documents will make the process much easier.
- Budget plan
Your hard money loan will be approved in a much shorter time if you already have your complete budget plan with the property you would invest in. With that being said, it will be helpful if you can have price estimates ready including the price of the property, the amount you must allot for the repairs and improvements then the estimated amount of money you can get after reselling the property. Giving them the whole picture of your profits will help you convinced them to give you your hard money loan.
With the budget plan, price estimates from contractors will help you. So make sure that when you are eyeing for a property, you’ll pay a visit with your carpenter, construction contractor, foundation man, HVAC contractor and more to give you professional estimates that will help you with the final budget.
How to avoid disapproved hard money loans?
We have put it on repeat that hard money loans are easier to get compared to normal bank financing. Even so, some still get disapproved for some reasons that we are going to find out. We have collected some tips below that will help you get closer to your loans without any disapproval from the lender.
- Do not buy a property from an auction or a courthouse.
This is very important because hard money loans only look forward in getting paid through your collateral and that’s the property you would buy. In that case, those properties in auctions are not good collaterals at all. Private lenders hate it when they don’t have the title insurance and with properties I auctions, the trustee’s deeds can only be transferred after 1 to 3 weeks of the closed purchase deal. So if you take a look at it, your private lender will not have the complete hold of your collateral until you paid it completely which has no assurance. That is why real estate Las Vegas flipping houses investors buying properties in the courthouses were disapproved right away.
- No room for price mistakes
Private investors don’t approve hard money loans not because of a high-priced property but because of the mistakes committed when estimating the total market price of the house. Some real estate have mistakes in estimating the budget they need in improving the property including the repairs, improving fixtures, commissions, loan interests and all. As a result, they will just found out in the later part that they won’t make any money with the property they acquire. They just wasted time and effort for a property that is priced and sold with no huge profit at all.
- Avoid property locations with high foreclosure cases.
In looking for a property, you are not just focusing on the good sides of the property itself because you should also consider the location where the property stands. Avoid those places with high foreclosure cases because it means that you’ll have difficulty in selling the property in a higher retail value. This means no profit for you and for your lender as well so the least they could do is to disapprove your hard money loan application. So when you spot a property and you think it’s good, consider the location first before doing your final decision.
- Don’t show lack of interest
Some private money lenders give approvals to those who show complete interest in getting the loans. The interests the borrowers portray will be a very big help for the private lenders to know and see that you are persistent in getting the money and paying it with interest on time. They can also see that you are willing to huge profits out of that money hence you can be capable of paying. So make sure that you are always ready to communicate with them, allot time with them and make your meetings as valuable as possible. Meet their demands and follow their instructions as much as possible. Build a good professional relationship with them and surely, you’ll both benefit with hard money loans.