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Hard Money Loans in Los Angeles county


This is an incredibly exciting time to buy in Los Angeles. Established neighborhoods are steadily increasing in value and emerging areas are finding their footing. Homeowners are seeing prices ascend to levels unseen before the crash of 2008. And the developer’s shovel is in constant motion. But the unfortunate side effect is that prices are now beyond the reach of most buyers.

Fringe neighborhoods of yester-year such as Echo Park, East Hollywood, Koreatown, West Adams, downtown and others have now become some of the hottest markets in town. High-rise condominiums and spectacular towers spike the city while construction is going on everywhere.

Downtown, they’re building the Wilshire Tower, tallest building west of the Mississippi which will offer about 400,000 square feet of office space. Over on 820 S. Olive St. by Vancouver, construction engineers are rearing a 50-story tower that is said to be the tallest residential project yet. A few miles away, in the South Park district, Chinese developer Greenland USA is erecting his $1 billion mixed-use project which includes a 54-story condominium tower. Other high-rise residential projects include Beijing-based developer Oceanwide’s $1 billion mixed-use Fig Central, and another project by Onni Group at 1200 S. Flower St.

Visit Miracle Mile and you’ll see Rick Caruso’s megalith of a 19-story residential tower that will salute Beverly Hills, while in Century City you’ll shade your eyes from a $300 million, 39-story skyscraper that was designed by Miami developer Crescent Heights. Finally, end your visit with the Townscape Partner’s 8150 Crescent Heights that is created by none else than the uber-famous architect, Frank Gehry.

Reasons for the Boom

Analysts suggest that this construction boom is rooted in various issues. Firstly, unemployment is improving so people are spending more. Secondly, in recent years, downtown LA has become more vibrant attracting more opportunities in construction. Then again, over the last 15 years, demographics have changed with a younger population moving downtown. And, finally (although not exclusively), foreign investment is impelling construction with outsiders, largely from Korea, China, Canada and Germany, investing in the area.

And then there’s the metro (Expo Line Phase 2) which is due to be completed next year and is projected to have 64,000 boarding passengers by 2030. The project enhances Los Angeles – or at least downtown Los Angeles, because it relieves congestion and improves traffic.

Regardless. Downtown, according to insiders, has over 60 percent of properties that are owned by the top seven landlords and they have the ability to control rental rates. All over, most rates are above market price, and many other property prices, throughout the city, are intimidating if not exorbitant. So if you live in Los Angeles and don’t have the money but want to buy – you can get a loan. But fewer banks acquiesce. Particularly if your credit is poor.

Unfortunately, it’s not only office prices – or prices of Class A spaces – that are soaring. MarketWatch reports that home prices are way beyond the reach of most buyers.

Writes real-estate analyst Edward Fitz in MarketWatch, October 2015:

The median sales price of single-family homes in the second quarter in greater Los Angeles (the Westside, Downtown and Northeast) reached a record high of $1,371,500, and for condominiums it hit $675,000, making the across-the-board price for homes a gasp-inducing $938,000.

These sky-rocketing costs make it less easy for you to have the kind of home that you wish.

Early October of this year, the California Association of Realtors (CAR) distributed a report that mentioned tyrannical prices, housing shortage, and imminent interest rates that may worsen the situation.

Says Leslie Appleton-Young, CAR’s association’s vice president and chief economist:

“People want real estate, but nobody wants to overpay for it. The feeling right now is that things have gotten a little out of hand” – which is why people who have been unable to land loans from the banks may have no alternative but to flock to hard money lenders. It is a hard money lending market!

The Short Of It Is This…

People who want to invest – or simply buy themselves a home to live in – may have a hard time shelling out the money. Banks and credit unions dissuade them since many banks have acquired bad real estate loans because of loose lending practices of recent years. Banks have set strict criteria and they scrutinize your credit background all the more closely. Properties also usually need work which makes banks or credit unions even more reluctant to loan. For this reason, real estate investors have limited financing options. But hard money lenders – who look at the assets not the credit – can serve as alternatives.

In short, if you are considering borrowing, you may want to give hard money lenders a look because they are faster than banks and credit unions and less concerned about your credit. There are no appraisals or other costs and no shenanigans from loan committees or from underwriting processes. All you will have to provide is verification of your honesty.

And your ability to get a speedy loan, incidentally, hikes your advantage when it comes to buying. Given the wildness of today’s Los Angles market, you may well find yourself bidding in a competing environment. Other investors may have to go with the slow conventional financing, but you – with your ready-at-hand money – are more likely to get a seller’s attention and to set your offer apart from the rest of the buyers.

True, the high interest prices may dissuade you but given the alternative of being unable to land the standard loan, you may well find hard money loans worth the risk.

What do you think?

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