When it comes to investing in real estate, hard money loans are part of the Real Estate Investment Basics. Hard money lenders have been around for a long time and continue to be a viable option for different kinds of real estate investments. Traditional financing can be difficult to obtain because of strict regulations and crowd funding can take too long to put in place. If you are flipping property, hard money is your best option.
For individuals who are new to real estate investing, hard money loans are the principal form of financing. Hard money and private money loans are ideal for novice house flippers because hard money lenders care more about the potential value of the property than the borrowers financial qualifications. Here’s what you should know.
Real Estate Investment Basics: Luxury real estate
In many cases, luxury real estate is a much better even than other cheaper real estate. You can flip a small home in the same way that you would flip a luxury home but the only difference is the profit potential.
According to U.S. News, “In 2014, the S&P/Case-Shiller National Home Price Index for single-family dwellings rose roughly 4.5 percent. But Frank Symons, executive vice president and chief operating officer for the western region of Sotheby’s International Realty, reports that luxury homes appreciated 8 percent that same year. He cites Sotheby’s Global Luxury Residential Real Estate Report for 2015.”
Real Estate Investment Basics: Know your market well
If you pay market price for an investment property, you probably won’t see high profits because appreciation when it comes to real estate isn’t going to change in a short period of time. Look for deals that are under-priced and determine how much it will cost for you to get the price up to see how much you can sell it for. You have to do your research because you won’t know which deals are under-priced if you don’t have a good sense of how properties are priced.
Real Estate Investment Basics: House-Flipping
Hard money lenders have been around for a long time and continue to be a viable option for house flipping today. Traditional financing can be difficult to obtain because of strict regulations and crowd funding can take too long to put in place. If you are flipping property, hard money is your best option.
In this form of investment, the goal is to get in short-term and sell properties at a markup which is why hard money loans are great for this kind of investment. While many investors may make money this way, it really depends on the neighborhood you buy and sell in. Don’t forget to figure out all of the hidden costs associated with renovating the property that can decrease its net return.