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Using Hard Money Mortgages to Seize Opportunity

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Hard money mortgages can be a real estate investor’s best friend during periods where banks refuse to

lend money. We are currently enduring one of those periods, leading many investors to say, “I need a hard money loan now!”

The marketplace is red-hot at the moment, as speculators continue to seek out distressed properties. Priced to move, these properties are often in foreclosure, meaning that the seller is incredibly motivated. This secret is how many real estate moguls develop their massive portfolios. By acquiring properties that are priced to move, investors can capitalize on the recent real estate bubble, and expand their own holdings as the market continues to rise into the coming decade.

But, all of this is easier said than done, right? Those interested in acquiring properties should become well acquainted with secured lending, and how it can impact their own investment opportunities. Consider these tips as a great way to find and acquire properties for far below their market price:

(1) Identifying Opportunity

Distressed properties are defined as those that are currently in foreclosure. They often require a bit of “fixing up”, so investors interested in such properties are advised to have the necessary capital back to facilitate the repairs. However, because of their listing status, these properties can often be had at prices that are below the market’s valuation. This is where hard money mortgages play a significant role.

Because these secured loans will often pay around 70% of the property’s market value, those with a keen eye for opportunity can leverage them to cover the cost of acquisition. With the necessary repairs underway, the property can then be either rented to a tenant (commercial or residential) or “flipped” for a profit. The capital investors get their profits on the interest gained through the loan, and the buyer enjoys the remaining profits from the property’s sale (or lease). When it comes to distressed properties, being able to identify a great opportunity is critical.

(2) Initiating the Process

Once a property has been discovered, the next step is securing financing. Contacting a lender is as simple as researching the organization, then giving them a call. The property details, coupled with “I need a hard money loan NOW!” should do the trick. Though, this doesn’t guarantee that you’ll have the financing. We’re close – but not home yet.

From this point, the lender will schedule an appraisal of the property. Because it will act as collateral against the loan itself, it is important that they have all relevant information before entering into a contract with the buyer. After all, many investors likely came together to offer up the capital, and the firm must protect their interests, too!

(3) Moving Forward

Once the valuation is completed, your broker can brief you on the remaining elements of the process.
Pay close attention to the interest rate and repayment period!

Hard money mortgages are a great way to generate income during the real estate recovery. Those who understand the incredible opportunity presented by a recovering property market are leveraging hard money loans to the fullest extent – are you the next real estate mogul?

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