Are You Interested in Entering the Rental Property Business?
When you and your wife decided to walk away from your traditional full time jobs, it was a little bit scary. You knew, however, that you were enjoying the success you had buying homes and turning them into rental properties. And while that third property that you purchased required more renovation lending than you anticipated, the place turned out great. The new renters are thrilled and because of their excitement for the property they are committed to keeping it in top shape.
Five years later, both you and your wife enjoy the new normal and are especially happy with the opportunity to set your own schedules. It is difficult work and takes careful attention to needed renovation lending, but the fact that you now have five units rented out is an indicator that your approach is working. Doubling the number of houses you would have available to renters was your dream, but you would not have guessed that your dream would happen so quickly.
Hard Money Mortgage Lenders Help Investors Finance Quick Property Turn Arounds
Property investors often take two different kinds of approaches: a quick flip or a long term rental property. For the investors who want to buy, fix, and sell a property, the best option is often getting secured short term loans with the property itself as the collateral. One type of loan, a hard money loan, is known for offering higher interest rates, typically 15%, 18%, or higher, and lower loan to value ratios. These loans come with higher interest rates, but the goal is to complete a quick renovation and to sell the property. This kind of renovation lending can be challenging because the buyers do not always know all of the needs a property will have when they first make the purchase.
With a knowledgeable team of contractors and construction workers, however, even the largest projects can be completed in a timely manner. By paying the higher interest rates on this kind of renovation financing, the money can be available very quickly. The goal, of course, is to complete the necessary fixes and changes and resale the property before having to make many of the high interest payments. Hard money loans for real estate investors require some research, but the serve a real purpose for the right kind of investor.
Other property investors do not plan on reselling the property that they buy. Instead, this group looks for renovation lending with lower interest rates and hope to rent the remodeled property and use those rent collections to make the loan payments. Over time, the property investor gains equity in their property and can then use that equity toward a loan on another property. In this way, property managers can grow their investments but still control the amount of money they need to borrow.
Although the hard money loans are often sought after for their quick turnaround, the usual seven to 14 day process is not the ideal lending opportunity for most buyers.