When To Use A Hard Money Loan For Flipping Houses

This one goes out to all my flippers. Are you tired of trying to get a conventional loan for your flipping projects? Have you ever considered using hard money? Do you even know what a hard money loan is? Don't worry, I've got you covered. Hard money, just like any tool, can help or harm you depending on how you use it. Let's go over on when you should be thinking about using hard money for your next flip. Hi, I'm Joe Homs, and I have over 40 years of experience as a broker, mentor, and investor, and I want you to subscribe So that you never miss a video. Hard money loans are usually used when you need to close on a property quickly. It is very important that you educate yourself about hard money loans, but a hard money loan is a basically a private loan. It could be a private lender, or it could be a company that acquires money through private lenders to give you a hard money loan. They close quickly because they're not qualifying you, they're qualifying the property. If the property qualifies and their underwriting standards, they will give you a loan on that property. If you have poor credit or even a limited credit history, it's not a big hurdle. Again, they're going to qualify the property to make sure that the value that you're purchasing it at is there and what the estimated rehab is going to be. And then they're going to do their own after-repair value estimate. If there's enough room there to pay them back and make you a profit, they're going to give you a loan. So credit score is not a big factor in their minds. Hard money loans are a great option for short-term projects, short-term being defined as 3 to 6 months or less. When you start getting into that 7th and 8th and 9th month, you're really kind of working for the hard money lender at that point. So you want to make sure that you can get in and out of these properties in that 3 to 6 month timeframe to make sure that you're not going to lose any money to that hard money lender. Hope you're getting value out of these videos. All I ask in return is that you hit that like button. If you need more flexibility with your loan terms or even rates, hard money may be your option. Hard money will determine how experienced you are. So if you have less than 10 flips, you're probably going to be paying around 10%, maybe 1 or 2 points. If you have 10 or more flips, then you're in a better negotiating position because they know that you know what you're doing at that point in time, you may get interest rates down as low as 7% and a half a point. And that's because they know that people that have flipped 10 or more are going to continue to come back to them and they can make more loans to you. If you're an experienced flipper, it can actually help you scale. And what I mean by that is, let's say you have $1 million and you want to buy one property. There goes the million dollars. If you are working with a hard money lender and they're wanting 20% down, that gives you the ability to buy 5 properties with the same million dollars that you just put down. So that gives you the ability to scale to the point where you're purchasing properties, you're rehabbing them, you're closing on them, and then putting all that money back in and buying more and continuing that process. Through the year. Hopefully this video has given you some insight into when you should use a hard money loan for flipping property. Remember, a hard money loan may not be the best choice for each and every property that you buy, but it can be a valuable tool in your flipping arsenal. If you have any questions or comments, leave them down below. If you like flipping videos, click on this video right here. Feel free to book some time with me One-on-one. Because as always, I'm always here to help.