Hard money loans are secured lending that primarily caters to the real estate investment industry. Hard money lenders care more about the property’s projected after-repair value than its present market value.
According to Hard Money Bankers’ Principal Senior Underwriter Jason Balin, this benefits borrowers since it provides unprecedented leverage for buy-and-flip and rehab-and-rent investments.
Hard Money Bankers provides a comprehensive range of hard money lending in Washington D.C., Pennsylvania, Virginia, New Jersey, and Delaware using its capital.
Facts to Know About Money Lending in D.C.
Hard Money Lenders in D.C. Are Legitimate Business Owners
Like a traditional bank, they make their money through loans. Typically, these businesses have a clear organizational structure and investment philosophy and are run as limited liability companies, S corporations, or sole proprietorships.
This is quite similar to how banks function, with the notable exception that private lenders are not subject to the same levels of red tape or federal regulations.
Hard Money Lenders in D.C. Are Good for Longer Rehabilitation Projects
Renovation projects with a longer time frame can benefit significantly from hard money loans. The standard period for a hard money loan is between six months and a year. Still, more extended periods (up to two or three years) may be available under the right conditions.
While you should have an exit plan (or two) in place before filing for a hard money loan, it’s possible to receive a six-month or a year-long extension if you keep your lender updated on your situation.
Loan Is Secure by a Hard Asset
Hard lending is an excellent option if you’re an investor in commercial real estate. In many ways, this is quite similar to bank financing, with the exception that the private lender can decide on factors other than the borrower’s creditworthiness, such as the property’s value.
Hard Lending is Not about 100% Financing
Hard money is not a hundred percent financing. Private lenders prefer customers with some equity in the loan because of the high risk involved. They’re usually wary of lending to someone who can abandon the loan at the first indication of problems. However, you should be skeptical of any lender who offers you terms that seem too good to be true, such as 100% financing.
Not Everyone Gets Approved
Hard money lenders may be flexible, but they still have rules and regulations they must adhere to when issuing loans. In other words, they don’t just hand out blank checks to any interested new investors. It’s important to remember that every hard money lender has their own unique set of requirements for lending money.
Contrary to popular belief, hard money lenders function similarly to local banks. They can zero in on whatever they have determined to be of utmost importance. Some lenders want a certain loan-to-value ratio, while others look closely at tax records and are merely interested in proof that you can make your payments.
Even though your proposal appears ideal, a lender may not be interested if it does not satisfy their individual needs.