One thing about real estate investors that you may not know about is the fact that they are relying mostly on the properties they purchase in the generation of their income. Albeit the fact that a strong buyer’s market greatly favors them, the truth of the matter is that it often takes a great deal of financial knowledge to navigate real estate investments in a successful manner. If you are wondering why they have to be knowledgeable financially with regards to handling their real estate investments, well that is because most of the time, conventional financing like loans intended for buying residential homes are not available for them to get. If they are in need for funds for their investment, what they usually do is that they rely on private money lenders, which are known as well as hard money lenders, to finance the purchases that they have.
Since we mentioned about hard money lenders, you have to know as well about hard money loans which is what they are offering to real estate investors and hard money loans are designed to meet all the needs they have, especially since they cannot avail the traditional financing. In most cases, both banks and other financial lending institutions out there are not financing real estate purchases and this is because these purchases do not meet the severe criteria they have regarding the types of properties they will finance. There goes the fact as well that they cannot get banks or any other lending institutions to finance they because of their past foreclosure issues or credit problems.
And because they do not qualify for conventional financing or banks and other lending institutions are not backing them up, what these real estate investors and buyers can do is to rely on hard money loans. Prior to you applying for these loans, you have to know and understanding first the different options available that you can choose from.
The first hard money loan option that we want you to know of is the fix and flip loan. Based on its name, fix and flip loan is a loan offered to real estate buyers who want to purchase a property, rehabilitate the property and sell it afterwards for a profit. Almost all houses that are financed by the fix and flop loans are those that FHA financing are not accepting due to the amount of work that needs to be done. Most of the hard money loans that made for fix and flop properties are also possible to be used in financing both the purchase price and the cost of repairs.
We have here next is the bridge loans and speaking of bridge loan, they are the type of hard money loan that can be used by business owners to cover the gaps between the operating expenses they have and their available funds.