Investing money in real estate is a kind of investment which helps people to live without any financial issues in the tough economic world. But, it’s can’t able to buy a property with own money. So, real estate investors looking for the way to get money for property purchasing. At such a case, using hard money for real estate investment is the best choice for the investor.
Using Hard Money For Real Estate Investment:
When you approach for mortgage loan or traditional conventional, banks and mortgage loan provider requires you to have more amount as down payment. This is because they face a lot of problem with home loan borrowers. So, bank and mortgage loan provider require you to put from 30% to 50% of the amount as down payment.
In order to get a loan from private lenders, you need to have 30% to 50% of total money that you’re going to invest inreal estate in your hand that means you only need to pay 30% to 50% money on your investment and remaining money provided by the bank or lender.
For instance, if you’re going to investment $100,000 in the real estate, then you need to invest $3000 of your money on the investment. But, this leads you to high risk and at the same time, this is not at all a possible for real estate investor.
Many real estate investors look for a way that helps them to get rid of risk in investing their money. For some people, they don’t have that much money to invest on the property. In this case, a non-traditional lender helps them and provides money with no risks that meanlenders offer a total amount that you need for buying a land.
So, you no need to invest your money on land. At the same time, it is not easy to get a loan from bank or mortgage lenders, because they check all details of the property and your credit card check. If you cross all those procedures also they take1 or 2 months to transfer money.
But, this is not in the case of hard money loan, where lenders don’t check your documents and won’t ask you to keep balanced credit card check for security.
Security of Hard Money Loan:
Instead of checking your credit score for the security of loan amount, a non-traditional lender requires paying high-interest rate. The interest rate of hard money loan is very higher than the normal loan that you get from bank or mortgage lender.
In the hard money loan, lenders ask you to pay 5 points while borrowing money and return back full amount along that 5 point.
For example, if you want $100,000 for real estate investment, then you need to pay 5% of $100,000 while borrowing itself. And, when you return the total amount you need to give $100,000. Thus, the interest is high, but there is no other way for you to buy real estate right!! So, hard money for real estate helps you to buy property at a time when you want.