Investing in real properties is never a bad deal, you can always be certain that the value of your real property is going to appreciate over the years especially in New York. There are a lot of real properties that you can purchase at low prices on auctions and indirect sellers especially if the property needs rehab.
However, banks usually do not fund this type of purchase and even if they do, the loans in banks usually take two to three months for the funds to be released. This is where New York hard money loans come in. Hard money loans are loans offered by money lenders for investment purposes and not for residential properties.
The process usually takes two to three days and in emergency situations, funding can be released in a day. Moreover, the loaned amount will be directly used to pay for the property up to 85% of the total value. While money lenders are not banks, the interest rates for this type of loan could also be higher than what is being offered by banks.
Also, the mortgage period is much shorter which s about two to three years only. Here are a few things you should know if you are looking into making a hard money loan.
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What Is New York Hard Money Loans?
New York Hard Money Loans are loans that can finance real property investments for up to $2 Million without the overlong process in banks. It is fast and efficient and can even be availed of by people who have bad credit scores, or for properties that banks would not touch like if it does not have a Certificate of Occupancy.
These loans are very similar to the one’s banks offer but the requirements and criteria for evaluating the loan application are quite less in hard money loans, moreover, the application and release process takes only days as opposed to months in banks. The loans can be used to acquire properties that are on auction and needs to be paid upfront. However, these loans are only for commercial purposes, it needs to be used for investment in real properties. You cannot take out a loan and then live in the said building or property.
Also, the interest rate for hard money loans is a bit higher than those offered in banks. Although the loans are quite substantial, the amount released will really depend on the property and the market value and rate of appreciation and not on the borrower.
The money lenders will look into the potentials of the property to make money and devise a plan to help the borrower make money out of the property so that the borrowers can pay off their loans. The loans can also be used to buy a decrepit property and then rehabilitate it and sell it for a much higher price, which ensures that the borrower can make a profit to pay off the lender.
What Does New York Hard Money Loans Look For?
Sometimes with real property, it can happen at an instant, one property suddenly becomes available, or finally, you raised the capital to a business venture but you do not have space, or sometimes a property will sell very cheap, but now you do not have funds to acquire it. So, what it is that New York Hard Money Loans look for to increase your chances of getting a loan?
The first one should be what are the things that make you less appealing to the moneylender? Like, these loans are not for individuals, it has to be applied for an LLC since it is considered a commercial loan. However, this should not be a problem since it is very easy to apply for an LLC and it only needs at least one member.
Next is that since the loan is used to cover the value of the property, the property should not be for residential purposes but rather it should have the potential to be rented or sold, so as to make money for the borrower. The money lenders will not fund the property if it does not meet the said requirements.
Then, make sure that the property value is selling below the market price as this is always an advantage. Properties that need to be rehab are also one of the things money lenders like to fund, so if you can find one then this would also be a great option.
Where Can You Get a New York Hard Money Loan?
Getting a New York Hard Money Loan is not that complicated, once you have the property you want to invest in, either a fix and flip property where you buy low, rehab and sell for a higher price or buy a building or space that can be rented out then all you need is to find a local hard money lender. It is best to work with a local establishment that knows the area and offers assistance on what needs to be done in order to make that investment work.
Make sure to find a money lender that operates in the area where the property you want to purchase is located in as they would be knowledgeable about the area and the potential for profit of the property and also the rental laws and taxes in the area.
There are many hard money lenders, but the best one would be the one that can give you a no-frills experience, just honest and straightforward, and one that can guide you on what to do with the property you purchased and how to be able to see a profit from it.
For some, making a New York hard money loan may be intimidating, but when you get the hang of it, you can actually do more and earn more with a real property investment like fix and flip. There is actually a huge potential for this market, especially in New York where properties are quite expensive and limited. You just have to know that every investment involves risks, but with the help of a hard money lender, the risks are a bit lower.
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