If you’re buying an investment property, you have a couple of options for funding – and one of them is a hard money loan. Hard money loans are different from conventional loans, which require you to have a good enough credit history, a borrowing history and a certain debt-to-income ratio.
So should you apply for a conventional loan to buy an investment property?
Here’s what you need to know.
Should You Apply for a Conventional Loan on an Investment Property?
A lot of investors choose to use hard money instead of conventional loans. It’s not that there’s anything wrong with conventional loans – it’s just that they’re not particularly suited toward investing (especially house-flipping, because you typically need money quickly to snap up a great deal).
Conventional loans take a long time to wrap up – sometimes months.
Hard money loans can be extremely quick, which can be tremendously helpful if you’re trying to out-bid someone else on a property you really want to buy.
Short-Term Hard Money Loans
Hard money loans are usually short-term loans, and they’re based on collateral – they’re secured because the property is the collateral. These loans typically last from one to five years.
In many cases, they’re more flexible than traditional loans. Some people feel that hard money loans are easier to get – especially because they’re secured by the property. Unlike conventional loans, you can borrow a hard money loan based on how much the property will be worth once you’ve repaired it; in a conventional loan, the lender typically lends you only the value of the property right now.
Are You Looking for a Hard Money Loan to Flip a House or Buy a Rental Property?
Paces Funding is a hard money lender offering hard money loans to purchase and renovate non-owner occupied residential and commercial properties throughout the Atlanta, Nashville, Florida, or the North and South Carolina metropolitan areas. Our application process for hard money loans is easy. Just fill out this very simple online form and you will be contacted shortly. Unlike other lenders, the window between applying and funding is very small. We have funded properties in as a little as one day, but typically funding hard money loans takes about 7 to 10 days.
Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of the collateral—and if you use the loan for renovation or construction, the loan amount can be based on the collateral’s improved value.