If you’re a real estate investor or someone who’s having a hard time getting conventional financing, you might be considering a hard money loan. But what properties can you use a hard money loan to buy?
Here’s what you need to know.
What Properties Can You Use a Hard Money Loan to Buy?
When you take out a hard money loan, you can do so for just about any type of property available. You might borrow for:
- A single-family residential house
- A multi-family residential building
- Commercial properties
- Industrial properties
Some hard money lenders don’t lend for certain types of properties, and some specialize in certain types of properties. It’s usually a good idea to get quotes from a couple of hard money lenders – or at least call and find out what types of loans they can fund – before you make a commitment to any.
The amount of money a hard money lender will allow you to borrow depends on the value of the property. That’s because the loan is secured against the property – the property is collateral. Your interest rate will vary, too, based on several factors (but primarily on the amount of risk the lender will have to assume by letting you borrow the money).
The lender you choose will consider your plan for the property (such as whether you intend to fix it up and flip it or you’re going to use it as an investment property) before quoting you on a loan, too.
Do You Need a Hard Money Loan?
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