In this video you will learn the following…
• Funding your Next Fix N Flip
• Hard Money Loans vs Traditional Bank Loans
• Flexible Lending Criteria and Options
And more!
Using a Hard Money Loan instead of a Traditional Bank Loan to Buy a Fix and Flip Property can Offer Several Advantages. Here are the Top Five Reasons:
1. Speed of Funding:
- Hard Money Loans: These loans are known for their quick approval and funding process, often within a few days. This speed can be crucial in competitive real estate markets where opportunities need to be seized quickly.
- Traditional Bank Loans: Banks typically have a lengthy approval process, including extensive paperwork and underwriting, which can take weeks or even months.
2. Flexible Terms:
- Hard Money Loans: Lenders are often more flexible in their terms and conditions. They focus more on the value of the property and the potential for profit rather than the borrower’s creditworthiness.
- Traditional Bank Loans: Banks have strict guidelines and criteria for approval, often requiring excellent credit scores and detailed financial documentation.
3. Less Stringent Requirements:
- Hard Money Loans: These loans are asset-based, meaning the loan is secured by the property itself. Lenders are more interested in the property’s value and the borrower’s ability to execute the project.
- Traditional Bank Loans: Banks require thorough background checks, credit checks, and proof of steady income, making it difficult for some borrowers to qualify.
4. Higher Loan Amounts Relative to Value:
- Hard Money Loans: Lenders may offer higher loan-to-value (LTV) ratios, sometimes up to 70-80% of the after-repair value (ARV) of the property. This can be beneficial for investors looking to leverage more capital for their projects.
- Traditional Bank Loans: Banks typically offer lower LTV ratios, and the amount you can borrow is often limited by your personal financial situation rather than the potential value of the property after repairs.
5. Short-Term Focus:
- Hard Money Loans: These loans are designed for short-term use, typically ranging from 6 months to a few years. This aligns well with the timelines of fix-and-flip projects, where the goal is to buy, renovate, and sell quickly.
- Traditional Bank Loans: Banks offer longer-term loans, which might not be as suitable for short-term investment strategies like fix-and-flip, as the terms and conditions are more aligned with long-term property ownership.
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