Uses of hard money loans

    by Aditi Bansal

Updated on Donnerstag, 27. April 2017

If you’re looking to tap into the growing real estate market for your personal financial interests, but your credit score is entangling your efforts, commercial hard money loans could be your best option. Compare rates from various lenders to find the best terms and rates.

tags  #Hard Money Loans  #Cash Out Refinancing #


With the real estate market expanding by leaps and bounds every single year, many real estate investors are keen to get their portion of the market share. Property prices are on the rise, hence savvy investors can buy low, and sell high to make a good profit.

However, just because investment opportunities are available doesn’t mean finances are easy to come by. Banks are tightening their lending regimes, and not many real estate investors can qualify for qualify for huge amounts of loans. Your credit score needs to be excellent for your application to be considered. The financial collapse that sparked the global recession seems to have hit the real estate industry hard, but as the economy picks up, banks are reluctant to dish out money to investors with poor credit records.

That’s why many people are now considering commercial hard money loans for real estate development. Here are the common uses of hard money loans:

Bridging Loans

Bridge loans refer to temporary loans that investors use to buy, build, or improve a home or commercial property. It offers small businesses a short-term capital to utilize for renovating a property as you work to find occupants or establish your business or even sell the property after renovation. Hard money bridge loans can navigate the strenuous requirements by conventional lenders. The fast access to funds and quicker approval process enables the investor to keep up with the dynamic market trends.

Funds for Fix and Flip 

Real estate investors use fix-and-flip loans to rehabilitate family homes and later resell at a good appraisal value. Commercial hard money loans provide a reliable source of finances for flip and flip projects hence keeping the cost of renovation low and enjoying maximum appreciation in property values.

Provide Cash Out Refinancing

Cash Out Refinance loans are used by investors to refinance their existing mortgage loans for a higher amount. The difference between the original loan and the cash out refinance is then utilized to pay for rehabilitation work, or home improvement of a distresses property. You can also use the money to cover capital expenditures and equipment costs.

Buy and Hold Finances

Buy and Hold alternatives allow investors to extend the loan duration and reduce the loan's principal amount. You can direct a portion of your payment to cover the initial loan amount instead of just paying monthly interests. Even bridge loans can be extended using buy and hold financing.

Purchasing Distressed Properties

Some investors are looking to buy distressed properties, renovate them to top notch conditions, and sell them at improved prices. Banks and other financial institutions always repossess properties whose owners have defaulted loan payments, and they’re looking to sell them quickly to recover their money. Distressed property loans provide a quick means of acquiring the required cash to grab such opportunities.

Financing Ground Up Construction

Ground up constructions are much more complex that fix-and-flip projects or residential rehabilitations. Such projects are suited for highly experienced builders or real estate investors. Have a thorough documentation of the budget plan and contractor qualifications to ensure that the money will accomplish the project. Verify the authenticity of contracts signed with architects, engineers, and contractors and ensure that the building permits and all necessary authorizations are acquired.

This page has a focus on Hard Money Loans, Cash Out Refinancing was shared by Aditi Bansal.

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