Why Residential Hard Money Lenders Don’t Like Owner-Occupied Deals

An owner occupied deal is one where the individual who possesses the property is living there. Many commercial hard money lenders are not prepared to lend money for this type of project. That is the principal problem which is as a result of the guidelines and principles for owner- occupied properties.

last updated Wednesday, May 17, 2023
#Hard Money Lenders #Owner Occupied Deals

John Burson     Subscribe
Why Residential Hard Money Lenders Don’t Like Owner-Occupied Deals


Owner-Occupied Deals

Commercial hard money lenders have to evade many loops and rules because they loan money to a borrower residing on a particular property. Sometimes foreclosures are put on hold because the government doesn't want to keep the homeowners out of their homes. The government tries to keep the possessor in the property longer regardless of whether they have failed to pay or have difficulties.

Because the government can interfere with the deals, many residential hard money lenders are not likely to get involved in this type of deal. If you are a commercial hard money lender and you are doing finances for owner-occupied, and there are some properties put on foreclosure, you will be held responsible for all those circumstances. However, some commercial hard money lenders are eyeing to purchase single houses as an investment property type. They, therefore, will not be ready to buy owner-occupied properties.

Types of residential hard money lenders.

  • A long-term lender is a lender that will be willing to lend for one to five years or even more.
  • The short-term lender is the lender who will be ready to invest for only six months.

Long-term commercial hard money lenders are harder to find than short-term commercial hard money lenders. The objective of many borrowers is to buy a property, fix it up and resell it for a profit. The residential hard money loan can also capitalize on an opportunity quickly.

Many hard money lenders dislike owner-occupied deals because of the legal responsibility, and no one likes to kick somebody out of their house. The hard commercial hard money lenders also do business and want to get profits. An owner-occupied deal is likely to have many risks; therefore, commercial hard money lenders will try to evade it as possible. However, some hard money lenders handle residential hard money loans. Many of them classify just like a single-family houses. Some classify single-family homes as duplexes.

You will have an excellent time in a single-family house because of the short terms; for instance, fixing up and reselling is much easier to estimate the property's price. It is also easy to renovate. Investing in single-family houses is good because everything needs to be done just once.


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