Hard Money Lender Orange County (FL)

Hard money lenders serve as non-institutional, property-based financial solutions and are distinct from the lending techniques used by banks. Their approach to lending emphasizes the asset’s worth over the borrower’s credit profile. This shift in focus facilitates a more streamlined underwriting process, enabling these lenders to finalize loans within a week, far more rapidly than the banking norm. This capability is particularly beneficial for real estate investors who face strict timelines, such as auction-based foreclosure acquisitions. Hard money lenders also extend their services to properties that are typically less appealing to banks, including those awaiting a Certificate of Occupancy. Additionally, these lenders accommodate those with less than stellar credit or who are in the process of credit restoration, offering a chance at a loan despite a low FICO score. They can also be approached for refinancing purposes or to obtain cash from one’s property equity.

It’s crucial to understand that hard money lenders specialize in providing loans for investment real estate and do not extend mortgages for residential purposes. Properties funded by hard money lenders are designated for investment use and cannot serve as primary residences.

With hard money loans, borrowers enjoy the advantage of faster approval and funding compared to conventional bank mortgages, but with interest rates ranging from 9-12% due to the increased ease of obtaining these loans. Origination points tend to fall between 1 to 3 and are settled at closing. These loans typically have a short life cycle of one or two years and are disbursed in two main phases: the initial funding that covers between 65-85% of the property’s acquisition cost, and the renovation financing, which potentially covers 100% of refurbishment expenses. Note that renovation financing is only provided if there is a need, and the disbursement follows the completion of work stages. For instance, if the renovation budget is $50,000 and the borrower finishes $15,000 worth of renovation, the lender will release $15,000 and continue to do so in stages. To ensure the loan remains safe, hard money lenders cap the final total loan allocation at 65% of the property’s value post-renovation or the ARV.

Hard money financiers cater exclusively to LLCs, not individual borrowers, due to the commercial nature of these loans. Worry not, for you can easily establish your own LLC, even as its sole member.

These lenders evaluate a property’s present cost against its future value post-improvement, called ARV, to ensure repayment. A crucial aspect of the loan process is the property’s affordability in relation to the current market value. Additionally, if the loan includes repair work budget, lenders want assurances that the work stays on schedule. Before hard money loans are approved, it is pivotal that all legal issues with the property or the borrowing LLC are rectified.

Hard money lenders have a vested interest in profitable transactions, ensuring that the ARV encompasses all expenses plus a profit margin for their borrowers.

The following scenarios frequently call for a hard money loan:

• Ideal for “fix and flip” ventures to purchase and repair properties that banks decline, with an intent to sell to end buyers.
• Appropriate for renovating and renting out non-bankable properties, eventually refinancing through traditional banks once rental income is established.
• Beneficial for short-notice property purchases, such as foreclosures, where bank loan timescales don’t suffice.
• Useful for immediate refinancing against an existing property.
• Suitable for real estate acquisition under LLCs, circumventing typical bank restrictions.