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It's easy to qualify for a hard money loan for rental property when you contact Tower Fund Capital at 646-564-3499. Let us know about the property you're looking at and we'll assist you in applying for a loan with a fast approval and quick closing time. Our loan terms extend up to 24 months for rental properties.
Investing in real estate is a lucrative way to build wealth and is an effective way to diversify your portfolio. Real estate investment trusts (REITs) and real estate crowdfunding allow you to make a passive investment, but some investors may prefer to own property outright.
If you are not comfortable setting aside a significant amount of cash upfront to invest in property, Hard money loans for real estate investments is an answer to the problem.
While this type of loan has advantages over traditional financing, there are potential disadvantages. A certain amount of equity cushion is still required.
How Hard Money Loans Work
Hard money loans, sometimes referred to as bridge loans, are short-term lending instruments that non-traditional lenders can use to finance an investment project.
This type of loan is often a tool for homeowners or real estate developers who want to renovate or develop a property and then sell it for a profit. Private lenders issue cash loans instead of conventional financial institutions such as banks.
Unlike traditional bank loans, the creditworthiness of the borrower does not equate to the ability to obtain cash financing. Instead, hard money lenders use the value of the property themselves to decide whether to make the loan.
Lenders focus specifically on the "after repair value" or ARV, which is an estimate of the value of the property once the remodeling or development phase has been completed.
The cons
Cash loans are not a perfect financing solution. There are two main disadvantages to consider:
Costs. Cash loans are convenient, but investors pay a price for borrowing this way. The rate can be as much as 10 percentage points higher than normal borrowing. Start-up fees, loan servicing fees and closing costs are likely to cost investors more.
Shorter amortization period. The purpose of a cash loan is to allow a real estate investor to prepare to go to market as quickly as possible.
As a result, these loans have much shorter amortization periods than traditional mortgage loans. When choosing a cash lender, it is important to have a clear idea of how soon the property will become profitable to ensure that you will be able to repay the loan in a timely manner.
The Benefits
There are a number of good reasons to consider taking out a cash loan instead of a regular bank mortgage. The main benefits that this loan option offers investors are:
Convenience. With a cash loan, you can get a hard money loan fast. This is important if you are financing a large-scale development project and cannot afford a deviation from the schedule until completion.
Flexible terms. Because private lenders offer cash loans, investors may have more room to negotiate loan terms. You may be able to tailor the repayment schedule to your needs or receive certain fees, such as the origination fee, reduced or eliminated during the underwriting process.
Get a hard money loan with one of the top mortgage lenders
Tower Fund Capital is a private lender made up of a group of advisors and financiers with many years of experience in the real estate world.
The Tower Fund Capital team bases its work philosophy on two fundamental pillars: transparency and security. This has made it one of the best private lenders in the real estate finance sector.
If you are interested in learning about their services, you can visit the firm's website and apply for an instant appointment.