Real Estate Investors Use Bridge Loans Versus Bank Loans

The Banker's Fate in Lewis Carroll's The Hunting of the Snark (1876)

The Banker’s Fate in Lewis Carroll’s The Hunting of the Snark (1876)

Will the days of bank lending ever return to the years leading up to 2008? In those days, as the old saying goes, “If you could fog a mirror you could get a loan.” But for real estate investors who can’t wait around for banks to make ‘turtle-like’ lending decisions, bridge loans or hard money loans are their only source of real estate financing. Particularly during 2008 to 2010 when bank lending was virtually locked up, real estate investors had no other alternatives for financing other than bridge loans. But what is a bridge loan, you may ask?

A bridge loan is a non-bank loan from a private money source. Bridge loans are of short duration and typically come with higher interest rates than bank loans. And what kind of real estate will a bridge lender finance? Just about anything from raw land to commercial buildings. For many commercial real estate investors who have loans coming due this year or next year, bridge loans may be their only option for refinancing their properties.

If you haven’t looked into alternative sources of financing for your real estate this year, consider using bridge loans versus bank loans. A bridge loan may mean the difference between getting a deal done this year and not getting it done. Until U.S. banks can successfully adapt to new lending standards, stress testing, and regulatory reform, bank lending will not be loosening up again for a long time, particularly for commercial properties.

Posted by Corey Curwick Dutton

6 Items You Need to Close a Rehab Loan Fast

Get started on your rehab faster with a hard money loan

Get started on your rehab faster with a hard money loan

Because so few banks will lend on vacant properties in need of repair, it is often a hard money lender that will finance a rehab loan instead of a bank. Every hard money lender has a particular list of requirements needed to close a rehab loan. If you are motivated to close a rehab loan quickly, here are some specific items you should have ready or on hand:

1. Purchase Contract & Escrow Instructions: If it’s a purchase loan have the purchase contract and escrow instructions if provided, and give them to your hard money lender.

2. Bid for Repairs: Even if you’re doing some of the painting and odds and ends yourself, make sure you have a bid for repairs to give to your hard money lender.

3. Photos of the property: Take photos of the property to give to your lender. Particularly those areas of the property that will be repaired or updated.

4. Basic Loan Application: Not all hard money lenders will require a loan application for a rehab loan, but check your lender’s website to see if an application is required.

5. Proof of Hazard Insurance: Get with your insurance agent and have a quote for hazard insurance ready for your hard money lender.

6. Preliminary Title Report: A hard money lender will always want to order a preliminary title report. If you have one of these available, provide it to the lender. Do not order one yourself until you confirm with the hard money lender that it is ok to use your designated title company, or the seller’s title company.

Because every hard money lender has its own set of requirements, make sure you are well versed on your lender’s specific requirements. The more you know, the faster you will close your rehab loan.

Posted by Corey Curwick Dutton

Private Money Mortgage is Alternative to Home Loans for Bad Credit

Payday loans sign

Unlike  “Pay Day” loans, title loans, or other similar fast credit options, homes loans for bad credit have practically ceased to exist since the onset of the crisis. Because so many people suffered blows to their credit scores as a result of the financial meltdown of 2008, getting a home loan these days is a dream. And with new laws passed in January of 2014 that define what “qualifies” for mortgage, and as it turns out, no one can qualify. Thousands and thousands of people are searching for home loans for bad credit end up wasting time searching in vain. So many companies promise they can qualify anyone for a loan program that sounds too good to be true. After lots of paperwork shuffle back and forth, many borrowers simply walk away frustrated after finding out they cannot qualify after all.

With our new private money mortgage program, we can accept borrowers with credit scores as low as 500. This private money loan program is the real deal for those who are endlessly searching for home loans for bad credit. The debt to income requirements for this program are also much lower than other lender. If you or one of your clients is having difficulty finding home loans for bad credit, this program may be the answer. Fill out a short contact form at this LINK and let’s see if you qualify.

Also, make sure you watch out for loan scams when searching for home loans for bad credit. If you are new to the topic of private money mortgages, read more on our blog on this topic called, ‘Hard Money 101.’ Avoiding popular scams in lending is at the top of the topic list so take a few minutes to read about this before starting your search for home loans for bad credit. Because there are so many ‘loan sharks’ out in those waters, do a little research on our blog first so you can learn how to avoid them.

Posted by Corey Curwick Dutton

Why Real Estate Rehabbers Can Resell Properties for Premium

Rehabbed bathroom

It’s amazing what a real estate rehabber can do for the “dog house” in a neighborhood. Last year in our own neighborhood, a real estate investor purchased a dilapidated home that was previously owned by an aging couple. The house was had extreme deferred maintenance and needed at least $100,000 in rehab to get it back into shape. Within 5 weeks, the rehabber had turned that “dog house” in our neighborhood into one of the nicest homes on the block and resold it for top dollar.

These are the types of real estate investors that we lend money to do these types of rehab projects. I’m always impressed to see the final product. But how and why are some real estate rehabbers able to fetch premiums for properties they fix up and later resell? Because we are a real estate lender and are able to see some of the “tricks of the trade” of our real estate investor clients, we would like to share them here. Here are 4 reasons why real estate rehabbers can resell a property for a premium:

1. A Knack for Finding Niche Neighborhoods: Real estate rehabbers have a talent for finding properties in the most sought after neighborhoods where property listings last days or weeks at most. These are the opportunities for the highest price premiums.

2. Home Staging: Dressing up a vacant property is shown to yield price premiums. The elements of design, style, and visualization are strong factors here. Check out a recent blog post we wrote for using home staging to sell a home fast and for a premium:

3. Addition of Modern Elements: Real estate rehabbers tend to focus on adding modern elements to a home to get price premiums. Some examples include: Addition of shingle siding or slate stone on exterior walls in sections around stucco or wood siding, addition of contemporary outdoor and indoor light fixtures, designer paint colors on exterior trim and walls.

4. Patience is a Virtue: The turnaround time on a real estate rehab varies greatly by project. Depending on the season, weather conditions, and current market conditions, a property may take longer to sell than anticipated. The most successful real estate rehabbers are able to get top dollar because they are patient. I’ve seen properties take as long as 10 months to sell. Properly budgeting for holds as long as this can allow a real estate investor to fetch a premium by waiting for the perfect buyer.

Thinking of selling a property this year? If you want to fetch a premium for the property, pay attention to some of the tactics used by the most successful real estate rehabbers.

Posted by Corey Curwick Dutton