United Capital Investors

About Hard Money

Why Hard Money?

In a competitive real estate market, cash is king. What many investors have learned, though, is that while cash may be king, it is not always completely necessary. Hard money loans provide investors who do not have (or want to deploy) all of the cash required to fund a purchase + renovation the ability to compete with cash buyers, while utilizing just a fraction of the cash out-of-pocket. 

What are Hard Money Loans

Hard money loans are specific short-term advances the lender provides for the purchase of a property. Such a loan is an excellent option if you are an investor that is looking to close a loan quickly. The average hard money loan process can complete in 10 business days or less in most cases.

What is the average hard money loan duration?

Most hard money loans that are for rental properties pay off in 90 days or less.  If the repairs are completed in 30 days or less, and you immediately get it rented, your tenant will be making your payments.  We have actually had some clients refinance in under 45 days.  On properties being flipped, the current average loan duration for our clients is 120 days. 

Uses for Hard Money Loans

You can use hard money loans to purchase a wide variety of properties. The beneficial part of borrowing a hard money loan is that your cash advance will have value that is substantially different from the purchase price. The lender will base the loan on a percentage of the projected after-repair value (ARV) of the property rather than the purchase of the residential or commercial property. For example, your distressed property may be on sale for $85,000, which is discounted from its true value of $150,000 because of all the necessary repairs. A traditional lender will offer a conventional loan of up to 80 percent of the purchase price of the home that would be, at most, $68,000. The hard money lender will offer up to 70 percent of the after-repair value, plus it will pay for the closing costs that are sometimes as much as $25,000 or more. Lenders will pay for the repairs that you will have to submit to get the property ready for use. The lender will also cover the closing costs, which can be several thousand dollars.