Hard Money: A Hard Look At Investing With Little Cash

What is this hard money and where do you find it in the DFW metroplex?  Getting hooked up with a hard money lender is key if you have limited resources of cash and are looking to purchase and rehab flip deals.  Private individuals and companies back this hard money with the loan qualifications based more on the property and not as much on the individual.  Money is loaned on a short term basis at the individual’s or company’s discretion for acquiring and rehabbing investment homes.

Now hard money might not be very hard to come by but the terms usually are.  Right now institutional banks are offering interest rates at record low 4.25%.  Compare this with the hard money lender who will charge you in up wards of 12%.  Don’t let this scare you because even though interest rates are high on these types of loans, they are great for beginner investors who have little cash to get started with.  As long as you find the right deal there will be profit left at the end of the day.  Some additional criteria for hard money loans include low loan to value’s, upfront points, and prepayment penalties. 

You can expect to get a loan for about 50% – 70% of the fair market value, also called the after repair value.  All lenders have different policies so just like conventional lenders shop them.  Points paid upfront might range on up to 6 for closing costs.  Really scrutinize the terms when shopping around because everyone will be different. 

If you are looking for several good contacts in the DFW area for hard money lenders, shoot me an email or give me a call and I will be happy to send you my Rolodex.  I also have access to their favorite properties and together we could build a great portfolio.  There has never been a better time to get started as a real estate investor.