Fred Mullins, Donna Mullins, & Erin Biby
Coldwell Banker Schmitt Real Estate Company
1201 White Street Ste. 101 Key West, FL 33040
Direct: 305-745-9440
Email: mullinsf@bellsouth.net
Website: www.lowerkeys-homes.com
If you’ve been considering buying a property to “fix and flip”, whether it’s to sell outright or to rent; or, you want to convert a property into a residential home, you’ll find traditional banks, credit unions, and mortgage brokers won’t be so eager to finance your venture.
The reason is because these sources don’t consider future opportunity; they look only at the risk.
This is where hard money financing comes into play. It allows someone to get the money they need to do something like buy a distressed property to rehabilitate it and sell quickly or to rent as an investment. In addition, it’s also a route to financing for someone who wants to convert something like a commercial property into a residential one.
What are Hard Money Loans?
Unlike “traditional” financing, approvals are given on the basis of the property’s value and/or projected value and not the borrowers credit score. The funding is made available generally through a pool of investors, such as an equity group, looking to capitalize on their investments quickly.
The downside is the interest rates are typically substantially higher than a regular, 30-year fixed mortgage. Often, points are assessed on the loan, substantial collateral is usually required, and payments must be timely. On the other side, approvals don’t take nearly as long as a regular mortgage application, properties all types can qualify; and, it’s a more straightforward process.
In short, this is an alternative source for financing a property, particularly a home to flip for profit.
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