You have found a fantastic property that needs a bit of help to make it truly shine — what a great discovery! Investment properties are very attractive to individuals and families looking to generate a profit and turn a real estate dream into a money-making reality.
However, you may find that when you go to a conventional bank for a real estate loan, that dream gets stopped in its tracks quite quickly. Traditional banks look at a lot of factors in determining whether or not to give out a loan, and how much money to lend. You may be in for a disappointment if the bank turns you down.
That does not need to mark the end of your real estate goals, however! With the help of a rehab lender, you can flip a home with all the funding you need, secured quickly and easily.
Why Rehab a Home?
The real estate market has not been kind to everyone. Many homes have fallen into disrepair, making them available at rock bottom prices. For an intrepid investor who is willing to take on a rehab project, it’s increasingly easy to buy one of these homes at a low price, do the work to renovate it, and make it worth buying for a much higher amount than before. The investor can then pocket the profit, after paying off the loan and the funds spent on renovation.
For people with the time and skill, rehabbing a home is a fantastic way to generate extra income. For many, getting started is the hardest part. People are unsure of how to get funding, or find that their conventional bank balks at the idea of funding a rehab project. Lantzman, on the other hand, is willing and able to fund rehab and renovation projects, if we deem them worthwhile.
You can have the money you need to buy a house, close on it, and restore it back to its former glory. Keep reading to find out if the property you have in mind could qualify for a rehab loan.
What Qualifies a Hard Money Residential Loan?
Rehab lenders give out hard money residential loans based on the value of the home project itself. If you are looking for a real estate loan in San Diego, this will be a different experience to what you would endure at a traditional bank! While more traditional loans focus on things like your income and credit score, a hard money residential loan looks primarily at the residential real estate asset in question.
For rehab lenders, this means that residential hard money loans are based on:
- the current value of the property
- its projected value, after you use the money from rehab lenders to renovate the asset
Hard money real estate lenders want to invest in properties that are going to be valuable, so you’ll need to show how your rehab project is going to be a success. This could involve looking at similarly renovated homes in the area, determining the cost of the rehab itself, and other factors your rehab lenders will explain to you.
There are numerous benefits to taking this route, aside from the fact that your finances are not the only part of the equation. Next, we’ll explore additional advantages to hard money lending.
Hard Money Real Estate Lenders Fund Fast
A traditional bank will not release loan money very quickly. It all has to go through an approved process, financially and legally, which can take several months to complete. For people who want hard money residential loans fast, that won’t work.
On the other hand, when you get a hard money real estate loan in San Diego, you are looking at around a week’s wait to get your money. Residential hard money lenders like Lantzman know how important it is to have the cash you need for a fix and flip or other real estate project. We aim to get our residential hard money loans in our clients’ hands as quickly as possible.
For you, that means hard money real estate lenders are the quickest path from real estate dream to renovation reality.
Do not waste your time going through the traditional banking process, if you want to get started right away. Instead, work with hard money real estate lenders, and hit fast forward on your project.
Hard Money Lenders Finance Projects Others Won’t
As long as your real estate project will bring in new value and profit, hard money lenders will provide the funds you need, quickly. If you have had a conventional bank walk away from one of your real estate ideas, don’t despair. Get in touch with a hard money lender like Lantzman. We are happy to explore any real estate project that can make money, whether you’re looking at a rehab project or another plan.
What Projects Will Residential Hard Money Lenders Fund?
Rehab loans are available from residential hard money lenders and are popular for those who want to fix up a property and sell it for more than the purchase price, a scenario perfectly made for a hard money real estate loan in San Diego. There are many other cases, however, in which residential hard money loans are appropriate, so even if you aren’t rehabbing a home, you could still benefit from working with a hard money real estate lender like Lantzman.
Hard money residential loans can be tailored to various situations, including any need for quick funding, or a quick closing, construction loans, buying property despite credit issues, or purchasing land. Talk to your residential hard money lenders about whether or not you qualify for a hard money real estate loan in San Diego. The odds are that if your property has a good value and shows promise for the future, you will be able to benefit from a residential hard money loan.
How to Make the Most of a Rehab Loan
It can be tempting to try to fix everything that is wrong with a house, but that is not an ideal way to turn a profit – especially if you want to do so quickly! The goal with a rehab loan is to renovate a property quickly, but solidly, focusing on the areas that will drive up the value of a property so that you can make the most from your investment.
Before approaching residential hard money lenders, be wary of seeking a loan for a building that needs significant structural fixes. In many cases, these are not worth rehabbing, and are better off as a tear down and rebuild project. Taking on construction is another scenario where a hard money lender can help, but you should be aware of the kind of project you are getting into before you start making financial plans!
Once you know that your rehab project is doable, and have secured the rehab loan to fund it, there are a few ways that you can maximize that money and get great results that are sure to appeal to even the pickiest buyer.
Budget conscious upgrades add a lot to a home without requiring you to use all of your rehab loan in one spot. Consider smaller, more luxurious upgrades like a top notch shower feature or a beautiful front door. Instead of outfitting the whole home with expensive finishes, work on the areas you know will attract attention, such as kitchens and flooring.
Make your real estate project appealing to its new buyers by using neutral finishes as much as you can, from paint colors to cabinetry. This technique allows potential buyers to easily imagine their belongings in the space, which makes them more apt to put in an offer.
Remember that the homes surrounding your rehab project will have an impact on its future value, too, so be wary of projects that will price your renovated home out of the local market!
Should I DIY or Hire a Contractor?
When making your list of projects to undertake as part of your renovation, consider your skills and available time. Obviously, it is important to make sure that any renovation or other real estate project is done well, especially when it is part of an investment strategy.
While your rehab loan is not contingent on any specific way of doing things, it is based on the projected value of the home, once all rehabbing is complete. To maximize profit while ensuring that your flip stands up to the test of time, decide carefully what is worth hiring out and what you can do on your own.
Addressing the Common Questions
Does this all sound too good to be true? Hard money loans are often a huge problem-solver for people interested in real estate projects. Understandably, however, people can be wary of delving into a new way of financing their investments, especially if they are used to working with more conventional methods of funding.
Having questions and concerns about hard money lending is okay. We are happy to work with you to ensure that you are comfortable with a hard money rehab loan before you get started on your project. Part of the loan process involves consultation with our clients. We ensure that we answer all your questions and that everyone agrees that a project is feasible.
Here are two common questions people have about residential hard money loans, whether for rehab projects and other real estate plans.
Why Do Residential Hard Money Loans Sometimes Have Higher Interest?
This is a common question for people who are looking at rehab loans and other real estate loans in San Diego. They are interested in residential hard money loans but want to fully understand why the interest rate can be higher than might be found with a traditional bank.
Like conventional banks, hard money real estate lenders offer a wide variety of interest rates, depending on the market, the location, and other outside factors.
A hard money loan is generally riskier for the lender than a typical loan. This higher risk merits a higher interest rate.
Our clients find that their loans are worthwhile, despite higher interest rates, especially given how quick and easy it is to secure the money required for a rehab project or other real estate investment.
Hard money loans provide you with the funds you need to turn your real estate dreams into reality. Being able to move your project forward should pay off for you in the long run, especially in circumstances in which you can benefit from a quick turnaround.
How Flexible is the Term of My Loan?
If you are used to conventional funding, you may be in for a surprise when it comes to securing a hard money loan. Our funding is set up for short-term purposes versus a traditional bank’s longer-term lending plans.
You can talk to us about the specifics of your loan and what you need, but it is safe to expect that a hard money loan will be written for around two years maximum. This makes sense when you consider the risk of the loan and the fact that hard money loans are often given to bridge real estate deals, to purchase land, and to enable renovations. We know that our clients want to profit from their real estate plans as soon as possible, then move onto new projects or goals. Our shorter term loans are suitable for these situations.
Hard money lending offers you freedom and flexibility, and the funds you need to jump into your real estate project without delay. If you think that this type of funding arrangement might be right for you, we will gladly answer any questions and go over your situation in greater detail.
We many successful real estate transactions in our history. We’ve achieved this by looking at every loan application on a case by case basis. You can rely on us to treat your project with the care it deserves, giving you the utmost in customer service and satisfaction.
Talk to Lantzman’s lending experts today, and turn your dreams into plans.
