Hard money loans are those provided to fix and flip investors for the purpose of making property improvements and then re-selling the property at a profit. The lender of the money loans will generally acquire that cash from other investors and lend it out to the fix and flip investor at a higher rate of interest, so that he/she can make a profit as well.

The lenders to fix and flip investors thus act as middlemen between the property investors and the moneylenders behind the scenes.

Advantages of hard money loans

Unlike taking out a traditional loan from a bank, a hard money loan can be arranged much faster, generally in two weeks or less. By contrast, bank loans often take two months or more, even if the applicant is approved.

Even though a hard money loan generally comes at a higher interest rate than a traditional loan, it still has some distinct advantages. Because hard money loans can be arranged so much faster than traditional loans, you have a great deal more flexibility and agility in pursuing real estate properties. Opportunities can suddenly become available, and if you can’t act quickly enough, they can disappear just as quickly.

Applying for a hard money loan

The first step in applying for hard money loan is to search for hard money lenders in your area, and then you’ll have to reach out to one or more of them with your project pitch. You can expect to have to provide financial documents that demonstrate your financial stability, ideally two or three years worth of documents which show evidence of your past transactions and projects. It would be better for you to have a very good credit rating, a clean tax record, and pay stubs showing earned income that will be proof of financial stability.

Property investment with 5-Star Funding Group 

At 5-Star Funding Group, one of our specialties is helping clients with their property investments, and we’re always ready to listen to your ideas for that next big investment project.

Contact us today, so we can work together to secure that property investment with a hard money loan that will help your business grow faster.