Investors Who Leverage Money From Hard Moneylenders Can Earn Quick Profits


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When getting into the real estate investment field it’s best to possess a great deal of capital and have flawless credit to secure loans. Unfortunately, most of us don’t live in a perfect world. If an investor wishes to begin in the real estate investment industry and doesn’t have much capital or good credit, they can turn to hard moneylenders to obtain the funding to purchase a property. The goal here is to secure the property and flip it. An investor must have a solid exit strategy or the payments and interest will bury them before they can get it sold.

Most hard moneylenders will offer a short-term loan, also known as a bridge loan and put up 65% of the purchase price, but no more. They are willing to look past poor credit and a lack of serious capital, income or equity because they charge extremely high interest rates. They aren’t too worried if an investor can’t make the payments because they are more than happy to foreclose on the property and possess it for themselves.

Investors who have to go this direction are taking a bit of a risk and should have the capital to make at least 6 monthly payments. This will give an investor time to rehab and market a property. If they can sell the property quickly, they can secure a decent profit by effectively leveraging a hard moneylender’s capital.

Now that a real estate investor has 65% of the property paid for, how are they going to fund the other 35% of the property? Investors who own other properties can put these properties up as collateral on the remaining balance and the hard moneylender will fund the entire cost of the property. This process is called cross collateralization. Obvious, the risk an investor takes is substantial but if everything pans out, a serious profit can be made.

Many times a hard moneylender will ask to see an investors’ exit strategy. Most of these investors are retail property investors and plan to fix up a property, get it back on the market and sell it. These properties need to be purchased well below market value and not cost a great deal to fix up. Make sure that the property can be sold a bit below market value and still turn a profit. Don’t get stuck with a property that you can’t pay for or sell, without losing money.

If you are up for the challenge, consider securing a loan through a hard moneylender and put in the work to get it sold through a preplanned exit strategy.

Asking questions with these few tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business. Come see us for more information.

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