Hard Money Information (current)

My Hard Money knowledge thus far is a rudimentary knowledge of Hard Money. When someone needs a loan in a hurry, most commonly in order to buy real estate, they will apply for a hard money loan using something for collateral for the loan. The most common form of collateral is Real Estate, which the borrower will put up. In addition to the collateral, the hard money loan has very high interest rates, and there are also percentage points added on to the loan amount as well.

 

Reasons to Acquire a Hard Money Loan.

There are personal reasons that a hard money loan may be made. For instance, you might have a house and you want a loan to start a business, so you use your house as collateral to finance the business. Not the best way to fund a business. If your business goes under, you loose your house. But then again that gives you extra motivation to do well at your business. Definitely gives meaning to the phrase “all in”.

I have also heard of people taking money out on a house to buy stock when there is an ISO (initial stock offering). I remember when Agere was split off from Lucent, and was offering going to offer stock. People were taking out loans on there homes to buy the stock which was expected to split. Well, were exactly is Agere now? Not a great use of assets.

The most common reason to acquire a hard money loan and the type that this blog will concentrate on, is to buy real estate as an investment. You are an investor, and you have just scoped out a piece of hot real estate and done all the real estate research, due diligence, to qualify it as a great candidate to be flipped. Hot meaning it is new on the market and will most certainly be scooped up quickly. In order to be able to purchase the property before another investor, you need a loan quickly. So the hard money loan is the type of loan you will need to acquire.