You may have already reached out to a Clever Partner Agent in Louisiana to learn about investment properties in your price range. If so, your next step in the real estate investing process is to find a lender to help you purchase the property.
Should you go to your bank or financial institution that allowed you to borrow money for your primary residence, or should you reach out to an investment company to fund your loan? Learn about how hard money lenders differ from traditional lending institutions.
What is a Hard Money Loan?
Hard money loans differ from traditional primary residency loans in that hard money loans are for commercial, rental, or fix-and-flip properties that the borrower plans to resell quickly for a profit. Hard money loans are not for long-term investments. They are for real estate investments where the borrower is completing a new construction project or renovating an existing piece of property.
Another way hard money loans differ from conventional real estate loans is that borrowers take out hard money loans from investment companies instead of banks and other lending institutions.
Why would you want to work with an investment company instead of a bank? There could be a variety of reasons.
First, investment companies are not as concerned about the borrower's credit report. Although they run all the necessary credit reports, the investors at one of these companies are more interested in the value of the property that the borrower is purchasing.
Investors want to make sure they make money with each transaction. They are more likely to let you borrow money if they know if you default on their loan, they can sell the property to receive back the cash they allowed you to borrow.
Investment companies usually specialize in specific types of real estate investments. You may find that some companies only loan money for residential real estate while others may offer funds to back any commercial real estate endeavor. Make sure you understand your needs before you reach out to one of these companies or you may waste valuable time and resources.
Besides not being of too much concern over your credit history, another benefit for obtaining a hard money loan is that the process is much faster than the process at a bank or other conventional lending institution. The speed of the loan may be critical to you if you are trying to gather enough cash for a deal involving real estate.
Those investing in real estate may appreciate the flexibility of working with an investment company. You can negotiate favorable terms a little easier with an investment firm than you can a corporate lending institution. If you need flexibility with repayment issues, work with one of these institutions rather than a mortgage company.
Are there any disadvantages of hard money lending? Investment companies can't make it too easy to borrow money, or everyone would do it.
Hard money lenders charge borrowers a higher interest rate than conventional lenders. Sometimes, the interest rate may be in the double digits. The interest rate varies based upon your experience with this type of investment and other factors.
Borrowers may also have to pay more in origination fees for hard money lenders. As you figure out the rate of return on your investment, make sure you figure in all the fees your investment company may charge.
Finally, some hard money lenders may keep their loan-to-value ratios at 50% to 70%. This means you will need to have enough assets to cover the rest of the purchase of the property.
If you live in Louisiana and are interested in investing in real estate, here are some hard money lenders that work in the area. Most of these companies serve the entire country. Make sure you research each company before signing on the dotted line.
Located in Calabasas, California, Anchor Loans made their name from offering flip and flip loans to investors to the tune of over $1 billion in a year.
If your renovation project is expected to last from 6 to 12 months, you may reach out to Anchor Loan to learn more about their rates and fees. Their interest rates range from 8% to 13%, and the maximum loan-to-value ratio is 75%.
JCAP Private Lending
JCAP's website says they offer same-day approval. They also say you will have your funding within two days, which is impressive since their projects range from $100,000 to $5 million. JCAP's loan terms range from six to 24 months.
JCAP's operating philosophy is “We Care and We Serve.” Let them serve you by backing your real estate investment dream.
Watermarq Capital Partners
This interestingly spelled company is based out of Lakewood, New Jersey. If you have a special-circumstance capital need, reach out to Watermarq.
Watermarq specializes in foreclosure bailout, bankruptcies, environmental issues, and high vacancy properties. It's clear that this company is appropriate for high-risk investments.
Although they offer interest rates as low as 8.99%, at a maximum loan-to-value ratio of 75%, they work with investors across the nation, including Louisiana.
If you are looking for a loan for 12 to 60 months, connect with representatives at Carlyle Capital. This company offers loans from $500,000 to $25 million. They back almost every type of investment property from cinemas to cannabis use properties. Do you need to fund a golf course or storage facility? Carlyle Capital may back you on your investment idea.
EquityMax Financial, LLC
Finally, EquityMax Financial, based out of Fort Lauderdale, Florida, has been in business for over 28 years. They can close on your loan in 48 hours, and they have no minimum FICO score requirement. EquityMax also has no application fees or appraisals. They also do not require borrowers to provide bank statements or tax returns.
EquityMax offers loans from $15,000 to $1 million, and the maximum loan-to-value ratio is 80%. Interest rates range from 10% to 15%, and the life of the loan can range from 1 month to 204 months.
Before doing business with any company, make sure you do your research. Look at verified customer reviews that are found on websites not belonging to the company. Always check your investment company's Better Business Bureau reports and have an attorney who specializes in finance and real estate check out any legal documents before you sign them.
Work with Clever
Connect with a Clever Partner Agent in Louisiana to discuss your financing options. Your agent will not only help you determine which investment property is right for you, but they will also help you uncover other cost-saving strategies that will allow you to enjoy a high return on your investment.
Our Clever Partner Agents in Louisiana are the top performers in the state. Don't make any investment decisions before talking with one of our experts.