One of the biggest challenges new real estate investors face is not having enough money to get started. Financing your first few investment projects, you will need to take out loans until you make enough money to finance them yourself.
You may have heard that hard money loans are a top choice among real estate investors, but what are these loans and what makes them special?
This guide dives deeper into the specifics on hard money loans and where you can get one in Orlando.
What is a Hard Money Loan?
By definition, a hard money loan is a short-term loan that can finance real estate investments, such as a house flip or development. The loan is a tool used by investors that intent to purchase a property, upgrade it, and then sell it for a profit.
Hard money loans are financed by private lenders rather than mainstream banks or institutions and therefore follow different requirements. For starters, the borrower's credit worthiness is not a deciding factor. Rather, the lender will weigh the value of the property itself to determine whether to lend the money. These lenders are more concerned with the after repair value, which estimates what the property will be worth when upgrades are complete.
For more insight regarding determining a property's after repair value, see our guide on how to flip houses in Florida.
What Investors Should Consider Before Getting a Hard Money Loan
Although hard money loans are essentially financial vehicles for investors, there are a few things you should consider before taking out a loan.
For starters, the interest rates are much higher than a traditional loan — usually in the double digits. You might come out better if you used a different form of financing since what you pay in interest will directly impact your profits. Borrowers will also have to put up a collateral so that the lender will confident handing over the check.
On the plus side, hard money loans are easier to get than traditional loans, given the looser credit requirements. You can close on the loan faster than other loans, so you can start on your renovations sooner. And, you may be able to negotiate on repayment terms more so than you would a loan from a strict lender.
The flexibility and availability of hard money loans make them a worthwhile option for investors, especially if your credit isn't up to par. And for some investors, getting a hard money could be the deciding factor whether they're able to buy an investment property.
5 Reputable Hard Money Lenders in Orlando
Are you looking for hard money loans in Orlando? Consider these five reputable lenders that can help you get the funds you need:
Lord Mortgage & Loan
Lord Mortgage & Loan is based in Boca Raton and specializes in hard money loans for fix and flip properties. They provide funding for single-family homes and multi-family units alike, and you can get fast pre-approval via their website.
Monroe Funding Corp
Monroe Funding Corp serves all of central and south Florida with commercial and fix and flip hard money loans. They'll provide funding for apartment units, single-family homes, and office buildings, so you can expand your investment portfolio beyond the traditional house flip.
Global Capital Partners
Global Capital Partners specializes in a variety of financing options, including hard money loans for investors. Even if you find that a hard money loan isn't your best bet, you may find a more suitable option without having to go to another lender.
Nationwide Mortgage services all of Florida and several other states with hard money loans for commercial properties, fix and flip properties, loans for rental properties, and even hard money refinancing. Loan amounts start at $75,000 with rates ranging from 8% to 13%.
Direct Lending Partner
The loan services offered by Direct Lending Partner were made for real estate investors. They offer hard money loans in many states, including Florida, that can be used for house flipping, commercial investment properties, land for development, offices, retail buildings, or multi family residences.
How an Experienced Clever Agent Can Help Investors
Maybe you're looking for a hard money lender in Orlando to finance your next investment property. Or maybe you're still searching for that perfect piece of real estate to turn a profit. Wherever you are in your investment journey, would-be investors should connect with an experienced local real estate agent as a first step.
Your Orlando agent can help you find great investment opportunities, evaluate your financing options, and even help you uncover additional cost savings opportunities, including a $1,000 Home Buyer Rebate just for working with Clever!
Reach out to Clever today for a no-obligation consultation and let us help you find a top-rated Orlando real estate agent that can help you turn your investment into a living!