Are you looking to flip homes in Virginia? Before starting any real estate endeavor, it's important to decide the smartest way to fund your project. While many investors turn to traditional loans, some consider hard money loans. Here's what you need to know about hard money lenders in Virginia.
Flipping homes is one of the most tried and true real estate strategies that more and more beginning investors are trying. While flipping homes in Virginia can be an excellent way to make extra money, it's not without risks.
To successfully flip properties in Virginia, you'll need a great real estate investment strategy, starting with a financing plan. While traditional mortgages can be a great financing option, due to time restraints and credit issues, many investors turn to hard money loans instead.
Before taking out a hard money loan, it's important to do your homework to find out the pros and cons of this financing technique. This guide will walk you through the advantages and drawbacks of hard money loans and also make recommendations on the best hard money lenders in Virginia.
A Quick Review Hard Money Loans
Unlike traditional loans, hard money loans are funded through private investors instead of banks and other financial institutions. Hard money loans also have different approval processes, basing the amount and approval decision on a property's projected value versus a borrower's credit. Lastly, hard money loans are often short-term loans that borrowers will need to repay quickly, sometimes in as little as six months.
Pros of Hard Money Loans
1. Loan Approval
When applying for a hard money loan, your credit score and history won't hurt your chances of approval. Instead, these loans are based on the value of the collateral, making it easier for those with bad credit to finance real estate projects.
2. Fast Funds
Sometimes investors need to act fast to close on a real estate property. Hard money loans are generally available much faster than traditional loans, with funding sometimes ready in as little as three days.
3. More Loan Flexibility
Hard money loans contracts are much more flexible than traditional agreements, allowing borrowers more of a say over some of the terms and conditions, like the repayment schedule.
Cons of Hard Money Loans
1. High Interest Rates
Since the approval process is so simple, one of the hangups of a hard money loan is high interest rates. Even competitive rate hard money loans are higher than traditional loans, with some interest rates hitting the double digits.
2. Hidden Fees
Some, but not all, hard money loans have hidden fees, so it's important to thoroughly review your contract before signing it.
3. Unsecured Lenders
Even with hard money loans, you'll want to find a verified, trusted lender to work with. Many hard money loans are often unverified, which could leave you with a questionable contract.
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The Top 5 Hard Money Lenders in Virginia
If you think a hard money lender is your best option for financing your real estate investment, be sure to review the below five top-rated hard money lenders in Virginia.
1. Walnut Street Finance
Offering hard money loans for investors up to $2.5 million dollars, Walnut Street Finance is one of the leading hard money lenders in Virginia. They offer loan options for flipping houses and new real estate construction projects and have a 4.7-star rating on Google.
2. New Funding Resources
New Funding Resources offers hard money loans to investors in Virginia, Maryland, and Washington, D.C. Investors will receive their approval decision in as little as 24 hours and funding as quickly as 5 days later. They also offer different loan terms, depending on your real estate endeavor and have a 4.9-star rating on Google.
3. Richmond Mortgage, Inc
Based in Richmond, Virginia, this hard money lender offers fast loans and a five-minute loan application process. Richmond Mortgage Inc has a maximum LTV (loan to value ratio) of 70%, APRs range from 8% to 12.5%, and loan terms last for as long as one year. They also have a 4.3-star rating on Google.
4. Washington Capital Partners
Washington Capital Partners streamlines the hard money loan process, by offering fast online applications that pair customers with their own personal loan expert. They also offer investment advice and assistance to their customers, treating them as partners rather than clients. They also have a 4.8-star rating on Google.
5. Hard Money Bankers
With branches in Virginia, Maryland, and Washington, D.C., Hard Money Bankers has been providing hard money loans since 2015. Their website offers helpful resources on investing, including a deal analyzer option and simple online application. Hard Money Bankers also has a 4.5-star rating on Google.
When deciding to invest in real estate or flip homes in Virginia, it's recommended that you partner with an experienced, local real estate agent. Agents can offer valuable financial advice, help you find lucrative investment properties, and help you save the maximum amount of money along the way.
If you don't already have an agent, let Clever connect you with a top-rated agent with experience in investing near you.