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WHAT IS HARD MONEY?  AND HOW CAN IT BE USED?

First, some may say, what is Hard Money and what is a Hard Money Lender?  Well hard money is a source of mortgage money that is used to purchase property in a condition that most other Lenders would not make a loan on.  The decision to approve a mortgage loan is based on the property only.  Neither the credit nor the income of the borrower are factors in the loan approval.  (Interesting enough hard money lenders only lend a small amount of the money in relationship to your property value.  So in essence they are safe doing this.)

Also, another aspect the hard money rehab loan is the After Repair Value (ARV) of the property.  This is used to determine the percentage of money they will loan, usually 60%-70% of the property once it is repaired.  Lenders typically base their decision to make the loan to you on what the property will look like after you fix it up.

The major difference between these loans, conforming and non-conforming are the costs.  Interest rates range from 10% fo 18% with 5-10 points as part of the closing costs.  So, if you were to borrow $50,000 after the costs involved are deducted - your actual check at closing will be approximately $45,000.  Not only are the fees higher, all the payments go to the interest, not to reducing your principal balance and the terms are 12-24 months.

For example, I purchased a house in Jacksonville, Florida about a year ago.  This is a large house 2400 sq. ft. brick home for $27,000.  It was priced low because of fire damage to 1/3 of the structure - the cost to repair totaled nearly $30,000 so I borrowed $62,000 from a Hard Money Lender.  I did the repairs over a 2-month period and recently had this property appraised for $125,000.  I then refinanced it for 80% of the $125,000, which resulted in a cash profit of $38,000.

Hard Money makes it easy to buy a house that needs repairs on which most lenders will not even consider.  It also gives people with bad or no credit an opportunity to own their own home and also to make some money at the same time.  Especially, someone that can do his or her own repairs, i.e. you can save the high fees charged by building contractors.  Try this proven scenario and start building wealth through real estate investing.