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We have often heard that hard money rental loans are best for people who have an ardent interest in real estate investment.
There isn’t much formality for the loan to close, and you can quickly avail these loans. They are also beneficial because you can either get hard money or even assets like gold and platinum as the exchange of loans. If you have a multifamily property, you can also try getting multifamily loans.
However, there is still a lot of confusion and questioning that comes along with these hard loans. Especially whether they are safe! Yes, they might not follow all the government policies imposed on banks, but they have their own sets of protocols.
Plus, they aren’t illegal since these are not individuals but private companies who lend short-term loans.
What is Hard Money Rental Loans
It will be more clear if we just give you the definition. Hard money rental loans are when you go to a private money lending company and avail a quick loan.
These are more short-term since you cannot avail of a huge sum whose down payment will carry on for years. There is also less formality, and getting loans is easy.
This is one of the reasons why investors are so keen on these loans. Getting money quickly allows them to invest quickly when there is a good opportunity.
However, we can understand how some confusion might still linger; this is why we have collected all the frequently asked questions from the internet and answered them.
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Frequently Asked Questions
Here are some of the frequently asked questions regarding the subject of hard money rental loans.
1. How Long Can I Take The Loan Out For?
Since it is a short-term loan, these loans are generally for three months which is the minimum period, and if we talk about the maximum period, it is 12 months.
2. How Flexible is the Policy?
The policies are pretty flexible since they do not depend on the type of loans but the individuals who are availing them.
3. What is the Interest Rate?
There is no definite policy for the interest rate. Thus it can differ from lender to lender. Yes, it can be something between 19% to 18%.
4. How to Avail Hard Money?
If you wish to avail hard money, you have to consult a private money lending company. The documentation part takes a maximum of three days.
Once the loan is approved, you can get them in 72 hours.
5. How Do I Prepare For a Hard Money Loan?
Here are some of the steps you can follow; this will help you prepare for the hard money loan that you are availing.
- Take a consultation first.
- Always get a loan from a credible company.
- Remember that it is short-term, thus do not avail a loan that would be more difficult to pay back.
- Prepare yourself for the down payment.
- Apply for the loan and talk about the interest rate.
6. Are Hard Money Loans a Good Idea?
It is the best policy for rich investors. They are for quick capital gain for investment and seizing an opportunity.
It is not idle for everyone.
7. Does Hard Money Have a Return Policy?
Yes, there is a return policy. You are safe as long you return the money within three days of the payment.
8. What are the Examples of Hard Money Loans?
Some of the examples of hard money loans are as follows.
- Renovate & Renting.
- Property Investment.
- Real Estate Investment.
- Wholesale Funding
- Property Flippers.
9. How is Interest Calculated in Hard Money?
In order to calculate the interest rate, all you have to do is multiply the monthly repayment by the number of months that you are holding the property.
10. How is Hard Money Regulated?
Yes, hard money is regulated because it is collected from federally regulated product campaigns.
Confusion Gone – Decision Mode On!
So, there you go!
We have tried to answer most of the frequently asked questions over the internet, and this has surely helped with some of the confusion. Now, you can make an informed decision.
