You will find that the terms will differ between hard money lenders and private lenders, but each type of loan has its place in your real estate investing business.Hard money lenders typically charge between 12% and 14% for their loan. They also charge points and some have pre-payment penalties. All of the loans are interest only, most with monthly interest payments. Many new investors are taken aback when they see what the terms are, but more seasoned investors know that the terms are definitely worth it. It is basically an opportunity cost.
Banks are not going to loan the money for an investment property. Even those banks that offer "rehab loans" usually do not close in a timely manner and have all sort of specifications that you will not find in a hard money loan.There are many other benefits of working with hard money lenders. Hard money lenders know the market and specialize on working with real estate investors. They are familiar with values, areas and appraisers. And most importantly, they have the money to lend. Because they are in the business of lending, most hard money lenders have several million dollars available to lend out.
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