Fix and flip, or rehab investing , has become very popular lately . With the influx of foreclosed properties and distressed sales , many investors are able to buy low , do a little work to add some curb appeal, and sell to an end user buyer .
When dealing with these types of transactions, a lot of rehabbers find themselves looking for a hard money rehab loan , only to be let down by the requirements needed to line up funding of this type. In this case , a number of investors will turn to a private investor to help them leverage their existing cash .
A hard money lender is much more conciliatory than a bank may be these days . This is especially true if your project includes any type of construction or rehab. The banks simply are not lending money for these deals in todays market , but hard money lenders are.
Private money investors will give you the power to structure this type of financing in a fashion that will allow you to leverage your existing cash. Typically, you can obtain rehab loans using the after repair value of a property. In addition, financing for all of the purchase price is realistic, provided you have the cash to cover the cost of repairs and interest on the loan.
In the event the real estate market continues to feature stress, these types of rehab loans are going to allow more and more investors the ability to get into the rehab real estate market .
Many of these loans are put together as short term loans, maybe 12 months to twenty four months at the longest . Typically there is no pre payment penalization on these bridge type loans , and you should figure on paying an interest rate anywhere between 12 and 14 percent. It is not cheap money, but investor rehab loans are much less expensive than finding a joint venture partner. If you are in the market for this type of money, consider hard money lenders as a realistic avenue to go when looking for this kind of money .
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This post was written by LinkVineAuth on May 22, 2010
