Build Right! Top 5 Benefits Of Construction Loans In The Dc Real Estate Market

Let’s face it, perhaps the biggest issue that many real estate owners and investors face is locating financing when their credit scores and financial statements are less than stellar. Consecutively, it’s no wonder why private construction loans have gained such popularity among many real estate investors. Besides, you can find a plethora of companies offering construction loans in Virginia, Maryland and Washington, DC at affordable interest rates. Moreover, many builders and individuals generally prefer to take a private construction loan rather than conventional loans due to the flexibility, speed, and easier process of getting funded.

Construction loans offer a quicker and easier way to obtain funding for real estate deals. However, choosing the right private money lender can be a daunting task, considering the fact that there are so many lenders in the market and it may be hard to decide which lender to partner with.

To help cut through the masses and pinpoint the best lender for your real estate investment needs, you should consider the following:

1. Less Paperwork and Documentation- Considering the fact that a private lender doesn’t have to conform to the same stringent rules and regulations of a bank, getting a construction loan from a private lender entails a fraction of the paperwork and less rigid legal formalities.

2. Quick approval and closing- Without a doubt, one of the major benefits of this type of loan is the fact that the investors can secure the pre-approval within one or two days, given they have submitted the handful of documents that the lender has requested. Add to that, the real estate investor can close the loan sometimes in as short as a week, which can help win the bid in a competitive real estate market. When you compare the quick closing of a construction loan to the 30-45 days it can take to be approved by a bank, the benefits of speed are very obvious.

3. Property flexibility- In addition to offering flexible rates and terms, these loans also provide flexibility in terms of the types of property that are funded. Borrowers use construction loans to finance a broad range of real estate investment opportunities, such as duplexes, multi-unit buildings, condos, townhouses, and of course, single family homes.

4. Easy to qualify- Another major benefit of the private construction loan is that these loans are easier to qualify for than traditional banks. Private lenders are primarily concerned about the value of underlying real estate security and the borrower’s ability to repay the loan versus credit score or financial history.

5. Repair funds- Another major advantage with a construction loan is that it provides an opportunity for the borrower to repair all of the issues that need to be addressed in order maximize the profit potential of the real estate investment. This would not be possible if all construction costs had to be covered solely using the borrower’s own money.

An added bonus of the ease of obtaining construction loans via a hard money lender is that as more properties are renovated in the community, property values go up and the quality of the neighborhood improves.

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Fix And Flip Loans: Adding A New Dimension In Real Estate Investment

Over the years, fix and flip loans have emerged as a great way to invest in a real estate property which has seen better days and is in need of some kind of repair. When done right, fix and flip loans prove to be a solid way to generate income in the real estate investment industry. An added bonus is that everyone in the community benefits from fix and flips as it increases property values and improves the neighborhood.

In simple terms, a fix and flip is a real estate investment strategy that allows the investor to make a profit by finding an affordable, distressed property, repairing it and selling it at a profit. A good source of these real estate opportunities are the outlying areas of cities with a strong real estate market � such as Washington, DC. These loans have a number of distinct advantages over other forms of conventional financing. Real estate investors qualify for these loans based on the projections of the property and the strength of the real estate market, with less focus on credit rating or history of bankruptcy or foreclosure.

Read on to find out some of the major benefits of fix and flip loans.

1. Less Paperwork and Documentation- Considering the fact that a private lender doesn’t have to conform to the same stringent rules and regulations of a bank, obtaining these types loans entails a fraction of the paperwork and less rigid legal formalities.

2. Flexibility- When it comes to obtaining a fix and flip loan, the investor enjoys the benefits of flexibility. Less emphasis is placed on credit score and borrowers are able to finance properties in very poor condition which would otherwise be turned down by the banks.

3. Quick approval and closing- Without a doubt, one of the major benefits of this type of loan is the fact that the investors can secure the pre-approval within one or two days, given they have submitted the handful of documents that the lender has requested. Add to that, the real estate investor can close the loan sometimes in as short as a week, which can help win the bid in a competitive real estate market. When you compare the quick closing of a fix and flip loan to the 30-45 days it can take to be approved by a bank, the benefits of speed are very obvious.

4. Repair funds- Another major advantage with a fix and flip loan is that it provides an opportunity for the borrower to repair all of the issues that need to be addressed in order maximize the profit potential of the real estate investment. This would not be possible if home-improvement costs had to be covered solely using the borrower’s own money.

5. Property flexibility- In addition to offering flexible rates and terms, these loans also provide flexibility in terms of the types of property that are funded. Borrowers use these loans to finance a broad range of real estate investment opportunities, such as duplexes, multi-unit buildings, condos, townhouses, and of course, single family homes.

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Top 5 Tips For Choosing The Right Private Money Lender

Over the years, private money lenders have played a significant role in providing loans to those who typically would not qualify for conventional financing. These private lenders offer a plethora of private money loans depending on the specific acquisition and funding needs of the borrower. In the real estate industry, private money lenders extend financing to borrowers who may not qualify for a bank loan due to poor credit scores or insufficient income history. Those who wish to acquire a fix and flip renovation property that is in very poor condition may also be turned away by a bank.

Another challenge some borrows face and one that prevents them from receiving a traditional loan is not having enough cash on hand for a down payment. Although, private money lenders do require their borrowers to have some �skin in the game�, their loan-to-value requirements are more flexible than a bank. In addition to the increased flexibility of private money loans, a major benefit with this type of funding is the speed with which the borrower can receive the money for their real estate investment.

Private money loans offer a quicker and easier way to obtain funding for real estate deals. However, choosing the right private money lender can be a daunting task, considering the fact that there are so many lenders in the market and it may be hard to decide which lender to partner with.

To help cut through the masses and pinpoint the best lender for your real estate investment needs, you should consider the following:

1. Responsiveness and Reputation- When it comes to choosing a private money lender, make sure they are responsive to your inquiries, concerns, and can provide answers to questions that pop up throughout the lending process. It goes without saying that you should visit the lender’s website to read past customer reviews and testimonials. A huge bonus is selecting a lender who has extensive building and development experience themselves. This experience will only be of benefit to you as they can offer you advice and provide recommendations on contractors, budgets, timelines, etc. Who knows, they may even know someone at the permitting office to help get those stuck building permits pushed through!

2. Loan Flexibility- Before you choose a private money lender, make sure the terms are disclosed in the documents and that you are comfortable with them. Sometimes the parameters of the loan can be modified depending on your specific funding needs, desired loan term, and exit strategy. In any case, the flexibility you will experience with a private money lender will be greater than that of a bank.

3. Interest Rates- One major factor to consider before choosing a private lending company is the interest rate. A private lender’s rates will be higher than those of a bank because of the flexibility, quicker access to funding, and the greater risk they are taking on.

4. Assess Your Financial Situation- Even if you find the right private lender, you still have to factor in the higher interest rate into your profit calculations. In order to fully maximize the benefits of this type of loan, it is best to have a solid team of subcontractors, a comprehensive building, and development plan and anticipate to be in and out of the investment property within 9-12 months.

5. Focus Your Search Locally- Although you can find hard money lenders across the country, it may be best to choose a lender that is local to your real estate investment property. Not only is it good to be able to meet face-to-face with them when you are reviewing the terms of your loan, but a local lender will have extensive knowledge about your area’s real estate market and can help guide you on the right buy and sell price for your property.

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