When it comes to real estate investment, hard money loans are a popular choice among investors. They’re typically fast, flexible, and more accessible than traditional funding options. Hard money loans are also a viable option for borrowers with poor credit, as they rely more on the property’s value rather than the borrower’s creditworthiness. But, can you make money with a hard money loan? The answer is yes. In this blog post, we’ll give you a list of ways to make money with a hard money loan for your next investment project.
Fix and Flip:
One of the most common ways to make money with a hard money loan is by fixing and flipping properties. Essentially, you purchase a property that needs a significant amount of repairs or renovations with a hard money loan. Once the property is fixed up, you sell it for a profit. Hard money loans are perfect for this, as they’re typically short-term, and can be approved quickly, giving you the money you need to purchase and renovate the property quickly.
Buy and Hold:
Another way to make money with a hard money loan is by buying and holding a property. In this case, you purchase the property with the hard money loan, but rather than fixing it up, you hold onto it for a certain amount of time before selling it. During that time, you’ll be collecting rent or leasing out space in the property, which will generate monthly income. Generally, hard money loans for buy and hold properties have longer repayment terms, which gives you ample time to find a suitable buyer or refinancing option.
Another option is to use a hard money loan to finance a property and then use it as a short-term rental. For example, you can use the loan to purchase a property in a popular tourist destination, then rent it out on platforms such as Airbnb, VRBO or HomeAway. This will give you steady cash flow, as well as the potential for high returns on investment compared to long-term rental rates.
With a hard money loan, you can purchase a property and then sell it to another investor without doing any repairs or renovations. This is known as wholesaling, where you locate a property that is undervalued and can be sold to another buyer at a higher price. With this strategy, you may not make as much money as the other options, but it’s usually quicker and requires less work.
If you already own a property, you may be able to refinance it with a hard money loan, then use the money for another investment project. For example, you can purchase a property with a traditional mortgage, then refinance it with a hard money loan once the property has appreciated in value. The funds from the refinance can be used for another investment or to renovate the existing property, which can help you increase its value.
Hard money loans are a popular choice for many real estate investors due to their accessibility, quick approval process, and flexibility. They’re also a great way to generate income if used wisely. Whether you’re planning to fix and flip or hold onto a property for long-term, hard money loans can provide you with the funding you need to get started. Furthermore, these loans can often be used in creative ways to help you maximize your returns on investment. Use our list above as inspiration for your next project, but remember to always do your research and seek advice from a professional before making any investment decisions.
Fund With FlipCo Financial
FlipCo Financial is Houston’s leading hard money lending company that is helping investors all across the country achieve real estate success. Our team is dedicated to helping investors of all experience levels get funded quickly and easily. We pride ourselves on our great client experience and knowledge that we provide. Contact us today for more info on how we can help you get into real estate investing & hard money loans.