What is Hard Money?

What is Hard Money?

Hard money is a term often used in the United States to describe a type of financing provided by private lenders. Hard money loans are typically short-term loans, lasting for one year or less. These loans are secured by real estate, typically properties that are in the process of being sold or renovated. A popular term in the industry is “fix and flip” or “fixer-uppers.

There are two main types of hard money loans: equity-based and debt-based. Equity-based hard money loans are given based on the value of the property being used as collateral. Debt-based hard money loans are given based on the borrower’s ability to repay the loan. Working with a quality hard money provider is essential in learning which type is the best for your investment portfolio. Hard money loans are often used by investors because they are easier to qualify for than traditional banks.

Are Hard Money Loans Popular?

Yes. In 2017, hard money lending volume in the United States totaled $23.2 billion, a 7% increase from 2016. The average hard money loan size was $305,000 in 2017. These numbers have consistently increased year over year with the real estate market becoming more competitive and more people wanting to become financially free.

Types of Hard Money Loan Services:

Fix and Flip Loan: A hard money loan used to finance the purchase and renovations of a property. The goal is to sell the property for a profit once the renovations are complete.

Short Term Bridge Loan: A hard money loan used to purchase a property quickly, usually with the intention of selling it for a profit in the near future.

Transactional Loan: A hard money loan used traditionally by whole sellers to fund the purchase of a property and the subsequent sale of that property, usually within a very short period of time.

What are the Risks of Hard Money Loans?

As with any loan, there are risks associated with hard money loans. The most common risks are:

-The property may not be worth as much as the loan amount and the investor could end up owing more than what the property is worth.

-The interest rates are typically higher than traditional loans, so the monthly payments could be more than what was expected.

-If the property is not sold or rented out within the agreed-upon timeline, the investor could default on the loan and lose the property.

Despite these risks, hard money loans are often the best financing option for investors because they are fast, easy to qualify for, and have a lower interest rate than traditional loans.

If you’re thinking of getting a hard money loan, it’s important to work with a quality hard money provider who can help you understand the risks and structure the loan in a way that best suits your needs. Do your research and make sure you’re getting the best loan for your investment.

Get Your Hard Money Loan With FlipCo

If you’re interested in hard money loans, look no further than FlipCo. We are a hard money lender that provides financing for fix and flip projects, short-term bridge loans, transactional funding & more. We have funded millions in loans and have a team of experienced loan officers who are ready to help you get the loan you need to have a successful investment. Call or request a free quote today.

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FAQ's

At FlipCo, we understand that time is of the essence for real estate transactions. We can fund projects within 48 hours of receiving clear title and all underwriting documents.

The most important part of our deal structure is ensuring our client are set up for success. We go the extra mile to ensure that title issues are not overlooked, legal documents are prepared correctly for our clients and that our clients have all the tools they need for their projects. Our client’s success comes before anything else.

The monthly interest payment calculation is explained in detail via the agreed upon Term Sheet that is signed prior to project closing. We charge interest only payments and only ever on funds used.

Yes, every property we lend on is required to have title, builder’s risk, hazard, and general liability insurance.

  • Single Family Residential, up to 4 doors (No Owner-Occupied)
  • First lien position
  • Previously flooded properties require additional diligence from our underwriting team
  • Additional square footage will require a survey prior to funding

We typically approve our clients within 48 hours of receiving all required documents.

We do not require third party appraisals. All underwriting and price opinions are performed in house reducing project costs as well as providing enhanced efficiency to the underwriting process timeline.

  • Last 3 months of bank statements
  • Financial statement
  • Completed borrower application

We offer a 3 and 6 month term.

FlipCo typically does not require a credit check. We pride ourselves on lending on the asset and strategy rather than the borrower’s credit score.

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