Using Hard Money Loans to Diversify Your Investment Portfolio

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H A R D M O N E Y L O A N S T O D I V E R S I F Y
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H O W T O E X P A N D Y O U R N E X T R E A L E
S T A T E I N V E S T M E N T U S I N G A H A R
D M O N E Y L O A N
Real estate is generally deemed to be a safe
investment in that the relative price volatility
in this sector is typically less in comparison
to the stock market. Historically, data indicates
that property prices trend upwards when economic
conditions are expected. Major crisesincluding
the current pandemicor significant periods
of recession can prompt a temporary drop in
prices. These downward trends can offer a
substantial opportunity for first- time home
buyers and those looking to enter the real
estate investment space.
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P R I C I N G F A C T O R S
The general area and specific location are the
determinative factors that influence whether a
given property is considered hot or not. The
targeted property type is also an
important aspect of residential, commercial,
industrial, or undeveloped land. Additional
property characteristics to consider are
connectivity (i.e., water/sewer, electricity,
utilities, etc.), interest rates, economic
conditions, and the current demand and supply in
the real estate marketplace. There are also
multiple options available to aspiring real
estate investors in terms of how they want to go
about managing their portfolios whether that be
assuming the role of landlord and enjoying the
passive revenue stream from rental income,
investing in a real estate investment trust
(REIT) or attempting to fix and flip, and sell a
property.
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U S I N G H A R D M O N E Y L O A N S T O D I V
E R S I F Y Y O U R I N V E S T M E N T P O R T
F O L I O
No matter whether you go with the REIT, landlord,
or property fix and flipping strategy, you can
leverage the distinct advantages of hard money
loans in new york to expand and diversify your
investment portfolio, which will subsequently
enhance your bottom line. Hard money is
essentially unconditional financing for getting
your real estate transaction fully funded without
having to go through the qualification process
associated with traditional financing routes.
These traditional loan procedures can take
a significant amount of timea commodity often in
short supply for real estate investors looking
to capitalize on last-minute property purchases
at premium price points.
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The eligibility consideration for hard
money lenders is focused on the merits and
potential profitability of the deal at hand and
not the borrowers personal financial profile in
the majority of situations. Investors should
keep in mind the associated costs of obtaining
a loan and how it will ultimately impact your
return on investment. There are a few
fees associated with hard money loans to be aware
of, including
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Interest Hard money loans are interest-only
loans that usually range between 8-12 depending
on the loan amount and the specifics of the
transaction is funded. Points Lenders will
usually charge points for availing the loan,
with one point equating to 1 of the total loan
amount. Extension Fees These are charged in
instances where the duration of the loan is
extended, however, when partnering with Express
Capital Financing, you will receive a free
extension. Other Fees These include costs
related to inspections, processing,
applications, etc.
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Real estate investors should shop around and
compare multiple hard money lenders to find the
right fit for them in terms of cost and the
ability to tailor a loan package that
corresponds with your investment strategy.
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The vast majority of hard money lenders are
willing to lend up to 70, which is a loan to
value (LTV) of after repair value (ARV) for
property flipping projects. For other types of
projects, loan to construction (LTC) packages
can range from 80- 90, which encompasses the
acquisition expense and repair costs. This means
that you can flip a property with minimal (10-15
of the project value) out-of-pocket expenses,
which gives you ample opportunity to take on
multiple projects using hard money loans and
vastly expand your real estate investment
portfolio. The more projects and properties you
are drawing income from, the more your overall
profit margin will increase.
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