Form of Financing - Hard Money Loan

Hi everyone. Second round of posts with a value of… 3/3
Funding.
You could say the oxygen of real estate deals. Equity is good. But funding can take you further.

Financing is not bad or good. Is simply financing. And like any money, you have to know how to manage it and deal with it.

Financing real estate transactions allows you to increase your activity in terms of quantity and in terms of types of transactions.

This time I want to break the funding issue with you - Hard Money Loan

For you, hard money is another form of financing. It's not bad..it's not good… it's financing.
The perception of such a costly form of funding. Interest rates there start from 8% to the majority, so the transaction is less relevant.
In addition, it is more for flip deals or short term bridging loans until refinancing and obtaining a long-term loan at lower interest rates.

Consider stress that the interest on the loan is not the essence of everything. It's smooth. And therefore should look at financing as a whole (costs, the rate of financing, profitability it gives and more).

In addition, it is important to emphasize that for foreigners in small and agile transactions, this is almost the only option (but there will probably be extensive reactions to this ☺)

The loan is backed by the property itself (the rabbi also has a personal signature on the loan but this is an additional layer of security for the lenders) so there are cases where the rate of financing from the loan
loan-to-value
Will be relatively low
(Depending on the lender himself and his ability to give foreign residents a loan)
What does that mean?
Starting with 65% financing for the home itself.
Financing for multi-renovation is at the rate of 100%,
So that the de facto financing rate is approximately 70% -75%
I emphasize that there are always cases here and there, and my words are aimed at foreign investors, and it is known that there are those who lend at a higher rate.
In addition, there are lenders whose rate of financing is not the total investment in the project, but the rate of financing from the value of the property after renovation,
ARV - After Renovation Value

Then there will be a uniform rate of financing for each transaction. Sometimes it's a combination of both, which means that you go by one method, plus as a defense test users also see that it does not go beyond.

Flip investors often use this form of financing because of its nature. It is short, can be returned early, available to foreigners, and in fact because of the mode of operation and purchase of the property.
In the event of a failure to repay the loan, the house itself will suffice for the repayment. It also allows investors to put a low amount of equity ratios in a transaction.

The loan approval process is usually faster compared to regular sources such as banks, etc., as well as the underwriting process.

It should be remembered that beyond the interest there are the costs of document editing, valuation by appraiser as well as points, individual percentages, taken by the total requested funding 2% -5%.

But again ... remember that financing is not just one number.
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