This is a question that I have been asked hundreds of times. What I would like to do is go over the similarities and the differences. If you would like to use conventional (Bank) financing you will need full documentation (Tax Returns, W2's, Pay stubs, assets). When the bank is considering you for an investment property they want to make sure that you can afford the debt yourself if anything unforeseen goes wrong. The interest rates will be lower, but you will have a prepayment penalty tied to the loan. Usually prepayment penalties are six months interest, pretty much 6 months payments. The points/fees will be lower on a bank loan rather than a hard money loan, but the bank is looking at for your business for the long term.
If you are looking for a loan solution that will provide the capital for the acquisition of the property plus money to rehab the property. You should look at hard money. Today's hard money lenders are more sophisticated and are looking for investors that they can build relationships with for multiple transactions. Your hard money lender will charge you points ranging from 4-10 points. This depends on the way your fix/flip project is put together. If you don't have to put any money into the project but you benefit from the proceeds of the sale. I think their compensation is more than fair.
If you would like to go over a fix/flip rehab project contact Gary Martin at (909)717-2013
7 comments:
You should go for hard money lenders as they are faster than banks and do not have that much interest rate.
Investing in a property doesn't need to be a hassle on your part especially when hard money loans are available from lenders which are ready to assist you anytime you need.
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