The church youth group’s final stop was at the home of one of the urban city experience leaders. After taking the group to homeless shelters, soup kitchens, and projects in the lowest income part of the city, the church youth were surprised that they now found themselves pulling up in front of a home that would have brought top dollar in any other part of the city.
And while the leader and home owner explained that it had indeed been a little difficult to get the renovation lending he wanted for a home in this nearly blighted area, he felt it was an investment worth making. He hosted events that invited his less fortunate neighbors into this home that offered a sense of hope and a sense of promise. Although other homes in the area were run down, the goal was to show that nice places could exist amidst the chaos of some of the the other homes. In time, this nice home led to renovation lending projects in other homes. The nicer homes led to the business development of a new grocery store and gas station a few blocks away. Those businesses were the beginning of some new jobs returning to the neighborhood. Improving the community through the purchase of a few pieces of property was beginning to show some promise. It was slow, but it was working.
Both Residential and Commercial Real Estate Investing Projects Can Help All Kinds of Neighborhoods
Not all renovation lending is as difficult to acquire as the money needed to update a home in a low income high crime area of the city. Many renovation financing needs are, however, not typical home owner projects. Some projects, called hard money loans, look toward renovation lending that will lead to a quick profit for the lender. these loans often come with a rapidly increasing interest level which adds to the importance of building deadlines. Hard money mortgage lenders make their finances available immediately, often within 24 or 48 hours of an application. This quick availability allows the lender to step in on short sale real estate opportunities.
With the help of expert home inspectors and contractors who can assess the needs of a property that includes a single residence or commercial business, hard money lenders can use secured short term loans to purchase properties that they want to renovate and then resell for a profit. With the use of the property itself as collateral, these hard money loans are a viable option for lenders who want to buy and sell several properties within a year. Racing to make renovations before having to make many loan payments, the ultimate goal is to make the improvements and quickly increase the value of the project and bring the investor a substantial profit. Profit that can be used toward the next renovation project.
Adding value to both individual properties and an entire neighborhood, these renovation projects can benefit individual neighborhoods, as well as past and future property owners. Since most hard money loans are secured by a property with as much as 30% to 50% equity, the investor is well protected and the lender is the one who takes the risk.
Investment Property Mortgage Lenders Offer Property Owners Hard Money Loans
Typical bank loan borrowers who want to take out a business loan has to show that they have been in business for at least tow years. Additionally, they need to have at least $250,000 of annual revenue, as well as good personal and business credit and be able to show that their cash flow is positive. Hard money lenders, however, offer a different kind of loan. Because the property itself serves as collateral, these higher interest loans have fewer restrictions.
The borrower operates on the premise that the renovations will be completed and then the property will be resold before repayment is required. The higher interest rates, sometimes starting as high as 15% to 18%, may be the down side on this kind of loan, but the benefits are appealing to many borrowers. Having access to the needed financing means that these hard money borrowers can take immediate advantage of short sale opportunities and other real estate ventures.