What is a Hard Money Loan?

What is a Hard Money Loan?

 hard money loan uses the value of a property as collateral for the loan, instead of the borrowers credit score and financial history. Lenders focus on the after-repair-value (ARV) of a property to determine the value of the loan.

Since they are not based on credit history or debt-to-income ratio, these loans typically process faster than bank or credit loans. The loan is proportional to the ARV of the property, and the loan-to-value (LTV) ratio. With Taylor Made Lending, LLC., the LTV is at maximum 70%. In other words, we offer 70%. In other words, we offer 70% of the value of the asset, in addition to the interest rates. The property used as collateral may be on that borrower already owns, or one that they plan to invest in.

These loans typically span a 2-3 year repayment plan, with the opportunity to renew. They are meant to be short-term. In case a borrower is unable to repay the loan, the lender has the right to acquire the property registered as collateral.

Should I Consider a Hard Money Loan?

Hard Money Loans are best for borrowers who have been denied by traditional lenders and banks. When the bank says no, we say yes! Since the loans are based on property value, we save a lot of hassle on researching a borrower’s financial standing and credentials, allowing us to close loans quickly. This process takes about a week, unlike conventional loans which can take up to a month to process.

Hard Money Loans are best for:

  • Turnaround Investments
  • Land and Construction Investments
  • Borrowers with Poor Credit
  • Deals that Require Immediate Action

These loans are commonly used by real-estate investors who intend on developing or renovating a property, then selling it for profit. Remember, these loans are short-term loans! Investments should plan to build and flip quickly.

Things To Remember

Hard Money Lenders take greater risk of losing the loan, so interest rates are higher than conventional bank loans. In addition, the collateral is inspected and the value of the asset is what will determine the loan amount. If the loan cannot be paid, the collateral will be collected. The interest rates at Taylor Made Lending ranges from 8.99% – 12%. Our highest LTV ratio is 70%. The interest rates and LTV vary according to the interested property!


Fix and Flip Loans

Fix and Flip Loans

Our largest borrowers are fix & flip investors. Yes! Just like the HGTV series. We offer fix and flip loans to investment properties. There are great results when it comes to fix and flip real estate, but also many dangers and consequences. However, if done properly, and examined wisely your fix and flip project can produce amazing monetary results!

Investopedia says, “Flipping (also called wholesale real estate investing) is a type of real estate investment strategy in which an investor purchases a property not for his own use, but with the intention of selling it for a profit.”

A fix and flip can quickly turn into a fix and flop. Make sure you do your research when it comes to a neighborhood, a property, and the investments it will require. We recommend consulting with a group of professionals that can help guide your decisions along the way. When undertaking a fix and flip loans venture make sure you:

  • Do your research
  • Have a reliable team of experts
  • Give yourself enough time and have patience
  • Get an appraisal before buying
  • Get enough money

The last point is where Taylor Made steps in. We are a company that is committed to flexible financing options for your real estate ventures. When it comes to financing your project, we have exclusive and available financing opportunities. Be sure to really examine what you need for your project.

Financing Options

  • Hard Money Loan: A hard money loan uses the value of a property as collateral for the loan, instead of the borrower’s credit score and financial history. In the case of a fix and flip, it would be based of the after-appraisal-value of the property you plan on fixing. The equity can also be backed by a property you already own and choose to use as collateral.
  • Quick Bridge Loans: A flexible loan intended to provide short-term financing until a permanent financing can be established. A bridge loan provides financing to purchase a property that needs renovations. These loans are good for borrowers who have yet to qualify for funding.
  • Direct Private Money Lending
  • Home Equity Loans
  • Commercial Property Loans
  • And more…

Visit our “Types of Loans” page to see a longer list of the types of loans we offer! We like to work with you to make your dreams come true. If you have any questions, or feel ready to move forward with your project, give us a call.

Private Money Lenders: A Guide to Private Money Loans

Private Money Lenders: A Guide to Private Money Loans

Private Money Lenders are non-institutional lenders that issue short-term loans for the purchase of, and sometimes the renovation, an investment property. They’re commonly known as “hard money lenders.” These private money lenders offer private money loans to short-term fix-and-flippers as well as long-term investors looking for a rehab project or quick funding.

Looking for a hard money real estate lender to finance your next real estate investment? Taylor Made Lending, LLC. offers competitive rates for prime borrowers with no prepayment penalties and funding as fast as 4 days.

How Private Money Lenders Work

Typically offer loans that are secured by a real estate asset. These loans are used to purchase a house, condo or multifamily building. When people think about private lenders, they’re most typically referring to hard money lenders. This is because hard money lenders issue short-term real estate loans used to purchase and renovate an investment property. Hard money loans are good for both short-term fix-and-flip investors as well as long-term buy-and-hold investors.

There are three degrees of private lenders. Each are based on the relationship between the borrower and the lender.

  • Primary circle: Family & friends
  • Secondary circle: Colleagues, professional & personal acquaintances
  • Third-party circle: Accredited investors & hard money lenders

Hard Money Lenders are Private Lenders

Hard money lenders are considered to be “third-party” private lenders, which is the furthest away from a borrower in terms of relationship. However, hard money lenders are considered the best private lenders because they’re the most reliable and have standardized interest rates, costs, fees, and loan terms.

Private money lenders are predominantly right for short-term fix and flippers who want to compete with the short timeline of an all cash buyer. However, private loan lenders are also right for long-term investors who want to rehab a rental property before refinancing into a permanent mortgage or seasoning a property before refinancing.

Who Can Benefit from a Private Money Loan?

Private money lenders are right for the following types of people:

  • Fix-and-flippers
  • Short-term and long-term investors who need financing quickly.
  • Buy-and-hold investors looking to purchase and renovate a property before refinancing with a conventional mortgage.
  • Long-term investors who can’t qualify for a conventional mortgage but plan on refinancing once they meet qualifications.
  • Long-term investors who need to season the property

Private lenders often issue loans to short-term investors looking to make money flipping houses. Private lenders also issue both rehab loans as well as traditional hard money loans to buy-and-hold investors looking to purchase and/or renovate a rental property.

The best use for a private loan is for a fix and flip project. Fix-and-flippers often seek short-term financing options that allow them to purchase, renovate, and sell a property within a short period of time. However, long-term real estate investors who invest in rental properties can also benefit from private money loans.

Residential and Commercial Properties

Private money loans can be used to fund a wide variety of properties including residential and commercial properties. Specifically, private money loans can fund the following property purchases:

  • Single-family homes in most conditions
  • Multi-unit properties in most conditions
  • Apartments and condos in most conditions
  • Commercial real estate in most conditions

In fact, hard money loans are often the best financing options when it comes to properties such as:

  • Short-sale
  • Foreclosure
  • Non-distressed REO properties

This is because these types of properties tend to move quickly and investors often have to compete with all-cash buyers. The quick pre-qualification time and time to funding of a hard money loan allows investors to purchase these types of houses.


Types of Commercial Real Estate Construction Loans

Types of Commercial Real Estate Construction Loans

Commercial Real Estate Construction Loans. Developers and investors who purchase underutilized land or run-down properties have special needs due to the financing that is required to get their properties up to speed. Not only must these clients worry about selling, occupying or owning a project, but they must obtain specific financing to make the land, and any buildings on it, habitable.

Commercial development can be very risky, and getting funding can be tricky if the developer and others involved do not have a track record of successful projects. Sometimes the developers are the owners upon completion and can use other properties they have developed as collateral if there is enough equity in them. These are some of the most common types of construction loans.

Land Development Loan

When raw or undeveloped land needs to be made construction-ready a land development loan can be obtained. The raw land may be subdivided and sold as a number of parcels for commercial or residential use. It may also include the installation of sewer, water or power lines to the site.

Acquisition and Development Loan

An A&D loan is appropriate if raw land is ready to be developed, or is already developed but needs improvements to its infrastructure or existing buildings. The A&D loan usually covers both the purchase of this land and the cost of any improvements needed before the development can be completed.

Mini Perm Loan

This is a temporary loan typically used to settle an outstanding construction or commercial property loan on a project that, once completed, would produce income. After three to five years of generating income the mini perm loan is replaced with long-term financing. Mini perm loans are normally obtained through commercial banks.

Takeout Loan

A takeout loan can provide permanent financing on projects where a temporary loan, such as a short-term construction loan, currently exists. Many lenders require their developers to secure a takeout loan before a short-term loan can be granted.

Interim Construction Loan

This pays for the labor and materials used to construct a project. An interim construction loan is usually valid for 12 to 36 months, and is settled once a long-term mortgage is in place.

Contact the Commercial Real Estate Construction Loans Expert Today!

Asset Based Lending for Real Estate Investors

Asset Based Lending for Real Estate Investors

Asset based lending is expanding rapidly to meet the needs of real estate investors looking for capital. Technology has played a bit part in expanding accessibility. For anyone building a real estate portfolio, it’s very important to understand what asset based lending is, how to find it and how to use it.

What is Asset Based Lending? Asset based lending is any kind of lending secured by an asset. This means, if the loan is not repaid, the asset (your investment property) is taken as collateral for the unpaid debt. In this sense, a mortgage is an example of an asset based loan. More commonly however, the phrase is used to describe lending to business and large corporations using assets not normally used in other loans. Typically, these loans are tied to inventory, accounts receivable, machinery and equipment.

So, when something of value is pledged as collateral, it’s an asset based loan. But we’re not talking about a traditional homeowner’s or business loan. We’re talking about asset based lending for Real Estate Investing. The most common types of asset based loans for real estate investing are hard money loans and private money loans.

Why Use Asset Based Lending? Real estate investors find asset based lending attractive because loans are based on the property or project, rather than the personal credit history or cash position of the borrower. Instead, lenders look at the numbers: What’s the exit strategy and anticipated return for the investor? What’s the as-is value of the property? And what is the after repair value of the property as a fix and flip? They look for safety in the numbers of the deal rather than debt-to-income ratios and credit scores of the borrower.

These loans work great for real estate investors since many are self employed, some have existing mortgages that exclude them from traditional bank financing; and for those new to investing – it offers funding options that a traditional lender might not. So unlike the homeowner who has to prove income, existing debts and a whole lot more, an investor looking for asset based funding needs to document the viability of his or her property and it’s intended use and anticipated outcome.

Contact Taylor Made Lending today to discuss if Asset Based Lending is right for you?