Thread: How Hard Money Works

Hello,
I am looking into using hard money lenders to get my RE Investing career rolling, I have found several houses with asking prices around 65%-75% of the assessed value in my area of consideration. Say I were to offer around 50-60% of the assessed value would i be able to borrow 100% or 110% of the purchase price. For instance I am looking at a 2br/2b where the assessed value is 45000 the asking price is 36000 and I would like to offer 20000-23000 If I use hard money lenders would I be able to offer 20000 and borrow 25000-27000 to use to improve the house to increase resale value? Any insight you can provide on this would be greatly appreciated, and if not hard money is there any way I would be able to do this deal without a down payment and capitol of my own. Also I have thought about using an equity loan can i obtain an equity loan while using hard money? and If I were to mortgage the house in my own name how long after closing would I be able to access the equity in the form of a line of credit or loan to use to increase the value of the house for a quicker and higher resale.
Thanks In Advance For All of Your Help

If you can't qualify for traditional loans, hard money may be an option. Hard money is a loan that uses an asset (or collateral) to secure the loan. Instead of evaluating a loan's risk based on your financial position, the lender makes sure that they can get their money back by selling your asset if you don't repay as agreed.

Hard money loans are generally short-term loans, lasting from one to five years. You wouldn't want to keep them much longer than anyway, because interest rates for hard money are generally higher than they are for traditional loans.

A hard money loan is a specific type of financing asset-based loans in which a borrower receives funds secured by the value of a parcel of real property. Hard money loans are typically issued at much higher rates than conventional mortgages and commercial or residential are almost never issued by a commercial bank or depository institution. Hard money is equivalent to a bridge loan which usually has similar criteria for lending as well as costs for borrowers.

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