Even though hard money loans may have higher interest rates and terms than conventional loans, successful property investors still turn to hard money for the speed, flexibility and opportunity in real estate.
Hard money loans are designed for investors. They are short-term, real estate-backed loans that give you cash fast to easily purchase a fix and flip property, foreclosure or distressed property that’s an investment opportunity you don’t want to lose.
Hard Money Lending Terms in Houston
Nationally, interest rates for hard money loans average 10-15%, according to REtipster.com. Points or fees average 2-4%.
At Catalyst, our hard money lending rates for the Houston, Texas, area typically range from 9.99-13.99%. Points average 1.99-3.99%.
In many situations, your loan can be funded within a week, possibly even days or hours if you’re pre-approved with a lender. Whereas, a conventional loan could take up to 45 days. A fruitful property investment opportunity will not sit on the market that long.
The interest rate issued may be based on the property and your experience in real estate investing. Therefore, many property investors find it valuable to build a working relationship with one real estate lender who then gains an understanding of their investment background and exit strategies.
Approval of a residential hard money loan is based more on the property investment opportunity vs. your credit score. Oftentimes, the best opportunities come from the ugliest houses, and homes in poor condition typically won’t qualify for conventional financing.
Also, real estate wholesalers will only sell to those with either a cash offer or an approved hard money loan.
Not All Hard Money Lenders are the Same
Real estate lenders will vary when it comes to terms and also when it comes to how they work with you.
Look for a lender who offers various options and flexibility in rates, points and fees. The more options the lender has, the more opportunity you will have to find what works best for your situation and to open the door to future investments.
Also, look for a lender who is a property investor himself or herself. With the real estate market moving fast and constantly shifting, the right lender can provide a wealth of guidance, networking connections and business opportunities.
Catalyst Funding is a hard money lender who can help build your real estate investment opportunities. With a background in fix and flip projects and other property investments, we can provide resources and guidance to help you through the entire process. Contact Catalyst Funding today. 832.648.3626