Flipping Real Estate With Hard Money Loans

flipping-real-estate-with-hard-money-loans.jpg

Hard money loans for the acquisition and renovation of residential and commercial investment property allow many real estate investors to move quickly with fewer lender restrictions in a competitive market.  These loans also provide an alternate source of funds for investors who cannot qualify for traditional loans or for those who concentrate on projects that are difficult  to get funded through conventional sources of financing.

There are a lot of advantages to using hard money loans to finance real estate projects:

  1. Expedited underwriting process
  2. Often no or limited management committee involved
  3. Accessibility of key lender personnel
  4. Loan amount typically based on percentage of purchase price + rehab costs
  5. Borrowing costs may go down with proven track record and repeat business
  6. Generally loans are interest only based on the capital funded
  7. Lenders not usually interested in an equity position in your project

There can also be some perceived disadvantages as well:

  1. A business plan or executive summary may be required
  2. You may need to provide a personal financial statement
  3. A proven track record of successful projects might be necessary
  4. Interest rates will be upwards of 18% and not usually lower than 10-12%
  5. Origination cost could be anywhere from 0-8% of the loan amount
  6. Minimum interest period for the loan may be longer than you desire
  7. You might have to personally guarantee the loan

If you're an investor in the Chicago area and you're looking for alternative sources of funding for your real estate projects, you might consider looking into the following groups:
 

renovo financial logo

Renovo Financial

Renovo Financial offers first mortgage loans for the purchase of rehab and investment properties, typically from $50,000 - $250,000.

Why Renovo?  (in their own words) Speed, specialized financing for rehab investors, well capitalized, knowledgeable and Wow Service. (renovofinancial.com)
 

Continuum Capital Funding

Continuum specializes in acquisition, rehab, bridge or hard money loans.  Loan sizes from $100,000 - $3,000,000. Continuum lends throughout the greater Chicago metropolitan region. (ccfbridgeloans.com)
 

continuum capital funding logo
barnett capital ltd logo

Barnett Capital LTD

According to their website, Barnett not only lends to real estate investors, they also purchase and develop  commercial, multi-family, single-family and distressed assets on their own account.  They can serve their clients both with industry insight that other hard money lenders may only acquire vicariously.  (barnettcapital.com)  


****

Brent Hall is a Broker Associate with Jameson Sotheby's International Realty, Chicago. Contact Brent Hall to discuss buying and selling real estate in Chicago.