access to capital

Performance Property Real Estate Question

How Many Points Should You Pay For A Hard Money Loan?

Q: How Many Points Should You Pay For A Hard Money Loan? Jenna, Melbourne, FL. A: Hi Jenna. That’s a common question regarding hard money loans (HMLs). For starters, let’s not put the cart before the horse— it’s not about the points necessarily, it’s about the access to capital first and foremost. Make certain that you are only considering viable financing options before you begin comparing the specifics of different financing options. For example, a hard money loan that doesn’t charge any points is irrelevant to you if the lender requires you to pay 30% of the acquisition or rehab cost if you don’t have the 30%! That’s like buying an outfit for the Oscars even though you can’t get […]

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Hard Money Or Private Lender: Which Is Better?

Q: I have a property that I am interested in purchasing with a partner. Would I be able to get a hard money loan or would I be better off with a private lender? Jack, Morristown, NJ A: Good question, Jack. In general, hard money lenders are in the business of lending out money short term for profit–they often borrow and pay interest on the money that they lend too so they are incentivized to charge higher interest rates. Private lenders are typically individuals seeking additional income by passively investing in real estate. Ultimately, access to capital is more important than the amount you pay for it, so if you need money to fund a deal, anything is better than […]

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