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Common Questions

Q: What is a Hard Money Loan?

A: Hard Money Loans (also called bridge loans, rehab loans and  balloon mortgages) are short-term asset-based loans, generally with a  higher interest rate, meant for a quick fix and flip scenario. They are  geared towards investors who are having troubles getting funding from  banks or other sources yet need money fast to turn an investment  property. In some cases Hard Money Loans are good for people threatened  by foreclosure and who need a little time to gain control over the  management of their property. The after-repair value of the property  being borrowed against is looked at the moreso than the borrower’s  credit to determine if a hard money loan is the best choice.

Q: What is the difference between a Hard Money Loan and a Bridge Loan?

A: Although both loan types have similar criteria for qualification  and similar interest rates, hard money loans are specifically focused on  financially distressed situations where money is needed fast for a  quick sale to avoid bankruptcy or foreclosure or to help real estate  investors turn a property faster. Bridge Loans are more focused on the  term of the loan ie; to secure a project before permitting has been  sought or to carry a home buyer through the purchase of a new property  while in the process of selling an old one.

Q: Is my credit score important?

A: Generally not. The loan is secured mostly on the value of the  collateral property. However it is usually a good idea to have a credit  score of at least 640.

Q: How much money can I get in a single loan?

A:  Usually between 65-75% of the property value, however loans can  be cross-collaterallized with other properties to reach 100% financing.  Average loans are usually around $100k or so but larger loans may be  considered.

Q: What types of properties qualify for loans?

A: A typical property would be a residential 1-4 unit dwelling that  needs repairs or is in distressed condition. Other properties are  considered however on a case-by-case basis.

Q: If Hard Money Loans are not given by banks, who are they given by?

A: Usually lenders are private investors who lend only in local areas.

Q: Do Hard Money Rates follow bank rates?

A: No. Hard Money rates are determined by the local real estate market.

Q: Who is best suited to receive a loan from Mike’s Hard Money?

A: Borrowing from a hard money lender is not for everyone, but it can  be a great tool to get the job done fast when other lenders are  uncooperative. It is always good to have alternative sources for  funding, and a reputable lender with real estate experience is an ace up  the sleeve for a distressed investor. Mike focuses on building  investor-to-investor relationships in the communities of Fort Collins  and Northern Colorado. Circumstances vary greatly, but generally  speaking, you should be a new or experienced investor with a non-owner  occupied property on the table having proven potential to turn a  reasonable profit in a short period of time.

Q: A friend of mine told me that Hard Money lenders are the  equivalent of loan sharks. Is that true? What should I look for in a  lender?

A: You’d be surprised when you use the term “hard money” in  conversation how many people automatically associate it with loan  sharking. Perhaps it’s the sound of the word HARD that makes it sound  like an undesirable last resort. But regardless of why this term was  chosen, all lenders have be be licensed. Anytime you deal with a lender,  ask for references and check up on them. Make sure they are licensed  and have a good reputation in the community. Look for local investor  clubs like ICOR and ask them, and look up their license through your  local city or county’s website. But most importantly, sit down with them  and ask them about their business. Treat your meeting like a chance for  you both to get to know each others business, and pay close attention,  that way you’ll get a good feel for whether they are a good match for  you.