Get money for your home foreclosure investment

There are many ways to get money to invest in home foreclosures. You can use your own cash, run investor-related ads in the real estate section of your local newspaper, apply for a personal loan, use a credit card (more on this in another article), get a home loan, or use a hard money lender In this article, we will discuss the whys and wherefores of using hard money.

What is a hard money lender? A hard money lender is a certain type of lender that lends money on the future equity of a renovated property. Unlike conventional lenders, these lenders don’t care about current value. All they care about is how much the house will be worth once it’s fixed up and ready to sell.

They make it easier for entrepreneurs with poor credit and/or no money to make foreclosure investments.
Some things to know about these lenders:

1. Hard money loans are based on the value of the property after fixing up the house as stated above.

2. These loans are generally short-term loans; from 3 to 6 months.

3. These loans can be closed in as little as two weeks.

4. These loans do not have as much bureaucracy as conventional loans.

5. These lenders give you the money to fix it on a lottery-type system.

6. These lenders can lend up to 65% of the repaired value. For example, a home for sale for $20,000 as is and after repairs would be worth $60,000, they would lend you up to $39,000, which leaves about $20,000 to repair the home.

7. They generally do not require a down payment. Conventional lenders almost always require at least a 20% down payment with good credit and may not even lend to borrowers with less than perfect credit, which leads to #8.

8. They will give you a loan even if you have bad credit, no pay stubs, or no tax returns. This opens the door to many more entrepreneurs.

Here is an example of how a hard money loan would work:

Find a house: Purchase price of $43,000. Value after repair of $88,000. You receive a 60% hard money loan of $53,000, leaving $10,000 to make any repairs necessary to bring the house into habitable condition.

Receive offers for the necessary work. You can do it yourself to save money, but sometimes; there are fewer headaches and it frees you up to search for more offers if you have someone else to do the work.
So, you get offers.
Offers:

Contractor A: $12,000

Contractor B: $9,000

Local Handyman: 100 hours x $20/hr., $2,000+Materials, $2,500 = $4,500

You choose Contractor B. You decide you don’t want to do the work yourself or have to supervise a handyman. It is better to spend your time looking for new investments. Now, you ask, how do you pay the contractor? Easy. When the work is complete, the lender will send an appraiser to make sure the job is done. When they verify that the work is done, the lender will write a check to the contractor. It’s that easy.

Using hard money is how people with bad credit and no money make fortunes in real estate investing.

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