Hard Money Loan Articles

Hard Money Loans

Texas hard money loans, sometimes referred to as fix and flip loans, bridge loans, and even as asset-based or asset back loans, are a type of financing for procuring a residential or commercial real property, such as single-family residences, multi-family units, or commercial buildings. Read on to learn more about hard money loans.

Texas hard money loans are a type of capital funding that is made available, usually by a pool of private investors, rather than through a traditional lending institution, such as banks and credit unions. These can be found throughout the lone Star State and used for a variety of purposes, but most often are related to real estate transactions.

What are Hard Money Loans?

As briefly mentioned above, hard money loans are an alternative to traditional commercial financing, which is lent through a bank or credit union, or even specialty lenders. Instead, hard money loans, from private investors who group their money together in order to obtain a return on investment.

How Do Hard Money Loans Work?

Hard money loans, also known as bridge loans, asset-backed loans, and fix and flip loans, are a type of financing that is used to purchase and rehabilitate residential or commercial properties.

But, rather than having long terms, these loans are much shorter, lasting as little as 6 months, but up to 18, 24, and sometimes a bit longer. Most, however, only last a half a year up to a year or just a bit longer. Interest rates are generally competitive with traditional commercial loans, but these offer much flexibility in repayment installment amounts and other elements.

Advantages of Hard Money Loans

Of course, as with any type of financing, there are pros and cons to hard money loans. Here are some of the advantages of hard money loans:

  1. Quick funding. Unlike traditional commercial lenders, hard money loans I have a long reputation for making funds available in a very short amount of time. This is due to the fact that these do not require all the bureaucracy and red tape of traditional loans.
  2. Flexibility. Hard money loans offer much more flexibility than traditional commercial financing, which comes with many restrictions. As previously mentioned, hard money loans have a number of customization elements, which means that borrowers are able to set their own terms.
  3. Leverage. Because of how hard money loans work, borrowers need not put up their own cash to secure them, making them ideal for short-term financing.