Are you buying your investment properties with the help from your bank or a conventional mortgage lender? Or maybe you’re paying cash for your fix and flip or buy and hold purchases? What if we told you that you could be doing more with a private money loan from Capital Fund 1?
Choosing to get your financing from a short-term asset-based lender can help you increase the number of fix and flips you complete in a year, thus increasing your income from your investments. Still not convinced? Check out these reasons why you should switch to using hard money to finance your real estate investments.
Working with a bank or other traditional lender often leads to needing you to put together as much of your financial history like your credit score, any debts that you already have, and other items that could decrease the amount you’d be able to borrow. With an asset-based hard money loan, the only thing that is looked at in terms of financing is the property in question. In simple terms, banks and traditional lenders underwrite you while private money lenders underwrite the property itself. For real estate investing, that certainly makes more sense than having a bank look at just you first and the property second.
Asset-based hard money lenders take a look at the potential of the property and the current state to determine the value of the property, typically looking at similar homes to the subject property in the surrounding area. Not only does that mean your financial history is pulled into question, but it also means no credit checks are required.
Quick Turnaround Time
Since we are only looking at the asset you need a loan on Capital Fund 1 is able to underwrite it in-house and provide a quote on the same day, or within 24 hours depending on the project. With trustee sales this is really important as we can underwrite and fund your loan in 24 hours, or when the title company is ready. On the other hand, banks can take weeks and sometimes months before they can fund your loan.
So why not secure the investment property sooner and begin fixing it or renting it instead of waiting for permission to buy from your bank?
While we can’t speak for all private lenders, Capital Fund 1 does not impose prepayment penalties on residential investment properties. After all, it is your job to sell a fix and flip as soon as possible so why get hit with a penalty for doing that really well?
Conventional lenders and banks, on the other hand, will definitely have a few things to say about selling a property in less than 6 months. You will be faced with penalty charges as well asa other fees that can result in a net loss on your investment.
We aren’t just talking about buying more fix and flips or adding more rental properties to your portfolio, we are also talking about adding that 500-1000 square feet to a historical home that is smaller than the homes around it, increasing the value of the home significantly. This can be done by leveraging your own finances into the project or working with draw funds for a major remodel.
You can take down walls to create open concept kitchen and living rooms, replace damaged or old items with new and more efficient ones to make the home a green one, and add more equity to the home to make it more desirable in the market. If you’ve got a rental property, you can even use the loan to help you fix a rental after a bad tenant does some damages and help you market the property for a hopefully better tenant.
And of course, you can purchase more properties and flip homes faster with the help of a hard money loan as opposed to working with your own cash. If you’re able to do more, you can make more money with your investments.
So, what are you waiting for? Call Capital Fund 1, LLC today and get your next project financed!