Purchasing Investment Properties
Many of our clients often utilize Hard Money loans or similar types of Private Lending financing for the purchase of the property. Hard Money lenders are a necessity and serve a real purpose among the investment community. These “short-term” loans are often utilized for below-market properties in need of renovations. The investor sometimes finances the renovation costs within the Hard Money loan and then looks for more permanent financing once the property is ready for tenants. Not all properties need to be purchased with Hard Money loans. If the property being purchased does not need renovations and is rent-ready, consider purchasing with a long-term or more permanent mortgage product and not default to just Hard Money.
With most Hard Money loans needing to be paid in full within 12-24 months, this forces the investor to refinance, pay cash, sell, or find some other means to pay the loan in full. Purchasing with a DSCR or other type of long-term loan eliminates the need to pay the loan in full within the first year or two, and saves money by eliminating the need for refinancing. It also allows the Real Estate Investor time to decide on what is best for their goals, without the pressure of needing to quickly pay back the loan.
