Speed matters. It can be the difference between winning the Indy 500, enjoying dinner tonight, or making a profit on a real estate repair and exchange project. Many real estate investors turn to hard money loans to finance the purchase and renovation of rehab properties, and the need for speed is a major reason.
How can you “win the race” in the world of real estate renovation?
Renovation projects are extremely urgent and require funding sources that can respond quickly. This is why:
Faster money gets the deal: In a high-density area like Washington DC, the competition for the right correction and exchange properties is intense. When the stock of foreclosed, abandoned or dilapidated homes hits the market, it is often the developer with the fastest access to financing who gets the property. If you can’t arrange financing in a couple of days, you may be missing out on a lot.
TIP: The US Department of Housing and Urban Development website has a portal that lists all foreclosed properties in the country. Check it out to see what’s available near you.
· Scheduling your sale: In most areas, the optimal time to sell a restorative top is limited to a multi-month buying season, which generally begins in early spring. This means that you should ideally schedule your purchase and completion of the rehab to coincide with the sales season. A quick private loan, available as soon as you need it, is the key to the right timing of your rehab project. A recent Zillow study puts the magic window for selling between mid-March and mid-April, depending on variables like location and weather. Homes sold during this window sold 15 percent faster and for 2% more. That’s real money in your pocket.
· Flexibility: Repair and exchange or construction loans are often structured with a draw schedule, so that funds are released each time a certain benchmark is reached (permits, frames, etc.) This ensures a constant flow of funds throughout the project. However, cost overruns and construction delays can occur, and developers often increase the scope or schedule of the project after initial funding. Whatever the reason you need additional funds for your project, waiting for a new loan can slow down the project. Hard money loans can be structured to include multiple phases, resorting to phase two or three only if necessary, and the money can be disbursed as early as the same day so that there is no need for any interruption in your business. draft.
