When someone is looking for a hard-money loan, one of the most common questions asked is, “will my targeted real estate purchase qualify or attract interest from a hard-moneylender?” This is an important, and valid, question that warrants a detailed response.
To be clear, a hard-money loan can be secured for virtually any real estate transaction. For example, a loan could be secured for the purchase of a single-family home, a multifamily residential property, commercial real estate, etc. Though, it is worth noting that the vast majority of hard-money loans in Los Angeles, and elsewhere, are issued as mortgages for residential property purchases.
One of the most popular real estate transactions that are financed via hard-money loans are fix-and-flip projects. The loans are typically utilized to purchase residential property with a specific objective to update the home, then put it back on the market for a profit.
Unique Properties Will Present Challenges
It may prove challenging to locate a reputable hard-money lender who is willing and able to provide a loan for other types of property, such as:
• Land purchases;
• Industrial property (e.g., steel mill);
A good rule of thumb is that the more unique the property is, the more difficult it will likely be to locate a respected and reputable lender who is willing to provide a loan for the purchase. Why? Because most lenders are generally interested in providing support on properties that will more readily sell. This helps ensure the lender will get their funds back sooner rather than later, even if the borrower suddenly decides to back out of the project or is unable to service the loan payments.
Hard Money Loans for Estate Sales
Even though it is more challenging to locate a reputable lender for more unique real estate transactions, it is worth noting that if you have identified a property on the market being sold via an estate sale, you could potentially secure a loan in Los Angeles and elsewhere with less obstacles compared to, let’s say the purchase of a restaurant. This is because some hard-money lenders can also provide loans while an estate is going through the probate process. This is an important service since, in many instances, the surviving heirs may need to borrow funds in order to settle outstanding debts and obligations that have attached to the estate of a deceased loved one. Hard-money lenders can provide a loan secured by the real estate property that is going through probate. It is important to highlight the fact that this type of assistance is typically not offered by traditional lenders such as a credit union or bank.