Software Features

BROKERAGE SERVICES

Software Features

Property Data

Research properties and their owners, compile lists, and more.

MLS Comps

A multiple-listing service comparable tool.

Listings

List your properties with Propelio Realty for incredible savings.

Short Sales

If you have an underwater property, our experts can help.

For Education

Blog

Interesting and valuable articles from Propelio and the industry.

Academy

Real Estate education platform led by a team of professionals.

Propelio TV

A channel that gives daily updated archive of our live video.

Discover Propelio

About Us

Get to know Propelio better – explore our story and mission.

Map Coverage and Brokers

Shows MLS coverage and broker transactions in your state.

Referral Program

Share Propelio with friends and family to earn exciting rewards

Template is not defined.
Play Video

When to Use Hard Money: A Comprehensive Guide

Welcome back to another edition of Hard Money 104. I’m Chris Jamison from SF Lending, your go-to hard money lender. Today, we’re diving into when it makes sense to use hard money.

Quick Closures

Making Strong Offers

If you need to close a deal fast, hard money can be your best friend. Sellers love quick buyers. With hard money, you can promise a five to seven-day closing period, making your offer more attractive. Build a solid relationship with your lender to speed things up even more. Fill out your application, get pre-approved, and make confident offers knowing your lender has your back.

Working with Wholesalers

Wholesalers often need fast closures, sometimes within days or even hours. Hard money lets you keep up with their fast pace. This helps both parties: the wholesaler gets their money quickly to find new deals, and you secure property fast.

Pre-Foreclosures

The first Tuesday of every month is auction day at courthouses. If you’re buying pre-foreclosures, get everything ready to close the Friday before the auction. This gives you some wiggle room for delays with title issues, attorney hiccups, or slow payoffs from big banks like Wells Fargo. Closing on a Friday also allows the seller time to move out, letting you start your rehab promptly.

Motivated Sellers

Sometimes sellers need to close quickly due to life changes—like moving for a new job or dealing with a vacant rental. Hard money can make your offer more appealing. Structure your contract to benefit both sides, ensuring a win-win situation.

Houses Needing Repairs

Addressing Major Issues

Houses with significant problems like foundation, roof, HVAC, or flooring won’t qualify for conventional loans. Hard money can help you fix these issues, allowing you to bring the house up to standard for take-out financing or resale.

Large Rehabs

Sometimes a property requires extensive repairs, costing $60,000 to $200,000 or more. If you can’t cover these costs upfront, hard money can bridge the gap. You can either close the purchase with cash and then refinance for the rehab money, or you can borrow both the purchase and rehab amounts upfront, minimizing your out-of-pocket expenses.

Renovations Only

If you have the money for the purchase but not the rehab, you can use hard money to finance the renovations. Close with your own funds, then refinance into a hard money loan to complete the rehab.

Building a Rental Portfolio Quickly

Rapid Acquisitions

Using hard money allows you to buy multiple properties quickly. You could potentially acquire three to four houses at once, then refinance them all together. This speeds up the process and helps you build a rental portfolio faster.

Reduced Out-of-Pocket Expenses

Leverage hard money to minimize your cash investment. Buy multiple properties, fix them up, and refinance them all at once. This strategy helps you manage different Debt-to-Income (DTI) ratios and get multiple properties cash-flowing faster.

Flipping Multiple Houses

More Deals, Less Time

Using hard money can let you flip three times as many houses as using cash alone. If you were to buy, rehab, and flip one house at a time, you’d probably do two deals a year. With hard money, you can manage six flips in the same timeframe. This spreads your risk across multiple deals and can significantly increase profits.

Risk Management

A hard money lender won’t let you dive into a bad deal. They conduct third-party appraisals and ensure the property is worth the investment. This added layer of security helps you avoid overpaying and reduces the risk of a bad flip.

Pre-Deal Analysis

Before committing to a hard money loan, use tools like Propelio to run comparable sales and get a realistic idea of a property’s value. This prep work ensures you’re not wasting your lender’s time and helps you prioritize solid deals.

Hard money lending offers numerous benefits for investors needing quick closings or dealing with properties requiring significant repairs. It also accelerates the growth of rental portfolios and increases the volume of house flips you can manage.

Wrap-up

Hard money lending can be a game-changer for real estate investors, providing the speed and flexibility needed to seize lucrative opportunities. Whether you’re aiming for quick closures, working with wholesalers, navigating pre-foreclosures, or tackling extensive rehabs, hard money offers a practical solution. 

It facilitates rapid portfolio growth and enhances your capacity to flip multiple houses, all while mitigating risk through diligent lender appraisals. By leveraging hard money strategically, you can maximize your investment potential and achieve your real estate goals more efficiently.

Get started with Propelio and unlock all the tools you need to succeed in real estate. Sign up now for a 14-day FREE trial: Start Free Trial

show less

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Episodes

Play Video
3 minutes

Many have asked how I climbed from wholesaling five years ago to flipping...

Play Video
45 minutes

Welcome to the Real Estate Business Mastery Show! In today’s episode, we recap...

Play Video
62 minutes

Welcome to another insightful episode of the Real Estate Power Hour. Today, we...

Play Video
49 minutes

Good morning, everyone! I’m Robert Kelley, and today I’ve got Kristen Gary Saad...

Play Video
47 minutes

Hey everyone, I’m Ryan from Propelio. Today, we talked with Lolita Shira, also...

Play Video
2 minutes

Do you remember the first time you tried to solve a complex problem?...

Play Video
50 minutes

Understanding the real estate market is crucial for investors looking to thrive and...

Play Video
5 minutes

Hey folks, Blade Johnson here from Finishing Touches in Fort Worth, Texas. Today,...

Play Video
28 minutes

In today’s fast-paced world, staying on top of your health can be a...

Play Video
44 minutes

Hey everyone, good morning! I’m Ryan with Propelio, and today in the studio,...

<span data-metadata=""><span data-buffer="">Propelio TV

Do you love learning from your favorite hosts? Subscribe and we will notify you when we release new shows.