Hard money or investor loans are real estate loans that many contractors use to get money to finance the purchase and/or renovation of depressed properties to resell or get a long-term mortgage at the renovated value. Unlike traditional loans from banking institutions or other lenders, these loans, provided by private groups or individuals are almost always quicker and easier to qualify.

These lenders are mainly concerned with the after-repair value (ARV) of the home that will get used as collateral to secure the loan. There is much less attention paid to the borrower’s credit score or the ratio of income to debt. This method gives the hard money lender flexibility in funding remodeling projects most traditional lenders would judge too speculative to finance.

Investor Loans, Quick & Easy

Getting the money to move on investment right away could mean the difference between getting a hot property or another developer swooping in before you. Another consideration is that traditional lenders are constrained by banking regulations that might prohibit you from getting money for more than a certain number of properties. Also, traditional lenders usually know nothing about the real estate market in the Houston area.

Unlike banks and other traditional lenders, when applying for investor loans, you are dealing with private lenders who can customize the loan to meet the needs of both the borrower and the lender. It does not matter that you are a new real estate investor renovating their first property or a seasoned fix and flip developer, there are investor loans to fit your requirements.

Investor Loans Are Often Relationship Based

However, a developer or contractor that has received loans from the same company before would not have to prequalify, as there is a relationship already established. That takes one step out of the equation and make the process a little quicker. Your reputation as a competent contractor that completes projects and repays their loans is more important than your credit score.

Prequalifying can be as easy as showing clear title to the property, a renovation plan, and an exit strategy (sale or refinance). Even the first-time applicant can complete the process in a few days rather than months like a traditional bank loan. First-time applicants might have to show evidence of completed projects or if they are using a contractor, their previous projects.

Likewise, if you already own the property, the provider will get an appraiser to look at the house and consider your statement of repairs to determine how much they are willing to loan you. Red Door Funding can lend up to 100 percent of the ARV. Many investor loans only get approved for 75-80 percent of the ARV with other lenders. That’s like having to pay a down payment.

Although the interest rates and points are higher for investor loans, the length of the contract is usually 12-36 months instead of 30 years like a typical mortgage. In addition, the expense of the loan might not count as income, but you should discuss that with a tax attorney.

Contact Red Door Funding for Investor Loans

Call Red Door Funding at(832) 539-1099 to ask about investor loans. We have the funds you need to get your project started or to purchase and renovate a property. Just complete a secure credit application here. Send us an email with your questions,dwilliams@reddoorfunding.com.

Skip to content