Hard Money – Can I get Money for Repairs?

“Hard money” is a term for money borrowed against and secured by a hard asset, i.e. a building or other property, rather than by the credit worthiness of the borrower. In most hard money loan situations, the lender is not concerned with the borrower’s credit because the value of the collateral will be sufficient to cover the loan principal in the event that the borrower cannot repay the loan. In today’s world, the term hard money has come to have another meaning—it’s money that is hard to borrow. Rehab money and construction money often fall into this category. At a time when banks and other traditional lenders are reluctant to make loans to credit worthy borrowers on properties that are well maintained and in excellent condition, the possibility of securing a loan to rehab a distressed property becomes almost impossible. After years of making risky loans, the pendulum has swung in the other direction and banks are hesitant to make any loan which they perceive to have even the slightest risk.
For the potential investment property rehabber, all is not lost. There are lenders who specialize and are active in making rehab loans. To answer the question, “can I get money for repairs”? The answer is yes, under specific conditions.
1) Can the property once rehabbed command a “future value” greater than the purchase price and construction costs it takes to renovate the property?
2) Is the investor/rehabber experienced in this type of transaction?
3) Can the “Hard Money” be paid back in timely a timely fashion with a refinance or sale of the property?
4) Will the loan be less than 60% of the appraised value of the property after completion?

If the answer to these questions is yes, it is very likely that an investment property rehabber will qualify for a rehab loan with Select Funding. Please give us a call at 847-386-6783 with any questions that you might have.