How Can a Hard Money Loan Help Your Renovations?

If you own a building in Chicago that needs to be rehabbed or renovated, or are considering purchasing a building that needs work, and are concerned about the costs associated with doing so, consider applying for a hard money loan from Select Funding.  Hard money loans are given based on the value of real estate – they’re used for projects that last a few months to a few years, such as renovation or rehab projects. The loan is given based on what the property is currently valued at, were it to go on the market at the time of the loan application. In other words, value is defined as “today’s purchase price.” These loans can help secure the financing necessary to bring a building up to code, update the interior, or make repairs that make the building inhabitable. How can one help you with your project?

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Bank on Future Value

While hard money loans are often given with much higher interest rates than those on traditional mortgages, the idea is that in the future, the property owner will be earning more on the property to ensure ease of payback. Hard money loans have, in the past decade, ranged from 12-21% interest, and if a borrower defaults on the loan, they may be charged a default rate, which is even harder—as much as 25-29%.

Secure Funding Fast

Commercial lending works at a much faster pace than residential lending, and once a loan has been secured, the funds are made available very quickly—once your hard money lender consultant inspects the property and all necessary paperwork is collected, loan funds are wired into a designated bank account of your choosing, typically within 24 hours.

Work Better Renovations Into Your Plan

You may want to upgrade the floors in an apartment building that you intend on renting out. If they are currently old vinyl flooring, you may be considering laminate, but a hard money loan could help you be able to afford something even better, such as hardwood flooring, for example. Of course, this is just one example, but the sky’s the limit. With a hard money loan, you won’t have to settle for renovations based on the money you have now—you can base it off the loan and create an even better finished project than you thought. Plus, then you may be able to collect a higher rent on the units after they’ve been renovated if they have top-of-the-line finishings.

Hard money loans are not for every project, however. Contact the brokers at Select Funding for more information about hard money loans and how they might help you.