What Can You Finance with a Hard Money Loan?
Written for Broadmark Realty Capital
To be successful with real estate investing or development, you the capital to get started. Many investors turn to hard money loans to get the financing they need to get their projects off the ground.
A hard money loan is a loan issued by an investor or investment group. Unlike traditional loans—which use an applicant’s credit score and financial history to determine risk—hard money loans use the property being purchased as collateral. Although hard money loans generally have higher interest rates, they allow borrowers to secure funds faster, even if they don’t have outstanding credit scores.
Since hard money loans rely on collateral, they’re typically reserved for real estate transactions. If you’re looking for some capital to get your commercial real estate project off the ground, here’s what you can finance with a hard money loan.
Flipping a Property
Property flipping is an ideal use of a hard money loan. When you’re trying to snatch up a low-cost property, renovate it, and flip it for a profit, everything moves quickly. You’ll need a loan that can keep up.
A hard money loan gives flippers the funds they need to be competitive when bidding on properties. And since most flippers try to sell the property within a year of purchase, they don’t need a long-term loan term that they’d get from a typical mortgage.
Purchasing Commercial Property
Hard money loans aren’t limited to just flipping property. Many commercial real estate investors use hard money loans to purchase long-term properties, too.
Since hard money loans rely on collateral, they’re ideal for investors who might not have the best credit. If you’re denied a mortgage from a traditional bank or credit union, there’s still a good chance you can secure a hard money loan and keep your commercial real estate dreams alive!
Commercial Real Estate Development
Commercial real estate properties come in all shapes and sizes. Many of which might not qualify for a traditional mortgage. This is where a hard money loan comes in handy.
Developers can use a hard money loan to get financing to cover any kind of property and fund the various phases of the project as they build your property from the ground up. There are different types of hard money loans to support each step of the development process:
- Land development loans
- Construction loans
- Bridge financing loans
- Rehab or redevelopment loans
- Acquisition and development loans
No matter where you are in your development project, there’s a hard money loan designed to keep you going.
Get the Funding You Need for Your Commercial Real Estate Project
Hard money loans are much quicker and more flexible than traditional mortgages, making them ideal for any type of commercial real estate investment. If you’re looking for some support in your commercial real estate endeavors, perhaps a hard money loan is right for you!
At Broadmark Realty Capital, we know a thing or two about hard money loans. In our over a decade of experience, we’ve funded over $2.8 billion to commercial real estate investors all over the United States. Contact us and get the funds you need to take your project to the next step.