Real estate investors often need financing to make improvements or changes to their properties. This may be to prepare a property for resale or to increase the ongoing value of a property earning revenue. While there are lots of types of financing available for real estate investors, a hard money loan is a valuable option for making improvements to a property.

What Is a Hard Money Loan?

A hard money loan is a short-term loan that is typically secured with real estate. These types of loans are usually funded by private investors with a general term of twelve months. However, they can be extended to two to five years in some cases. In most cases, the application is based on the value of the property used to secure the loan.

Who Can Use a Hard Money Loan?

Most often, hard money loans are used in real estate transactions. Specifically, they are used to secure financing by real estate investors to make improvements to existing properties. The property on which improvements are being made is the property used to secure the financing. These loans are good for people who want or need to make improvements to properties either to increase value for resale or to improve value for ongoing income, such as through rent.

What Are the Rates for Hard Money Loan?

Since the length of time for repayment of a hard money loan is shorter, it typically has a higher interest rate compared to other, more traditional financing options. Interest rates vary based on different factors, including location and the risk level being taken by the lender. The amount of money approved in a hard money loan is usually between 60% and 70% of the value of the property.

Whether you are preparing a property for resale or making improvements to increase its ongoing value as a source of revenue, a hard money loan may be helpful. With the right financing, you can move forward with your investing goals and be successful.