Hard money loans are a type of loan that buyers receive from private investors or companies that are looking to invest in sure things. That makes hard money loans a little tricky to get, but they are an excellent way to ensure a fast closing.
If you are interested in attempting to gain a hard money loan for your next property purchase, make sure you have these four things checked off before you contact an investor like Loan Source LLC for a commercial real estate investment loan in Houston, TX.
Property Analysis
Private investors and companies that are looking to lend hard money loans want to make sure that their investment is going to pay off. That means that you should do a property analysis and write a report for your lender. Make sure the investment property is located in a good neighborhood or an up-and-coming neighborhood. Print out articles about the neighborhood to show proof that it is a good investment. Remember, your lender wants to put in a safe investment, and you have to make sure you show them that the property is worth the risk. In addition to location, you should include photos of the property and any public records about the area, including water sourcing and recent transaction histories.
Repayment Plan
Remember that hard money loans are based on the quality of the investment, and your lender is investing in you. Therefore, before you step in the door, be sure you’ll be able to answer the question: “How are you going to pay us back?” This will show the lender that you’re prepared for the question and that you are confident in your payment methods. Having a solid repayment plan is a solid step toward loan approval for a hard money loan.
Income Documentation
As a part of your repayment plan, you may have to provide proof of funds or a business plan if you are thinking about using the property as an investment for yourself as well. This will show the lender that you’re prepared to pay back the loan in full based on the amount of income you make in a month. You may also find that it’s important to include references in this situation. This is especially true if you have been with a company for less than six months or a year. These references will show your lender how secure your employment situation is and give them proof that this is a secure investment.
Business Plan, If Necessary
Remember, if you are planning to use this property to help you start your business—i.e. if it is a management or investment property for you—you should include a business plan to show your lender your plan to pay them back. This is a great way to ensure you have a solid investment for your lender, and that it is safe.
If you are interested in getting a hard money loan, contact Loan Source LLC. They are an investment company that specializes in commercial real estate investor loans in Houston, TX. Visit https://ils.cash today to get started.