How to Avoid the Pitfalls of a Texas Hard Money Loan

Texas Hard Money: the good, the bad, and the ugly

LIKE EVEN THE MOST BEAUTIFUL WOMAN IN THE WORLD, HARD MONEY IS NOT PERFECT. WHILE IT SEEMS SIMPLE – AN ASSET SECURES THE LOAN SO EVERYBODY’S SAFE – TEXAS HARD MONEY IS ONLY ONE OPTION. IT IS EXPENSIVE, SO THINGS HAVE TO WORK ACCORDING TO PLAN FOR PROFITS TO MATERIALIZE. SO MAKE SURE THAT YOUR PLANS ARE CLEAR AND GOOD! TEXAS HARD MONEY WORKS DIFFERENTLY FROM LOANS YOU MAY HAVE USED IN THE PAST. LENDERS USE MORE CONSERVATIVE METHODS TO VALUE PROPERTY THAN YOU MAY EXPECT.

Here’s a few ways to keep things going to plan:

Texas hard money loans are best used to rehab investment properties and sell them for a profit. Everyone likes someone knowledgeable about their job, so do a little extra research and then make offers. Talk to contractors to get a few estimates on what it will cost to refinish and otherwise repair the property. If you head into your lender’s office with information on repairs needed, a little history and an estimate of the costs involved, you’ll be that much more likely to get approved.

Also, have an exit strategy. Texas hard money loans are typically short term and usually are 1-2 years in length. The lender always wants to know that the borrower has a solid plan for either selling or refinancing the property long before the term is up. Knowing how you plan to repay the loan is a key factor in a hard money lender’s decision. If you are doing this all willy-nilly, you’re going to look bad in the eyes of everyone and no one wants that.

Being prepared and having a plan are the two best ways to avoid the pitfalls of high interest associated with hard money loans. They also make it more likely that you will be approved quickly and can start on your fix and flip project today! Give us a call at Level 4 Funding if you want to learn more about the Texas hard money loan options available to you!