Most hard money loans will only lend a percentage of the value of an investment property. Some investors may need more, if you find this to be you, ask your hard money lenders Texas about how you can cross collateralize with other assets to maximize your borrowing potential.

When you get a hard money loans through hard money lenders Texas, there are a few things you need to be aware of. Firstly, the loan process will be quick and have less paperwork than a bank loan. You can usually get your money in about two weeks, sometimes less depending on the lender. Secondly, the Loan to Value or LTV ratio will differ by lender as will interest rates so make sure you shop around to choose the best Texas hard money lender. Finally, you will be charged a higher interest rate on this short term loan because it is riskier for the lender. If you can sell the property quickly enough this won’t matter and both you and your Texas hard money lender can make quite a bit of money.

If you are looking to purchase an investment property like a fix and flip, or rental property and have been denied a loan from a bank, don’t give up hope just yet. With hard money lenders Texas you can probably still get the loan you need with less hassle and paperwork than a traditional mortgage. Texas hard money lenders base your loans on your assets and investment potential, rather than many traditional qualifiers like debt to income ratio or credit score.

However, while getting loan is usually easy, you need to keep in mind that most lenders will only loan a percentage of the property’s value. The loan to value ratio, or LTV, is usually between 65 to 75 percent of the purchase price. So, if you want to buy a property for $200,000 you can expect to get a hard money loan for between $130,000 and $150,000. This means that you will need to have anywhere between 50 and 70 grand of liquid cash to invest in the property.

But, What if I Don’t Have That Kind of Cash in The Bank?

You may be asking yourself if it is still even possible to purchase a fix and flip or investment property without having a big chunk of cash saved up. Well, with hard money lenders Texas, it is. If you need to borrow more than the LTV of the property, ask your Texas hard money lender about cross collateralizing the loan.

Basically, this means that you would use other assets or properties you own to make up for the difference in the LTV and what you need to borrow. So if your lender would give you $170,000 in a hard money loan, you could use another investment property or even your personal home to secure the remaining $30,000 that you need. This is most common in commercial hard money loans, but many hard money lenders Texas will also consider it for residential investments as well, for the right borrower.

Don’t let a LTV ratio stand in your way!

Call hard money lenders Texas today to make all of your investment dreams come true!

Dennis Dahlberg

Broker/RI/CEO/MLO