Are you aware of the term "hard money loans''? These are loans that are extremely specific and are made by private investors who usually have plenty of funds for investing in real property.
Hard money lenders can lend money to those who cannot obtain the loans they need from mainstream institutions like mortgages and banks. It could be because of many reasons, like having a bad credit score or a job that is not paying well, or another problem with credit.
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The traditional lending establishments are cautious about who they loan money to, but an unsecured lender is not as stringent.
It's not surprising that hard money loans carry more interest than traditional loans. The loan provider is taking a risk on a borrower with poor credit. The loans are secured by the property and, typically the lender who is hard money will want to be the primary name on the lien. If the borrower fails to pay the loan, the lender who has hard money takes over the property.
Typically what is financed should not exceed 70 percent of the property's value. This is particularly important when the person who is getting the loan is purchasing houses to make repairs and sell.
If the home is valued at $30,000 to purchase and requires work of $25,000 the value of repair for the house will be $55,000. The loan amount would be $38,500 which is sufficient to cover all repairs needed to the property.
This type of loan is ideal for investors who are just beginning their journey in the business of flipping houses.