The secret is out of the bag: conventional banks aren’t super fond of real estate investors. When it comes to banking and property, financial institutions were set up to cater to mortgage holders or people who plan to live in the home as opposed to performing flips. Fortunately, direct hard money lenders in the Phoenix, AZ, region understand the plight of property investors.
Hard money lenders are more concerned with the value of the asset overall rather than the financial capacity of the borrower. This means that they seek lower loan-to-value (LTV) than the typical bank. Whereas the bank wants a 10-20% down payment in order to jumpstart the mortgage (recurring payments to take care of the remaining 80-90%), direct hard money lenders in Phoenix, AZ, want to make sure the deal is right.
What attracts a hard money lender? If an investor can acquire a property at a significant discount and perform a rehab within the 65-70% LTV margin or below, then that leaves a 20-25% profit margin, which allows the investor to sell the property and pay back the lender all at once.
Lenders in this space reserve the right to add interest and origination fees as well, so looking for the best possible deal puts the investor in the most favorable light when it comes to real estate investing.
