Hard money loans are often used for short-term needs such as real estate acquisitions. Hard money loans are usually available for 30 days to five years. In contrast, a traditional mortgage is available for 10 to 30 years. However, on distressed or vacant real estate, it is difficult to obtain a traditional mortgage. For this reason, Moneylender Review is commonly used by real estate investors for new acquisitions.
Here’s an example:
-A real estate investor finds an apartment complex for sale.
-This complex is in complete disrepair and vacant.
-It is very difficult to get a mortgage on distressed or vacant real estate.
-This real estate investor has two options.
- Receive a loan from a partner, friend, or family member.
- Use a hard money loan to buy the property. The hard money loan will also cover cost for repair need to this apartment complex.
-Once the property is rehabbed and ready for rental. The real estate investor obtains a conventional mortgage to repay the hard money loan.
This is an example of a short-term loan used to acquire a property but not intended as permanent, traditional financing. For those who are new to hard money loans, remember that these loans are to be utilized for short term plays, not long term holds.