Hard Money Loans from The Liquidity Source in New York
There are many reasons that you may need quick funding for your real estate project. There are many reasons that a senior first mortgage may be the answer otherwise known as a hard money loan. You purchased a vacant property and need time to fix this up and lease before getting traditional financing. You have some immediate cash flow concerns with your business and cannot afford to wait months for traditional financing. You may be buying out a partner and have the collateral of real estate but not the substantial cash needed to pay him off. While this type of loan has advantages over traditional bank financing, you need to understand the basics to make the right decision for your business.
The Liquidity Source can help your business by using property as collateral and facilitating funding in as little as two weeks. Our company is committed to supporting small businesses and will give asset based loans to businesses with qualifying real estate to help keep local businesses open.
How Do Hard Money Loans Work?
Hard money loans, sometimes referred to as bridge loans, are short-term lending instruments that real estate investors can use to help finance an investment project. This type of loan is a smart tool for real estate developers whose goal is to renovate or develop a property before requesting a traditional loan when a stabilized asset is needed. Hard money loans are issued by private lenders, like The Liquidity Source, rather than going through traditional financial institutions such as banks
Unlike bank loans/mortgages, the ability to obtain hard money financing isn’t determined by the borrower’s creditworthiness. Instead, hard money lenders use the value of the property itself in determining whether to make the loan. Specifically, lenders focus on the property as a stabilized asset or fully cash flowing. The hard money investor looks at the property from an asset based calculation. If the property is appraised at certain dollar value, the hard money loan may be equivalent to 50% to 65% as an LTV or loan amount. The Liquidity Source underwrites all deals like a bank would do but looks at the asset value versus the stabilization factor.
Hard money loans aren’t a perfect financing solution. There are two primary drawbacks to consider:
- Cost – Hard money loans are convenient, but the overall cost is or can be substantially higher.
- Shorter repayment period – The purpose of a hard money loan is to allow an investor to get a property ready for stabilization, so it may be expensive on a short term basis, but gives the owner time to fix, rent and then get a traditional loan at a reasonable price.
Why The Liquidity Source? How do we differentiate from our competition?
In most cases, we expedite the process, visit the site, get the information and have a solution typically within 24 hrs. Next, our pricing is better than most, we watch the competition and make sure we will be focused on financially helping our clientele.
- Expedited – Applying for a mortgage is time-consuming, senior first mortgage money is typically available in as little as two weeks. Terms- Because hard money loans are offered by private lenders, you can structure loans from 6 months to 1 year and with potential extensions, you can go out as much as two years under certain conditions.
- Collateral – With a hard money loan, the property itself serves as collateral for the loan. Banks are typically not asset based lenders, they rely strictly on “cash flow” and stabilization of properties.
The Liquidity Source can help you with this process start to finish, as well as provide hard money loans for qualifying businesses. Contact us today to learn more about how we can help get the financing your business needs.