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3 Property Types for Hard Money Loans

Hard money loans are a quick source of financing for when a buyer wants to secure a property. There are a host of factors why a hard money loan may be a great option for a borrower. Whether it is a distressed property, shortened timeline, or credit that is not yet robust enough to apply for a traditional loan, hard money stands as a solid option for securing a property. However, a question may be what type of property does hard money cover? Here we look at the different property types you can obtain with a hard money loan, and key information to be aware of with each type.


Property Types for Hard Money Loans


Different lenders are best for different property forms. Some specialize in one type of property over another and are more willing to lend in property types that are more comfortable. However, with the right loaner, there are an array of options open to a borrower. Within the scope of hard money loans, owner-occupied, commercial, investment, industrial, and land-only properties are all part of the hard money family. Today we will focus on three in particular: owner-occupied, commercial, and investment pieces.


Owner-Occupied Properties


Owner-occupied properties are distinctive in the real estate field. This category requires that the property owner be the primary resident of the home for at least a year. This loan does not cover investment properties, second homes, or homes for beneficiaries, as there are certain benefits that come from this loan. Since the owner is the primary resider, the borrower may be open to certain advantages that otherwise would not be available. This includes certain loans such as FHA or VA loans and tax advantages for homeowners. In certain cases, owner-occupied loans may even provide 30-year fixed financing depending on the lender, creating a repayment plan based on the borrower’s needs.


Investment Properties


One of the most popular ventures on the real estate market today includes the fix and flip of distressed properties. Hard money loans are great for securing these as often banks will not fund distressed properties. Therefore, hard money loans fill the gap by providing funding for renovation and other costs incurred throughout the remodeling process. As it is a riskier venture for investors, borrowers should prepare for higher interest rates. With a solid repayment plan and exit strategy, fix and flip investment properties can be a great jump start to a diversified real estate portfolio.


Commercial Properties


The final property type includes commercial properties, which can be used for business ventures depending on need. Most commercial hard money loans occur when a space is needed in a quick turnaround period, or a business cannot get approval via a traditional loan. Hard money loans open up abilities to expand the commercial property with flexible terms based on borrower and lender agreements. When looking for a new space in a short amount of time, hard money can bridge the gap for your business.


Bottom Line


Whether searching for a residential, investment, or commercial property, hard money loans can bridge the gap between dreams and reality. With over 28 years of partnering investors with borrowers for an array of lending needs, JMJ can be your guide to securing and actualizing your property goals.

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