Hard Money Lenders Colorado: A Comprehensive Overview
If you’re a real estate investor in Colorado, you know that securing quick funding can make or break your next project. This is where hard money loans come into play. These loans offer a fast, flexible financing option, allowing you to seize opportunities in Colorado’s competitive market. Whether you’re looking to flip a property in Denver’s booming neighborhoods or purchase a commercial space in Colorado Springs, hard money loans might be the solution you need.
In this guide, we’ll explore everything you need to know about hard money lenders in Colorado.
We will explain what a hard money lender is, showing you how these loans work and what they’re typically used for. By the end, you’ll have a clear picture of whether partnering with a hard money lender is the right move for your next real estate venture.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.
What is a hard money lender?
A hard money lender is a private individual or company that provides short-term loans secured by real estate. Unlike traditional banks, which focus on the borrower’s credit score and financial history, hard money lenders in Colorado assess the property’s value as collateral.
These lenders often work with real estate investors like house flippers and buyers of rental properties. They use the after-repair value (ARV)—the projected value of a property after renovations—to determine loan amounts. Typically, they lend a percentage of this ARV to ensure the investment remains secure and profitable.
Interest rates for hard money loans are higher, ranging from 8% to 15%, and the loans are usually short-term, spanning 6 to 24 months. Borrowers also face costs like origination fees, closing costs, and points, which are upfront payments based on the loan amount. If the borrower defaults, the lender can take possession of the property to recover the funds.
How does a hard money loan work?
Here’s a detailed breakdown of the key aspects and benefits of hard money loans in Colorado to help give you a better idea of how they work:
