Hard Money Lenders San Diego: Quick Financing Options
Are you exploring options to fund your next real estate project in San Diego? Whether you’re aiming to flip a craftsman cottage in South Park or acquire an investment property in Pacific Beach, hard money lenders in San Diego can provide the fast and flexible financing you need. Hard money loans are a popular alternative to conventional financing, especially for those with tight project timelines, limited initial capital, or less-than-perfect credit.
For those not involved in real estate investment but needing to bridge the gap between buying and selling a home, this guide also offers alternatives to help you leverage your home’s equity. In this article, we’ll cover the fundamentals of hard money lending in San Diego, guiding you through the process and helping you decide if this financial tool is the right fit for your real estate investment or home-buying goals.
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 lenders, who heavily weigh the borrower’s creditworthiness and income, hard money lenders in San Diego focus primarily on the property’s value being used as collateral.
These lenders typically work with clients like house flippers and those purchasing rental properties who need quick access to funds and flexible terms. Hard money lenders use after-repair value (ARV) — the estimated value of a property after all renovations and repairs are completed — to determine the loan amount they are willing to offer. They usually lend a percentage of the ARV to ensure the investment’s profitability and security.
Hard money loans come with higher interest rates, typically ranging from 8% to 15% or more, and shorter repayment periods, usually between 6 and 24 months. Additional costs can include origination fees, closing costs, and points. If a borrower fails to repay a hard money loan, the lender can seize the property to recover their investment.
How does a hard money loan work?
If you’re a real estate investor in San Diego looking for a financing option that offers speed and flexibility, connecting with hard money lenders could be the right move. Here’s a quick overview of how hard money loans work:
