Hard Money Lenders Texas: Short-Term Loan Solutions
Are you planning your next real estate investment in Texas and considering a hard money loan? Whether you’re looking to flip an American Foursquare in Old East Dallas or secure a rental property in San Antonio’s Pearl District, hard money lenders in Texas offer the speed and flexibility you need. These loans are an alternative to traditional financing and are ideal for projects with tight deadlines, limited upfront capital, or credit challenges.
For those not in the real estate investment game but needing to bridge the timing gap between buying and selling a home, we’ll also explore alternatives to help you leverage your home’s equity. This guide will walk you through the essentials of hard money lending in Texas, helping you determine if this financing method aligns with your real estate goals.
What is a hard money lender?
A hard money lender is a private entity that provides short-term loans secured by real estate. Unlike conventional lenders, who scrutinize a borrower’s credit score and income, hard money lenders in Texas focus on the property’s value. Their services are sought after by house flippers and those acquiring rental properties who need quick funding and flexible terms.
Hard money lenders use the after-repair value (ARV) — the projected value of a property after renovations — to determine loan amounts, typically offering a percentage of this ARV to protect their investment. Interest rates on these loans are higher, ranging from 8% to 15%, with short repayment periods of 6 to 24 months. Costs typically include origination fees, closing costs, and points. If a borrower defaults, the lender may seize the property to recover their funds.
How does a hard money loan work?
If you’re considering investing in Texas real estate, it’s a good idea to familiarize yourself with the workings of hard money loans. Here’s a brief overview:
