Master the Basics of Hard Money Lending

Master the Basics of Hard Money Lending: A Free Mini-Course by BridgeWise Lending

At BridgeWise Lending, we’re not just about providing real estate investment loans; we’re also passionate about equipping investors with the tools and knowledge they need to succeed. That’s why we’re excited to present our Free Mini-Course on hard money lending! If you’re new to real estate investing or simply looking to sharpen your skills, this course will give you a solid foundation on how hard money loans work, their benefits, and how to use them to your advantage.

In this blog post, we'll walk you through the essentials of hard money lending, along with some free resources and tools that will take your investing to the next level.

Key Features of Hard Money Loans:

Fast Approval: With hard money loans, you can access funding in as little as a few days, unlike traditional mortgages, which can take weeks or even months to close.
Collateral-Based: Your approval is based on the value of the property rather than your personal credit or income history.
Short-Term Loans: Hard money loans usually range from 12 to 18 months, giving investors the flexibility to renovate or sell the property quickly.
Interest-Only Payments: Many hard money loans offer interest-only payments during the loan term, which can help keep cash flow steady as you work on your project.
High Leverage: Lenders may fund up to 95% of the purchase price and 100% of the renovation costs, depending on the deal.

Whether you're looking to fix and flip a property or need bridge financing while you refinance, hard money loans are an essential tool for every real estate investor.

Lesson 1: Introduction to Hard Money Lending

What is Hard Money Lending?

Hard money loans are short-term, asset-based loans that are primarily used by real estate investors. Unlike traditional loans, which are based on the borrower’s credit score and income, hard money loans are secured by the value of the property itself. This makes them an attractive option for investors who need quick financing for fix-and-flip projects, rental property purchases, or bridge financing.

Benefits of Hard Money Loans:

Fast Approval: Funds can be secured within days rather than weeks or months.
Less Strict Qualifications: Approval is based on the property’s value, not your credit.
Flexible Terms: Tailored loan terms with options for interest-only payments.

Lesson 2: When to Use Hard Money Loans

Key Scenarios for Hard Money:

Fix and Flips: When you need quick financing to purchase, renovate, and sell a property.
Bridge Loans: Short-term financing between buying a property and securing long-term funding.
Rental Property Purchases: Securing a property quickly before refinancing into a long-term DSCR loan.

Comparison with Traditional Financing:

Speed: Traditional loans can take weeks to close; hard money loans close in days.
Qualification: Traditional loans focus on creditworthiness, while hard money loans are based on the property.

Lesson 3: The Application Process

What Lenders Look For:

Property Value and ARV (After-Repair Value): Lenders focus on the value of the property as-is and after renovations.
Exit Strategy: A solid plan for repaying the loan, whether through selling, refinancing, or renting out the property.

Documents Needed:

Purchase contract
Renovation budget
Property appraisal or valuation
Proof of funds for down payment or rehab costs

Loan Terms:

Loan amounts typically range from $100,000 to $3 million.
Terms usually run 12 to 24 months, with interest-only payments available.

Lesson 4: How to Evaluate Hard Money Deals

Running the Numbers:

Loan-to-Value (LTV): This is the ratio of the loan amount to the property’s value. Lenders typically offer up to 90% LTV for hard money loans.
After-Repair Value (ARV): The estimated value of the property after renovations. Lenders will offer up to 80% of the ARV.
Return on Investment (ROI): Calculate your potential profits by subtracting the cost of the property, rehab, and loan payments from the sale price or rental income.

Free Tools to Help Analyze Deals:

DealCheck: Input property details to calculate ROI, cash flow, and cap rates.
Propwire: Find distressed, off-market properties for your next investment.
Investorlift: Access to thousands of wholesale properties across the U.S.

Lesson 5: Risks and Rewards of Hard Money Loans

The Pros:

Quick access to capital
Less stringent qualifications
Flexible loan terms

The Cons:

Higher interest rates than conventional loans
Short loan terms (usually 12-24 months)
Risk of foreclosure if the loan isn’t repaid on time

Mitigating Risks:

Thorough Deal Analysis: Use the tools listed above to analyze every deal before moving forward.
Have a Backup Exit Strategy: Whether it’s refinancing or finding a partner, always have a Plan B.

Lesson 6: Exit Strategies for Hard Money Loans

Developing an Exit Strategy:

Fix-and-Flip Sales: Sell the property at a higher price after renovations.
Refinancing: Transition into a long-term DSCR loan to hold the property as a rental.
Selling “As-Is”: If the market conditions aren’t favorable, selling the property as-is might be the best option to avoid losses.

Refinancing Options with BridgeWise Lending:If you decide to hold onto the property, we offer DSCR loans (Debt Service Coverage Ratio loans), which are designed for real estate investors who want long-term rental properties.

Bonus Lesson: Additional Free Resources for Real Estate Investors

As part of our commitment to your success, we’ve curated a list of free tools and resources to help you analyze deals, find properties, and streamline your real estate transactions.

Auction.com: Find foreclosed and bank-owned properties nationwide.
BiggerPockets: A massive online real estate investing community with educational resources.
CrowdStreet: A platform for accredited investors looking for commercial real estate investments.
DealMachine: A tool for finding off-market properties and generating leads.
LegalTemplates: Offers free legal forms, such as purchase agreements and leases.
Fundrise: A crowdfunding platform for non-accredited investors to access real estate investments.
Houzz: Find local contractors and interior designers for your fix-and-flip projects.
LoopNet: A platform for finding commercial real estate investments.
Magicplan: Create 3D models and floor plans of properties using your smartphone.
Yieldstreet: Invest in real estate debt with minimum investments of $10,000.

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"We hope this helps!."

Conclusion: Ready to Level Up Your Real Estate Investing?

Hard money loans can provide the speed and flexibility you need to succeed in real estate investing. At BridgeWise Lending, we’re here to help you not only secure financing but also provide the knowledge and tools necessary to make informed, profitable decisions.

To start learning more about our loan products or to apply for a loan, Contact Us Today.

BridgeWise Lending—Your Bridge to Fast, Flexible Financing.

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