3 Creative ways to use hard money loans
1. Secure a Purchase and Refinance Later
Sometimes you need to secure a deal with an all cash offer and a quick close. But if you are low on cash, and will need a loan contingency, you might miss the deal. A hard money loan can close in as little as 7 days, while a bank loan can take up to three months. Savvy investors can use hard money loans to secure the deal, and work on a traditional bank loan after escrow closes and the property is secure.
2. Cash Out Hard Money Loans
You can also use hard money loans to leverage equity on your property to purchase another one. Even if you already have an existing loan on your property and want to draw more, private money lenders can take a second position to the first lender, provide you with the necessary capital to purchase your next project.
3. Line of Credit
If you own a property free and clear and you think you might need some money in the future, you can establish a private lending line of credit with a lender. You establish a loan agreement ahead of time but only draw money when you need it. This way you can smartly save on interest and lock in favorable terms before finding a deal you like. When you are ready and need the money, it is usually available within a phone call. You can also use return the money to the lender if you are drawing the funds for a certain project – just like an ATM. Here are just some of the creative ways our investors use private hard money line of credit:
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