Hard Money Lending 101 For New Real Estate Investors

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Real estate investing has been a successful venture for many entrepreneurs over the decades, but for new investors getting started can prove to be daunting. New real estate investors typically come across challenges that range from lack of funds or experience and incorrect property valuations, to struggling to find deal flow and more. Anyone would be hesitant to jump in under these circumstances!

While all of this can be overwhelming, hard money lenders like New Silver can help new real estate investors navigate the murky waters that are real estate investment. Real estate is a great starting investment, offering multiple avenues to pursue for a successful outcome.

Here is what you need to know about using a hard money loan to close your first real estate deal:

What is a hard money loan?

Hard money loans are traditionally short-term loans backed by real estate, often referred to as asset-backed lending. These loans differ slightly to bank loans, as the loan funds are sourced

from a group of private investors who are able to offer faster approvals and underwriting processes than banks due to less strict requirements.

These investors additionally put less stake in the borrower’s financial history and more into the value of the asset itself, giving less established investors a foot in the door. Loan applications are considered on a case-by-case basis by hard money lenders, which allows more room for negotiation in terms such as repayment periods and more.

While the hard money process can be intimidating, new real estate investors can benefit from this type of loan as little seed money is required to get started.


When should hard money loans be used?

Hard money loans are not ideal for purchasing primary residences, but there are many ways to successfully use a hard money loan in real estate through other applications. Hard money loans are instead the type of loan which is ideal for fix and flip, fix and rent, cash out refinancing, construction deals and other time sensitive shorter-term transactions.

Banks will typically not take on loans with these use-cases which they deem too “risky” or they are simply unable to process loans in the short amount of time needed, leaving the investor in the dust. Banks are furthermore less likely to provide financing for distressed properties, while hard money lenders have more flexible approaches to which properties are considered good investments and which aren’t.


What terms should I expect?

Terms will often differ between lenders and will highly depend on which region you are located in, as well as the loan type and size. Hard money lenders stick to real estate investments which allow the biggest opportunity for borrowers to be able to make a profit and repay their loan in time.

Average hard money industry examples show interest rates ranging from 9-15%, terms lasting from 3 months to 3 years and funding granted in five to twelve days. New Silver offers interest rates from 9.85 to 12%, for terms up to 24 months and approved borrowers receiving funding in as little as 5 days.


How do I get started?

New real estate entrepreneurs will want to look for a loan type and lender which is most suited to their project’s needs.  It’s also a good idea to get acquainted with the in’s and out’s of hard money loans by using online resources and doing some research. Lenders will look at the real estate investor’s chosen property, do an appraisal and help set up connections with reputable real estate vendors and service-providers to help make the project successful.

At New Silver, interested real estate investors can apply and get conditionally approved online in minutes, and confirm details with our team and get final approval and funding in as little as a week.

New real estate investors looking to get into the industry should consider using hard money loans as a way to get started. Using a hard money loan means little seed funds are required from the investor, and loans can be used for fix and flips, fix and rents and other purposes.

It’s important to remember however, that terms can differ from lender to lender and will depend on the region the loan provider is located in.

Getting started with a New Silver loan today is as easy as clicking here. Speak to our experienced team today to get help with your first real estate investment.