Everything You Need To Know About Hard Money Construction Loans!

Everything You Need To Know About Hard Money Construction Loans!

Most people contemplate that a hard money loan is to be used for renovating an already owned property and selling it for profit. However, this isn't the only option with hard money loans i.e. these loans can be employed for new construction as well. Additionally, this is more fruitful if you plan to build a property for reselling it at profit. Also, you can acquire the loan for commercial as well as family residential properties, depending upon the real estate investment you are willing to invest.

So, let’s delve deeper to know what is hard money, where to obtain it, the top factors considering hard money for new construction and the pros of hard money mortgage

What Is Hard Money?

A hard money loan is a type of mortgage-backed by a physical asset, a borrower lends money for renovation, repair, and in some cases new construction also. Plus, the loan term depends upon the contract between a lender and the borrower. The lender will obtain monthly interest on the loan whilst the borrower will receive the complete loan amount. Additionally, hard money lenders charge the borrower a one-time fee also to move further with the loan process.

Who Needs Hard Money and Where to Obtain It?

The hard money loan can be procured from any investor group or private investors. Also, a hard money loan is commonly required by real estate investors who want to invest in distressed property that traditional banks are not ready to fund.

What Are The Top Factors To Consider For Hard Money?

  • Choosing The Location

Probably the most imperative attribute to keep in mind while looking for hard money construction loans from hardmoney lenders for newconstruction for funding is the location of the project. In addition to this, hard money lenders often approve the loan for a property that is close enough so that they can keep a regular check on the property construction and its progress. Moreover, contrary to traditional money lenders who just want timely mortgage payback the hard money lender is more interested in investment. Also, hard money lenders wish to see you achieve success and earn a good margin from the property as it will be beneficial for them also.

  • Understand The Down payment Requisite

Unlike traditional lending institutions such as banks, hard money lenders operate differently. Simply put, some hard money lenders may not opt for a down payment in the case of the existing property whereas in new construction the chances of delayed construction are likely to increase. So, because of this reason, some hard money lenders may ask the borrower to give some down payment. Hence it’s important for you to understand every requirement of a hard money lender before proceeding with the loan.

Advantages of Hard Money Construction Loans

  1. Speedy Process

The approval of a loan with a hard money lender is quick and fast as compared to traditional lending institutes. Probably one of the biggest advantages is that myriad real estate investors opt for hard money mortgages. In addition to this, the loan approval for hard money often happens in one day after thoroughly checking the requirement which includes the borrower's real estate experience, property, down-payment amount, and cash reserves. And if everything is right the approval is immediate.

Furthermore, after the borrower qualifies for the loan it takes approximately four to five days for funding to reflect in the account whereas in traditional lenders it usually takes thirty days for the funding. This is the reason hard money lenders are quite renowned among investors who are in dire need of funds.

  1. Minimal Requirements

Another astounding advantage of hard money loans is flexible lending criteria. Unlike traditional lenders like banks with strict lending conditions, hard money lenders have few requirements only. To add, a few requirements for a hard money lender include what is the value of borrower property? What is their exit strategy? How many years of real estate experience do they have? And how much cash in hand do they have? Plus, because of this minimal requirement, the chances of loan approval are high. If one chooses a loan from a traditional bank the list of requirements is long.

Besides this, some requirements like a credit score are not needed by hard money lenders whereas banks do consider it whilst approving the loan. Similarly, other reasons include short sales, any modification in loans, foreclosures, and most importantly foreclosures with each passing year the list of requirements is increasing. But in the case of a hard money lender the most vital factors are the enough down payment and equity the other attributes like foreclosures, bad credit, and many mortgages are not considered important.

  1. Interest Rate Is Flexible

Hard money mortgages come with a slightly higher interest rate in contrast to bank loans. However, experienced real estate investors' goal is to invest in a property with a motive to repair, renovate, or construct and get a profit quickly. Additionally, as the property begins to generate the requisite profit they sell it off and start investing for the next one. Profitable real estate investors know short term loans like hard money mortgages are the best-fitted resolution for them as they quickly acquire the loan, sell the property for profit, and prepare for the next project. Not to mention, a hard money loan has flexible terms and payment options also, which is especially beneficial for a novice real estate investor. Furthermore, one can also get low-interest rates along with no hidden underwriting charges, additional fees and taxes, and application fees.


Finding the right hard money construction loan lender can be a daunting task. You are ready to build your real estate empire all you need to ensure is the right funding from the right lender to thrive for success. If you are ready to take your real estate business to a whole new next level look no further! Get in touch with RCD capital lending specialists who are ready to offer you the funding required for your business success. To know more simply click on the website.


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