Hard Money Lending

hard money
lending

how to invest

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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry,

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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry,

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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry,

Benefits

High Return on Investment (Fixed Yield)

Trust deeds are a high-yield income option that performs much better than assets like bonds or stocks. In periods of volatility across your investment portfolio, trust deeds may be the only assets with a steady, high ROI. Gains of 7.5% to 13% are possible with trust deeds, including when other assets aren’t performing well. The investment is linked to the actual real property and guarantees regular monthly payments.

Portfolio Diversification

It’s always a good idea to diversify your investments, which is one of the many benefits of trust deed investing. To cushion yourself against any portfolio volatility, consider trust deed funding in multiple real estate markets. Another viable way to spread your risk is multi-lender or fractional loans in which you finance different loans jointly with other investors.

Trust Deed Stability and Predictability

If you’re seeking a safe, predictable source of regular fixed income, you couldn’t go wrong with trust deed investing. Just ensure there’s proper underwriting and you’re not over-leveraging the property. For the entire mortgage term, the monthly payments and interest rates stay the same, which can simplify your financial and investment strategy.

Security

Trust deed borrowers don’t take ownership of the property until they’ve repaid the debt. If the borrower defaults, the purchased property is collateral, so there’s virtually zero risk of losing your money with trust deeds. With property foreclosure and options like property sale or refinance, your investment remains safe.

Tax Benefits

As a trust deed investor, you may finance loans through your self-directed pension scheme, IRA, or 401Ks. It’s often a viable option, whether you’re after high yields of 10% to 12% or lower ROI of 6.5% to 8.5%.

Frequently Asked Questions (FAQ)

What is a bridge loan?

A bridge loan for real estate is a short-term loan that provides immediate financing to bridge a gap between two transactions, typically the purchase of a new property and the sale of an existing one.

How do bridge loans work?

These loans essentially “bridge” the gap in financing, allowing investors to access quick capital for their new property. Once the sale of the property is completed, they can repay the bridge loan. This flexible financial tool offers a practical way to secure other investment properties without the constraints of waiting for conventional financing.

How long is the typical term for a bridge loan?

Residential bridge loan terms are typically short, ranging from a few months to a few years. They are designed to be repaid once the borrower secures permanent financing through a traditional mortgage or the sale of the property.

What is the primary purpose of a bridge loan?

The primary purpose of a bridge loan mortgage is to provide short term financing to facilitate the financing of a new property with the end goal being a permanent refinance or sale of the property.

What types of properties can be financed with bridge loans?

Bridge loans can be used to finance various types of properties, including residential single family (SFR), multifamily, commercial, mixed-use and entitled land.

How do bridge loans differ from traditional mortgages?

Bridge loans differ from traditional loans in terms of their short-term nature and higher interest rates. They are not intended for long-term financing but rather for temporary use to bridge the financial gap between property transactions.

What are the typical interest rates for bridge loans?

Interest rates for bridge loans are generally higher than those for traditional mortgages, often ranging between 7% to 13%, depending on the borrower’s financial situation and market conditions.

Are there any upfront fees associated with bridge loans?

In some cases bridge loans do have upfront due diligence fees.

Can anyone qualify for a bridge loan?

While bridge loans are more accessible than traditional mortgages, lenders still require borrowers to meet certain qualifications, including having sufficient equity or down payment and a clear exit strategy for the loan.

What are the pros and cons of bridge loans?

A bridge loan offers the invaluable advantage of quick and flexible financing, allowing you to seize time-sensitive real estate opportunities. It serves as a valuable tool in competitive markets, helping secure new investment opportunities promptly. This flexibility can be a game-changer, particularly when the timing of property transactions is critical. A potential con of using a bridge loan is the higher interest rates, which can increase overall borrowing costs for the borrower.