Real estate investment provides an exciting, established means of building wealth and equity. For real estate investors, a strong buyer’s climate means it’s time to look for promising investment properties and purchase them before prices increase in the Sacramento market. Many Sacramento investors looking to take advantage of this favorable market seek private money financing, often known as hard money financing, in order to fund their purchases and realize an excellent return on investment (ROI). Hard money loans provide a wealth of options for Sacramento investors and private buyers who want to purchase properties that traditional financing just can’t buy.
Why Do Sacramento Investors Use Hard Money Loans?
For those who are new to the world of real estate investment in Sacramento, private financing and hard money loans may seem like a mystery. However, hard money loans are widely used by buyers who can’t purchase Sacramento properties with traditional financing. While buyers who have been through foreclosure or bankruptcy sometimes find relief from a good hard money lender, there are many other reasons to take out a hard money loan. Here are 5 great examples of how hard money loans can be used effectively in the Sacramento real estate market:
- Hard Money Loan Example #1: A Sacramento property that doesn’t meet a bank’s guidelines for traditional financing.
- Hard Money Loan Example #2: A private buyer who has taken out an FHA loan wants to buy a Sacramento residence to rehab and resell.
- Hard Money Loan Example #3: A Sacramento investor wants to purchase a non-traditional property such as a church or chicken farm.
- Hard Money Loan Example #4: A buyer wants to purchase a Sacramento investment property that is difficult to appraise, is owned by a bank or is owned by a real estate company.
- Hard Money Loan Example #5: An investor wishes to make a fast offer on a house at short sale in Sacramento.
Hard Money Loans for Sacramento Residential Purchases
Sacramento area buyers who want to purchase residential properties often use traditional financing to do so. However, FHA loans and similar products simply don’t fit every buying situation. Hard money, also know as private money loans, can provide financing from private lenders when other banks can’t or won’t. Of course, hard money loans are sometimes utilized by residential buyers who have poor credit scores but strong equity in a Sacramento home.
Fix-and-Flip Hard Money Loans For Sacramento Homes
Fix-and-flip hard money loans are used by residential buyers who want to buy distressed properties in Sacramento, rehab them and then sell them at a profit. Traditional banks are often reluctant to finance these types of purchases because of the condition of the investment property, but this where a good private investor can help. For Sacramento real estate investors, a hard money loan from a local Sacramento private investor can provide financing for both the purchase of a home and repair costs, allowing for a great ROI.
Ground-Up Construction Hard Money LoansFor Sacramento
On occasion, real estate investors want to build unique residential properties in the Sacramento region that don’t qualify for traditional financing, but that same project be considered by a private hard money investor. Hard money loans for ground-up construction in Sacramento are often used in these situations. Some savvy Sacramento real estate investors even use hard money loans to purchase partially completed projects, finish them and sell them at a profit.