If you're an estate investor, then you would know what an owner-occupied deal is. Fundamentally, it is a property, which is already inhabited and a tough money lender likes to stay away from these kind of bargains.
The basic reason behind this is there are totally different and quite difficult rules and regulations for an owner-occupied property in comparison to the vacant one. Therefore , residential hard money banks are not willing to fund for such deal as there's going to be a large amount of documentation involved.
Therefore if you're a speculator and are planning of reworking an owner-occupied property, then it's better to weigh the good points and bad points again because you find it very hard to get funding for such deal.
The explanation behind avoiding these properties is that almost all of the hard money lenders aren't that big. They don't have any financial assistance and they have to do everything on their own. So , they like short term lending, where they can close a deal inside six months, without much hassle.
While, the owner-occupied properties take much more time in paper work as well as in remodeling and in the final analysis they are not extraordinarily profitable as well. Infrequently, transforming of these properties get so much delayed that it finally goes into foreclosure, which no one likes.
Home hard money lenders are rather more enthusiastic about single family homes particularly, as they are fast to rework and the margin of profitability is actually high. Although, they also work for remodeling duplexes, threeplexes or fourplexes but they prefer single family houses.
Fundamentally, there are 2 kinds of personal cash lenders.
One, which have been debated above i.e. Short term lenders, who needs to fund for a maximum of 6-12 months.
The others are called long term lenders, which can lend cash for 3-5 years but they are extraordinarily hard to find.
The entire concept behind a hard money loan is to help somebody, who is willing to buy a property and rehabilitation it but doesn't have money to do it or is unable to get a loan from traditional lending. Private money loans are the best for them but these are excellent for the borrowers and lenders both, if taken for a short time period.
No-one wants to take chances and everyone in the property investment business is hunting for profit and so do the home hard cash banks. Your property serves as a security deposit foe their cash. Due to their real estate background, they can realize, which property is deserving enough to loan.
From another standpoint, if you've got a deal, which is reasonably dodgy and the banks can foretell that it won't be a lucrative deal, then they will not fund you. They don't like taking risks and they don't seem to be here to take chances. They are here to grow their cash with profitable deals.
The basic reason behind this is there are totally different and quite difficult rules and regulations for an owner-occupied property in comparison to the vacant one. Therefore , residential hard money banks are not willing to fund for such deal as there's going to be a large amount of documentation involved.
Therefore if you're a speculator and are planning of reworking an owner-occupied property, then it's better to weigh the good points and bad points again because you find it very hard to get funding for such deal.
The explanation behind avoiding these properties is that almost all of the hard money lenders aren't that big. They don't have any financial assistance and they have to do everything on their own. So , they like short term lending, where they can close a deal inside six months, without much hassle.
While, the owner-occupied properties take much more time in paper work as well as in remodeling and in the final analysis they are not extraordinarily profitable as well. Infrequently, transforming of these properties get so much delayed that it finally goes into foreclosure, which no one likes.
Home hard money lenders are rather more enthusiastic about single family homes particularly, as they are fast to rework and the margin of profitability is actually high. Although, they also work for remodeling duplexes, threeplexes or fourplexes but they prefer single family houses.
Fundamentally, there are 2 kinds of personal cash lenders.
One, which have been debated above i.e. Short term lenders, who needs to fund for a maximum of 6-12 months.
The others are called long term lenders, which can lend cash for 3-5 years but they are extraordinarily hard to find.
The entire concept behind a hard money loan is to help somebody, who is willing to buy a property and rehabilitation it but doesn't have money to do it or is unable to get a loan from traditional lending. Private money loans are the best for them but these are excellent for the borrowers and lenders both, if taken for a short time period.
No-one wants to take chances and everyone in the property investment business is hunting for profit and so do the home hard cash banks. Your property serves as a security deposit foe their cash. Due to their real estate background, they can realize, which property is deserving enough to loan.
From another standpoint, if you've got a deal, which is reasonably dodgy and the banks can foretell that it won't be a lucrative deal, then they will not fund you. They don't like taking risks and they don't seem to be here to take chances. They are here to grow their cash with profitable deals.
About the Author:
Tim Kelly is an expert in finance having completed his LLM in Finance (Master of Laws in Finance) from Institute for Law and Finance at Frankfurt School. To Find personal loan , easy business loan, 24hr payday loan in singapore
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