Hard money loans are ideal for short-term investors, including fix-and-flippers who purchase, renovate, and then sell a property within 12 months.
Hard money can also be great for long-term investors who find and purchase a home in less-than-perfect condition, renovate it, and then turn it into a rental property. These loans can also be used to season a property before refinancing it.
As an example, Kenwood Mortgage Investments generally has lower rates than other hard money lenders in Arizona. They are a non-bank private money lender located in North Scottsdale and have been providing real estate loans for all types of investment properties (Commercial, Construction, Fix and Flip, Industrial, Land, Multi-Family, Residential, Retail) since 1992. The principals of Kenwood Mortgage have more than 65 years of combined experience within the real estate, lending and banking industries. This powerful mixture has provided Kenwood Mortgage with the expertise necessary to continually meet the needs of our borrowing clientele with efficiency and flexibility.
Hard money lenders take on more risk with their loans, as compared to conventional home loans. Due to this higher risk, interest rates for a hard money loan typically range between 10-15% depending on the hard money lender and the level of risk for the loan.
Points can vary anywhere from 2-4% of the total amount loaned. Interest rates and points tend to vary rather significantly depending on the loan-to-value ratio.