You've likely noticed the flood of negative headlines about the real estate market. Higher mortgage lending rates, market volatility, and uncertainty are certainly having an effect. However, experienced private mortgage investors (not unlike many of AMI Lenders’ clients) know that real estate investment opportunities are still available.
As an investor, you must be prepared and ready to seize opportunities when they appear. Hard money loans can help you materialize these opportunities into investments.
Hard money lenders can provide real estate financing when traditional mortgage lenders won't. AMI Lenders has financing solutions for residential and commercial real estate in Houston. We can even handle specialized loans like rural property and churches.
Learn more about the role of hard money lenders in the current market and why AMI Lenders has become an industry leader in Houston.
Why Choose a Hard Money Loan?
A hard money loan is secured by an asset, usually real estate. Hard money loans come from private lenders, investing groups, or individual investors. Hard Money Loans have several advantages in the current economic and global climate.
Based on Collateral
Approval of a hard money loan relies primarily on the collateral. Your unique financial position is much less critical than for a traditional loan.
Many people have lowered or even damaged credit scores coming out of the COVID pandemic. A hard money loan may let them access real estate financing, anyway.
Streamlined Approval Process
The traditional mortgage process typically takes 30 to 60 days. You can often get a loan from private mortgage investors within a few days or weeks. Thus, you can move quickly to seize an opportunity as soon as it becomes available.
Fixed-Rate and Short Repayment Period
Hard money loans typically have a fixed rate and a repayment period of 12 to 36 months without prepayment penalties. This is ideal for certain types of real estate projects, like fix-and-flip. You aren't stuck, for example, in a long-term, variable-rate mortgage or one with prepayment penalties while market conditions change.
Available for Many Types of Properties
Hard money loans are available for many types of properties. Consumer and business-related real-estate loans are also possible. You can also get so-called specialty loans, such as:
- Hospitality
- Rural property
- Residential lot development
- Business lot development
- Multifamily
Not all money lenders offer all types of loans, though. When you work with AMI Lenders, you know you'll have a wide range of loan options.
Residential Loans
Residential mortgage loans are consumer loans. The primary use of the loan is for personal, family, or household purposes.
You should be aware that strict regulations govern loans for a property the owner intends to occupy. Reputable hard money lenders in Houston or elsewhere will ensure that their loan terms comply with these rules.
Some critics state that a hard money lender isn't always the best choice for residential mortgage loans. However, you may need non-traditional options in the current market. Suppose you have damaged credit or are now self-employed without solid proof of income. In that case, a residential hard-money loan may be an excellent option for purchasing the property you have identified as a good investment opportunity for your household.
Commercial Loans
Commercial loans, in real-estate terms, include any loan that is originated for a business purpose. Examples of business initiatives include:
- Fix and flip
- Fix and hold
- Repairs to rental properties
- Property improvements for owner occupancy or resale
The properties are being acquired and/or owned as an investment for a defined commercial use. Many types of properties can fall into the business loan category, such as:
- Apartments and multifamily dwellings
- Hospital or professional medical facilities
- Retail shopping locations
- Convenience stores
- Office buildings
- Warehouses
A hard money business loan may be especially attractive in the current market. You can move quickly. To access asset-backed financing, you don't need perfect credit or a lengthy documented income history.
Specialty Loans
A proper "specialty loan" category doesn't exist. However, people commonly refer to specialty loans when they mean a loan with more complex requirements. Examples include:
- Hospitality (hotels or Bed and Breakfasts, dinners, etc.)
- Rural property (homestead)
- Residential lot development
- Business lot development
- Church
These loans fall into either the personal or business loan categories.
Hospitality Loans
A hospitality loan is designed for acquisitions, new construction, or renovation of facilities in the hospitality industry. Businesses like hotels have specific financing needs. The lockdowns and partial shutdowns of the last few years created significant hardships for many business owners.
A hard money hospitality loan can give you up to 70% of the purchase price or appraised value. You won't be penalized for the industry's seasonality with a loan that relies significantly on collateral.
Rural Property Loans
Rural property loans or homestead loans are consumer loans. That's why many other hard money lenders in Houston won't make them.
Rural property loans usually involve large tracts of land for farming, ranching, hunting, or other outdoor recreational purposes. Demand for land in Texas soared in 2020 and 2021, causing prices to skyrocket.
Higher interest rates are cooling the market somewhat. Many regions of Texas are still in a period of growth, though. Rural land remains an attractive investment opportunity.
Residential and Business Lot Development Loans
Lot development loans finance the infrastructure to develop a tract of land. The loan could include features such as:
- Streets
- Underground utilities
- Signage
- Entrances
A residential lot development loan is for a property used for single-family residential lots. A business lot development loan is for a property that will host businesses like retail shopping, hotels, or restaurants.
Church Loans
Church loans are available to acquire, refinance, and rehabilitate church projects in Texas. Church loans are considered commercial loans. Traditional mortgage lenders evaluate churches in basically the same way as a business.
Many congregations haven't fully rebounded from the effects of the pandemic. A hard money loan can be a good option if your church doesn't qualify for traditional real estate financing.
Using Hard Money Lenders in Houston
Hard money lenders can be a good option in many situations. A hard money loan can provide the real estate financing you need when traditional options fail. Private mortgages may be available whether you need a standard loan or a loan with more specialized requirements.
In Houston, AMI Lenders has a team you can trust for hard money loans. We have more than 60 years of combined experience in residential and commercial loans.
AMI Lenders follows all federal regulations with as much flexibility as the law allows. Contact us today to discuss financing your next project.
