It seems now that many properties are being purchased for cash.  Sometimes that cash is really money from a "Hard Money" lender. What is a "Hard Money" lender? They are private individuals and entities (not banks) that loan money. Usually their requirements are:

LTV 60%

FICO score 600-700

Corporation Status (not individually to people)

Points

A factor, not really an interest rate.

These requirements make it easier for the "Hard Money" lender to foreclose in the event of a default. Allow for adequate worst case risk and finally keep clear of banking regulations. It is very important that a borrower understands the true terms of the loan. A lender may speak of a 10% loan but that is really a 10% factor. As an example if you borrow $100,000 you might pay 4 pts. 4pts means $4000 (4% of the principle). The lender will then expect you to pay back $104,000 plus 10%  ($114,400) back in 6 months. This is not a 10% APR loan. 

 The advice today....be careful.

Next blog: Confessions of Judgments and how they can lead to financial ruin!

#investors,#hardmoney,#flipping