Hard Money Lending is Improving Your Community Recent troubles in the real estate market have left many homes vacant and often unattended. These vacant or blighted properties cause many problems for local communities. As the level of decay increases the houses become safety and fire hazards, attract criminal activity and vandalism, and lower the property values in the neighborhood. These blighted properties thereby increase the demands for local government services, such as police and fire, as well as code enforcement. Local officials spend a lot of time trying to track down the owners of these properties to enforce building codes, but often to no avail. Local communities would greatly benefit from a renewed interest in these vacant properties. But with banks cracking down on their lending policies, many real estate investors have become unable to obtain traditional loans through banks, and other financial institutions to purchase and rehab these properties. Many savvy real estate investors however are now turning to hard money lenders to finance their purchase and rehab of these vacant properties.
Hard money lenders assess the value of the property and make a lending decision based on the property’s equity. An individual’s credit score is much less of a factor in these lending decisions; so many more real estate investors are able to obtain these loans. As more of these properties are purchased and improved, the property value of the entire neighborhood increases. These hard money loans are short term loans, often with higher interest rates. But for the purpose of purchasing a vacant property, improving the property, then reselling, this type of loan is a perfect fit. The loan can be obtained quickly (much more so than a conventional bank loan), and used to purchase and improve the property, then a quick resale recovers the investment and returns a profit. With more real estate investors turning to hard money loans, more vacant properties are getting a new life. These properties are being refurbished and sold, bringing new families to these previously blighted areas. With the removal of these “eye sores” in the neighborhood, property values increase, and the drain on local government services are relieved. Overall community vitality is greatly improved by the removal of these blighted properties, and hard money lenders are facilitating this community renewal.