For investors looking to break into the Airbnb short-term rental market will require access to extra capital. Enter hard money loans – a viable financing option that gives you instant access to bankroll your next big real estate project. These types of loans have become increasingly popular among investors and can offer a lot of benefits compared to traditional bank loans. In this blog post, we will explore why hard money loans might be the right choice for your Airbnb investment and how to get started. Keep reading to learn more!
What is a hard money loan?
A hard money loan is a type of loan that is typically used for short-term real estate investments. This loan is secured by the real estate property and not the borrower’s credit score. Compared to traditional loans, they are generally easier to obtain but also come with higher interest rates and fees. Hard money loans are ideal for investors who are looking to finance a property quickly and are confident they can turn it around for a profit.
Why choose a hard money loan for your Airbnb investment?
Unlike traditional lenders like banks which can take a long time to process applications and disburse funds, hard money loans offer the significant advantage of a speedy turnaround time, with some lenders able to approve and fund a loan within a matter of days. This can be a game-changer for Airbnb investors looking to complete a transaction quickly and finish renovations so they can list their property on the market.
Another benefit – you can still apply even if you’re credit is less than stellar. Hard money loans are not based on traditional credit scores, so even if a borrower has a low score, if the property is profitable, the loan can still be approved.
What Interest Rates and Loan-to-Values Can You Expect?
If you’re considering a hard money loan, you’ll want to be aware of the interest rates and loan-to-values (LTVs) that you can expect. Keep in mind that rates and LTVs can vary depending on the region and lender. Typically, hard money loans come with higher interest rates than conventional options due to the risk involved for the lender. The LTV ratio will also impact the terms of your loan and is determined by dividing the loan amount by the property value. The lower the LTV, the better terms and rates you can expect. So, if you’re looking for a hard money loan, be sure to keep these factors in mind and consider shopping around to find the best terms and rates for your needs.
What property types can you fund using a hard-money loan?
If you’re a real estate investor in need of funding, you may be wondering what types of properties you can finance using a hard-money loan. Many hard money lenders prefer investments that involve fix and flips or rehabbing, as these can offer a quick return on investment. Usually, lenders will fund most property types, including:
- Single-family homes
- Multi-family properties
- Commercial real estate
- Industrial real estate
However, it’s important to note that some hard-money lenders may not lend on owner-occupied residential properties due to additional rules and regulations.
How to obtain a hard money loan for your Airbnb investment?
The first step is to find a reputable and private hard money lender. Make sure to research their backgrounds, experience, and track record. You should also try to get references from other investors who have used their services.
Before applying for a loan, you will need to provide the lender with the details of your Airbnb property investment. These details should include the property purchase price, the anticipated rental income, and the expected costs of repairs and renovations. The lender will use this information to determine the loan amount and interest rate.
If you are looking to finance an Airbnb investment property quickly and efficiently, hard money loans are a great option to explore. They offer investors flexibility, speed, and a more straightforward process compared to traditional bank loans. Remember to do your research, find a reputable lender, and have a plan in place for your investment before applying for a hard money loan. With proper research and planning, you may be able to secure the funds you need to take advantage of this exciting opportunity.
Get a fast, hard money loan to fund your next Airbnb short-term rental property
Looking to access fast capital to fund your next investment project? EMCAP Lending provides renovation, construction, and commercial bridge loans from the ground up. With our financing, you only have to pay interest on the money you withdraw. If you’re ready to boost investments on your next Airbnb property, we use a hassle-free process that eliminates long approval times. Prequalify online today – receive cash in as soon as 2 days.