If you are a property financier, then you would know what an owner-occupied deal is. Essentially, it's a property, which is inhabited and a tough money lender likes to stay away from these sort of bargains.
The basic reason behind this is there are totally different and quite complex rules and laws for an owner-occupied property in comparison to the vacant one. Therefore , residential hard money lenders are not willing to fund for such deal as there's going to be a lot of bureaucracy concerned.
Therefore if you're a backer and are planning of transforming an owner-occupied property, then it is better to weigh the pros and cons again because you find it extraordinarily hard to get money for such deal.
The explanation behind avoiding these properties is that the majority of the hard money lenders aren't that big. They do not have any financial assistance and they have to do everything all by themselves. Hence they like short term lending, where they can close a deal inside half a year, without much trouble.
Whereas, the owner-occupied properties take much more time in paper work as well as in transforming and ultimately , they aren't extremely profitable also. Infrequently, transforming of these properties get so much delayed that it at last goes into foreclosure, which nobody likes.
Home hard cash banks are way more enthusiastic about single family homes particularly, as they happen to be fast to remodel and the profit margin is really high. Although, they also work for transforming duplexes, threeplexes or fourplexes but they prefer single family homes.
Fundamentally, there are 2 kinds of private money lenders.
One, which have been discussed above i.e. Short term banks, who would like to fund for a maximum of 6-12 months.
The others are called long-term banks, which can lend cash for 3-5 years but they're very tough to find.
The whole concept behind a hard money loan is to help somebody, who is content to buy a property and rehabilitation it but has not got money to do it or cannot arrange a loan from conventional lending. Non-public money loans are the best for them but these are good for the borrowers and lenders both, if taken for a short period of time.
Nobody wants to take risks and everybody in the estate investment business is searching for profit and so do the residential hard cash banks. Your property serves as a security deposit foe their cash. Due to their real estate background, they can realize, which property is worthy enough to lend.
On the other hand, if you have a deal, which is quite dodgy and the banks can predict that it will not be a lucrative deal, then they won't fund you. They don't like taking hazards and they don't seem to be here to take risks. They are here to grow their money with worthwhile deals.
The basic reason behind this is there are totally different and quite complex rules and laws for an owner-occupied property in comparison to the vacant one. Therefore , residential hard money lenders are not willing to fund for such deal as there's going to be a lot of bureaucracy concerned.
Therefore if you're a backer and are planning of transforming an owner-occupied property, then it is better to weigh the pros and cons again because you find it extraordinarily hard to get money for such deal.
The explanation behind avoiding these properties is that the majority of the hard money lenders aren't that big. They do not have any financial assistance and they have to do everything all by themselves. Hence they like short term lending, where they can close a deal inside half a year, without much trouble.
Whereas, the owner-occupied properties take much more time in paper work as well as in transforming and ultimately , they aren't extremely profitable also. Infrequently, transforming of these properties get so much delayed that it at last goes into foreclosure, which nobody likes.
Home hard cash banks are way more enthusiastic about single family homes particularly, as they happen to be fast to remodel and the profit margin is really high. Although, they also work for transforming duplexes, threeplexes or fourplexes but they prefer single family homes.
Fundamentally, there are 2 kinds of private money lenders.
One, which have been discussed above i.e. Short term banks, who would like to fund for a maximum of 6-12 months.
The others are called long-term banks, which can lend cash for 3-5 years but they're very tough to find.
The whole concept behind a hard money loan is to help somebody, who is content to buy a property and rehabilitation it but has not got money to do it or cannot arrange a loan from conventional lending. Non-public money loans are the best for them but these are good for the borrowers and lenders both, if taken for a short period of time.
Nobody wants to take risks and everybody in the estate investment business is searching for profit and so do the residential hard cash banks. Your property serves as a security deposit foe their cash. Due to their real estate background, they can realize, which property is worthy enough to lend.
On the other hand, if you have a deal, which is quite dodgy and the banks can predict that it will not be a lucrative deal, then they won't fund you. They don't like taking hazards and they don't seem to be here to take risks. They are here to grow their money with worthwhile deals.
About the Author:
Tim Kelly is an expert in finance having completed his LLM in Finance (Master of Laws in Finance) from Institute for Law and Finance at Frankfurt School. To Find fast loan , easy business loan, 24hr pay day loan in singapore
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