There are a few real estate investors who pay cash for their Los Angeles investment properties which they rehab also with their own cash. It does save money in interest and closing costs associated with any loan. Even conventional loans have closing costs and loan fees.
For the mom and pop investor that doesn’t have unlimited financial resources, a hard money loan for the purchase of a property in Los Angeles may be the ticket for them. Usually the required down payment is 25-30%. After that, the private money lender will give you the rest. What that will do is let you leverage your money and perhaps buy 2 or 3 properties instead of just one.
When to use Hard Money?
For people that have the time, great credit and good financial statement, they may elect to get the conventional financing. It is rare that the people will have time to go through all of that time and hassle to get that type of loan. That’s why a Los Angeles hard money loan might be more attractive.
The question of when to use hard money is answered by “most of the time.” It frees up your cash for the next purchase, it allows you more money to do your rehab project once you buy the property, it also speeds up the closing process. I don’t think a listing agent in this hot real estate market is going to wait for someone to get a conventional loan on a property that may have multiple offers.
The next purchase offer you make in Los Angeles, you might make the offer with a hard money lender who has given you a pre-approval. Then you can submit your offer with the hard money lender’s Letter of Intent so the listing agent knows you are not wasting his/her time.
For Private money loans in Los Angeles call George at 714-681-2407