When it comes to investing in a real estate property, hard money loans come out as a great source of funding. However, many a times investors make some mistakes due to lack of knowledge about the real estate market and private money lenders which get them into huge troubles. Following article describes few of such mistakes and how to avoid them.
Are you looking for private money lenders in Orange County to invest in your property? Hard money loans can be a great option for real estate investments. And you can find several hard money lenders in Orange County. However, lack of knowledge about using these loans can get you into a lot of trouble.
Following are some of the ways in which you can get into trouble when using hard money loans:
#1 – Your Private Money Lender not Funding and Losing your Money
When you are depending on a hard money lender for funding your loan by your deadline. In case you do not get the funds you may lose your earnest money. And at the last moment the lender drags his feet and declines your loan, it is a complete loss for you. If it is a purchase will make you lose your money and that is a huge risk. Therefore, you need to be aware of the fact that when you use hard money lender on a purchase transaction, you need to close it as quickly as possible.
#2 – Paying Upfront Fees to a Hard Money Lender
When you pay upfront fees to a hard money lender like inspection fees, appraisal fees, attorney fees and then your loan is not granted, it can put you in a huge trouble. The trouble worsens when you are opting to going out to multiple private lenders in Orange County for getting a loan and paying upfront fees to each one of them. And then none of them actually funds the loan! Isn’t that a huge risk?
#3 – Getting in Touch with a Predatory Lender
It is a fact that among the several hard money lenders in Orange County there will be many predatory lenders. Such lenders often come with an intention to default on your loan or foreclose on your property when you make any sort of mistake and fall behind on your payments. And they will make all the profit on the property. Therefore, make sure to deal with a reputable, legitimate and professional private money lender after making a thorough research.
#4 – Market Collapse
The real estate market keeps on fluctuating and hence you cannot anticipate its position. So if you are planning to purchase a property and want to fix it up in 4 to 6 months from the buy date and add a bunch of improvements to resell it then when the market collapses during that time frame you get into huge trouble. You will be stuck paying on a high interest rate loan and in case you fail to sell the property due to market collapse the loss will be all yours!
Besides that there are several other problems that you may face if you are unaware of the hard money loans and the real estate market.
This article is written by All California Lending, one of the leading and reputable private money lenders in Orange County and all over California. They are licensed and possess years of experience in dealing with commercial loans and hard money loans.