Working with Hard Money Lenders: What Kind of Property Should You Choose?
Most real estate investors who work with hard money lenders find that they get the best return on their money when they focus on one particular type of property. There are lots of factors to consider before signing for a hard money loan. First of all, consider the market in the area you’re looking at. In some places, the rental market is very hot, and you’ll get the most return on an apartment building or duplex. On the other hand, a multi-family property can be a lot of work to maintain. You also have to think about finding good tenants. Some investors skip the challenges of multi-family properties by simply renovating a building and selling it on. It can be a big investment to do this, however. So be sure you have the funds and also that the market for apartment buildings and the like is on the rise.
Many investors find that redoing a single-family home and then selling it is the simplest approach. You only have to deal with one unit and find one buyer. In many cities in California, the single-family market is booming. On the other hand, if you’ve built up capital, a business property might bring a greater return on your investment. You have to decide whether you want to be a landlord and deal with finding tenants. An advantage of a business property over apartments is that businesses will typically sign longer leases than residential renters. Or you can just sell a rehabbed business property. It will depend on the market and your interest and expertise in being a landlord.
Find Out Everything You Can About the Area Before Getting a Hard Money Loan
Wherever you’re considering investing, you need to do the same kind of research. Look at comparable buildings or houses to see how they are selling. Make a budget for how much work needs to be done and compare that to how much money you can expect to get in the sale. You also want to make sure you’re not buying at the top of a bubble. No one holds a crystal ball, but do check the market statistics for the past year or two. You should also drive around the area to get a sense of its personality and safety. Call up the local police department and find out about crime rates. Check out local government websites to see if they have a positive vision of a growing future for the area. All of these things can tell you whether to invest in the area or keep looking.
At LendingXpress, we know you have many choices for hard money lenders. Please give us a call so we can start working together on your next real estate venture. All our agents have lots of experience with California real estate.