Loans For Real Estate
While there’s no denying that a house is an important aspect of both the American dream and the world of investments, that doesn’t change the fact that real estate is quite simply expensive. Getting a brand new house or investing in an upcoming apartment complex is not a simple task, and it can be easy to be disillusioned when you are just getting started in this world.
Almost everybody has experience with a rejected bank loan or the general bureaucracy of these institutions getting in the way of quick service. However banks are not the only option to get started in the world of real estate, and your dreams might be closer than you realize if you just look into these alternate methods.
Hard Money Lending
Hard Money Lending can be best described as a loan that is backed by an asset. In short, this means that if the beneficiary fails to pay the loan then the other party will gain the rights to the asset, but this approach does come with a lot of advantages despite the initial terms.
Hard Money Lending does follow regulations and proper loaners are required to register with the government. This means that hard money lending is regulated and interested parties can compare and contrast multiple alternatives to find a provider that offers the best service for them.
Beyond that, however, the main perk hard money lenders provide is that their approval process is much faster than banks. Hard money lenders don’t need to check every last detail of your transaction history since they are backed by a tangible asset, and this means that they are a reliable way to get a loan in cases where banks are not an option.
DSCR Lending
DSCR Lending can be seen as another way to gauge the potential of an individual or firm to pay debt obligations. While on paper this sounds very similar to the approach used by most banks, there are some key differences in the way a DSCR Lender approaches the subject.
DSCR Lending is based around the “Debt-Service Coverage Ratio” which measures the current cash flow compared to the obligation that has been or will be incurred. In that sense, DSCR Lending is based more on immediate information and less on your complete financial history which can be an advantage when applying for a loan.
DSCR can be easily calculated at home with a simple formula (DSCR = Net Operating Income / Total Debt Service) so it’s easy to know your ratio ahead of time before you even request a loan.… Read the rest
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