Most hard money loans that are for rental properties pay off in 90 days or less. If the repairs are completed in 30 days or less, and you immediately get it rented, your tenant will be making your payments. We have actually had some clients refinance in under 45 days. On properties being flipped, the current average loan duration for our clients is 120 days.
You can use hard money loans to purchase a wide variety of properties. The beneficial part of borrowing a hard money loan is that your cash advance will have value that is substantially different from the purchase price. The lender will base the loan on a percentage of the projected after-repair value (ARV) of the property rather than the purchase of the residential or commercial property. For example, your distressed property may be on sale for $85,000, which is discounted from its true value of $150,000 because of all the necessary repairs. A traditional lender will offer a conventional loan of up to 80 percent of the purchase price of the home that would be, at most, $68,000. The hard money lender will offer up to 70 percent of the after-repair value, plus it will pay for the closing costs that are sometimes as much as $25,000 or more. Lenders will pay for the repairs that you will have to submit to get the property ready for use. The lender will also cover the closing costs, which can be several thousand dollars.