Buying real estate in San Francisco can be a lucrative investment and a great way to diversify your portfolio. However, it’s no secret that San Francisco has one of the most expensive real estate markets in America, coming in at number two. While you could rely on crowdfunding or a real estate investment trust to fund your endeavor, you would not own the property outright. If you want to own the property without parting with a large sum of money, you do have options, one of which is a hard money loan California.

The Basics of a Hard Money Loan

Hard money loans, also known as “bridge loans,” are short-term loans that allow real estate investors to fund huge projects without draining their bank accounts. These loans are specifically designed for real estate investors who plan to renovate, develop or flip a property and then sell said property for a profit. Because conventional financial institutions do not offer bridge loans, you will need to seek out private lenders who are willing to take a risk on your project.

Unlike with traditional loans, your ability to obtain financing is not based on your creditworthiness. Rather, potential lenders will assess the estimated “after repair value” of the property before making a final decision.

Most hard money lenders San Francisco ask that borrowers repay the loan amount within 12 months. However, real estate flipping almost always comes with setbacks, so many lenders are willing to extend the term to up to five years. In the meantime, borrowers only pay either interest on the loan each month (which ranges from 10-15%), or interest plus some principal. You would pay the remaining principal at the end of the term, at which point the lender expects the borrower to have sold the property.

Property Types You Can Buy With a Hard Money Loan

A hard money loan California is good for just about every type of investment property. Those include apartment complexes, single-family homes, commercial buildings, plots of land and industrial warehouses. However, you should be aware that many lenders specify which types of properties they’re willing to fund. Few fund all types of properties, while most specify one or two they’re interested in financing.

However, most projects funded by hard money loans fit a specific profile. For instance, they usually involve a property the buyer intends to fix and flip, development projects, land loans and hot properties. Buyers themselves typically have credit issues, though this is not a criterion for qualifying for a bridge loan.

Find Out if a Hard Money Loan Is Right for You

Though hard money loans come with a few drawbacks, the two biggest of which include shorter repayment periods and above-average interest rates, they do offer substantial benefits. With a bridge loan, you can get the funds you need within a matter of weeks as opposed to the months it takes to process a typical real estate loan. Because hard money loans are competitive, many lenders are willing to negotiate terms. Finally, with a hard money loan, the collateral is the property, so if the project doesn’t pan out, you’re not out anything more than the money you already invested.

Hard money loans are a great way to invest in real estate in San Francisco and build your wealth. Learn more about bridge loans today.

KHTS FM 98.1 and AM 1220 is Santa Clarita’s only local radio station. KHTS mixes in a combination of news, traffic, sports, and features along with your favorite adult contemporary hits. Santa Clarita news and features are delivered throughout the day over our airwaves, on our website and through a variety of social media platforms. Our KHTS national award-winning daily news briefs are now read daily by 34,000+ residents. A vibrant member of the Santa Clarita community, the KHTS broadcast signal reaches all of the Santa Clarita Valley and parts of the high desert communities located in the Antelope Valley. The station streams its talk shows over the web, reaching a potentially worldwide audience. Follow @KHTSRadio on Facebook, Twitter, and Instagram.