Colorado Hard Money Acquisition Loans

Colorado Hard Money Acquisition Loans

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Acquisition Loans

Hard money loans, which are also known as private capital loans, are frequently a useful resource for borrowers who are having difficulties finding a traditionallender that is willing to fund a loan to buy an investment property. Traditional lenders may turn down a loan application for a number of reasons—timing issues, credit scores, underwriting criteria, executive loan committee denials—none of which are deterrents to hard money lenders like Montegra.

Montegra is based and funded locally in Colorado. Montegra underwrites hard money acquisition loans using a completely different set of standards than the average bank or institutional lender. Montegra is usually able to approve requests regarding the acquisition of good properties with acceptable loan-to-value (LTV) rates. Because Montegra has no loan committees or chief credit officers and minimal red tape, we are able to respond to most requests with a definitive answer within 24 hours (subject to receiving appraisal confirmation of the property’s value) and to close on acquisition loans within 30 days (compared to the months that traditional lenders typically require).

Denver Hard Money Acquisition Loans: What Are They?

Hard money acquisition loans offer alternative options for real estate investors who are looking to make short-term property acquisitions, or for those who can’t take out traditional loans for different reasons. The application process for a hard money acquisition loan is less complex and time-consuming than traditional loans. This is because the loan term is for a shorter time than a traditional bank loan. Traditional bank loans can be as long as five to ten years, while hard money acquisition loans typically are written for between six months to two years. Because hard money acquisition loans are primarily secured by real estate assets instead of the borrower’s credit and/or cash flow (like bank loans), they are underwritten and closed more quickly and with less red tape.

Hard money acquisition loans are frequently taken out by parties who want to purchase properties at below market prices and then resell them at a profit. Other uses of this type of loan are to buy a “fix and flip” property, or use it to purchase a property that can be converted to condominiums and then the condos can be sold for higher prices, thus providing a profit opportunity to the borrower.

The process of getting a hard money acquisition loan is straightforward and quick by design. After contracting for the purchase of a property, the borrower contacts the lender. The lender analyzes the pending purchase. The lender and the borrower then work together to create a loan structure that will allow the borrower to maximize their gain on the property.  Private capital lenders who provide these hard money acquisition loans  are more willing to offer flexible terms that work for the borrower than institutional lenders.

Because they are funded by private capital lenders, these hard money acquisition loans are faster to obtain than traditional bank loans.  Private lenders are able to use “common sense” to make their loans while banks are strictly regulated by various Federal agencies that create unnecessary red tape for the banks.

Who Typically Needs Hard Money Acquisition Loans In Denver?

Hard money loans are often taken out by real estate investors with promising opportunities in front of them, and who need to secure financing expeditiously. A hard money loan allows them to acquire the capital they need to purchase, rehabilitate, renovate, or build on the property for quick resale. Without the usual red tape of traditional lending, the process moves more swiftly.

These hard money acquisition loans  also offer options for investors with relatively  poor credit histories. Hard money loans are primarily secured by the real estate—not the borrower’s financial statement or credit score.  If the borrower can afford the terms, interest rate, and repayment schedule of a hard money acquisition loan, it offers an excellent opportunity to get their deal done.

Benefits Of Colorado Hard Money Acquisition Loans Over Traditional Loans

For investors looking to secure capital promptly, hard money acquisition loans in Denver have many advantages over traditional bank loans.

  • Faster turnaround for approval and receipt of funds. Hard money loans are  frequently approved within a day or two. The borrower may receive their funds within a week.
  • Fewer borrowing requirements. Hard money loans are backed by real estate acquisitions. Borrowers’ financial status and credit history aren’t as important in the underwriting  process. Real estate is the primary collateral.
  • Faster closing on property transactions. Real estate transactions can be held up by  time-consuming approvals, paperwork, and waiting periods of traditional bank lenders.  Hard money loans can be approved and issued within a week, which makes closing a pending transaction a much easier process.
  • Establishing working relationships with lenders. Career investors who take out hard money loans—and regularly meet the repayment requirements—build familiarity and trust with their lenders, which makes it easier to obtain more capital from them down the road.
  • Convenient for those starting in real estate. New investors often don’t have sufficient capital or credit to take out traditional loans. Hard money acquisition loans can help them get an instant foothold in the business of real estate investing.

Things To Consider With Colorado Hard Money Acquisition Loans

As is the case with any real estate transaction, hard money acquisition loans carry some elements of risk. Before applying for one, you should think carefully about a few key points:

  • Interest rates. Because they’re short-term and rely less on credit scores and other personal financial data, hard money acquisition loans have somewhat higher interest rates than traditional mortgages. Montegra’s rates for hard money loans start at 10.25%, with typical loan fees between 1.5% to 2.5% depending on the loan term. Factor in these costs when you map out your repayment budget.
  • Term of loan. Hard money loans (sometimes called bridge loans) normally have terms between 12 months to 24 months. Montegra offers its borrowers the option to renew their loan after the expiration of its initial term.
  • Down payment. Hard money loans typically require a larger cash down payment than bank loans. This is why they can close much more quickly, and offer more flexible terms to their borrowers.
  • Property risk. Both hard money loans, and bank real estate loans, use the real estate you’re acquiring as collateral. Since your loan is secured by property, no matter which lender you choose you always have the risk of losing your property if you default on repaying a real estate collateralized loan. Think carefully about whether or not you’re willing to accept that risk. If you are not willing to accept this risk then your only option is to pay 100% cash for your real estate purchase.

The Top Source For Denver Hard Money Acquisition Loans

Montegra Capital Resources is Colorado’s most trusted hard money lender. Our business approach is based on quick approvals and funding, fair and reasonable interest rates and loan fees, total transparency, and no surprises. We’ve helped local real estate investors and companies for 50 continuous years with creative solutions to their short-term capital needs. Contact us today for more information about our hard money lending services.

What Information Should You Include In Your Request?

You can speed up your loan request by providing Montegra with the following information:

  1. What is the property’s address?
  2. What type of property is it?
  3. What are your plans for the property once you purchase it (i.e., hold onto it long-term or fix it up, retenant and resell it)?
  4. Do you have an executed purchase contract for the property? (If so, please submit a copy with your request.)
  5. If you have signed a contract to purchase the property, when is your closing date?
  6. What do you believe the fair market value of the property to be today?
  7. How much cash are you willing to use as a down payment on the property?
  8. What amount of money do you want to borrow?

We will also need other routine personal financial and credit information to complete the application process, but we would like to begin by gathering the basics about the property and your plans for it to better understand what you would like to accomplish and how we can best help you achieve those goals.

See our recent closings for examples of how Montegra helped other borrowers close their acquisition loans and realize their projects.