To be clear, hard-money loans can be used to secure almost any real estate transaction. For example, a loan can be secured for the purchase of single-family homes, multifamily property residential, commercial real estate, etc. Although, it should be noted that most of the hard money loans are issued for the purchase of a residential property.
The people interested in real estate investment opportunities should know the different types of real estate transactions and the role of hard money lenders in it.
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Some of them are mentioned below:
Fix-and-Flip
One of the most popular real estate transactions financed through a hard-money loan is a project of fix-and-flip. The loans are typically used to purchase residential properties with a specific objective to update the house. Then the updated house is sold in the market for more profit.
Property Unique Will Present Challenge
For more unique properties it is harder to find respected and leading lenders who are willing to provide loans for the purchase. Because most lenders are generally interested in providing support on the property that will be easier to sell. This will help assure the lender will get their money back sooner rather than later.
Some of the hard-money lenders can also provide temporary loans on real estate that will go through the probate process. This is an important service because, in many cases, surviving heirs may need to borrow funds to pay off debts and obligations that have been attached to the estate of a deceased member. It is important to highlight the fact that these types of help are not usually offered by traditional lenders such as credit unions or banks.