FAQs
How does a hard money loan work?
Hard money loans are a type of private loans that are funded by individuals or companies that cannot be funded by traditional lending institutions. A hard money loan is also sometimes called an asset-based loan because it is backed by a real estate property as a collateral. Typically, hard money lenders do not require rigorous documentation requirements unlike conventional lenders.
If you’re looking to invest in properties but don’t quite have the cash to make your purchase, need a quick closing where your bank can’t meet the deadline, or need more leverage than your bank can provide, a hard money loan will make more sense than a traditional loan.
A hard money loan from GL&L Holdings, a local hard money lender based in Houston, can give you the cash you need with less scrutiny of your financial situation and a much less complex application process.
GL&L Holdings, the most trusted hard money lender in Houston will be delighted to help you achieve your dreams. All you have to do is to reach out to us, and we will talk to you frankly about your financing needs.
Who is the best hard money lender?
Not all hard money lenders are the same. The best hard money lender that you can use for your real estate investments should:
- Possess significant knowledge and experience in real estate investing
- Be very familiar with the local real estate market you’re in
- Provide the funds that you need in a relatively short period of time
- Have a proven and verifiable track record in lending
- Collect no upfront fees, no prepayment penalties, and have flexible loan options
Are hard money lenders safe?
Hard money lenders have been around for quite a while now and are generally safe to transact with. Having said that, there are also fake lenders that often collect application fees or upfront fees but never really fund your deals.
To keep yourself safe, make thorough research before you commit to any lender. Choose someone who has a proven track record and a verifiable business. If it’s your first time working with a company and has never heard of them before, a few ways to vet your lender is to do the following:
1. Ask fellow real estate investors in your local are about the company
2. Check Better Business Bureau (BBB) and find their name
3. Search the company name with the word “scam” or “fraud” on Google to find out if there are any red flags you should be aware of
4. Never, ever pay fees upfront. All fees should be paid during closing and through a title company
Are hard money loans worth it?
If you’re using debt as a leverage to achieve positive cash flow and build your wealth, those gains often outweigh the costs and make hard money loans worth it, despite its higher rates than conventional loans.
Weigh your “Cost of Debt” and “Opportunity Costs.”
Cost of debt is the interest rate and fees related to your hard money loan. This cost accounts for the time value of money, inflation, or the risk taken by your lender if the money is repaid. For example, a loan you use to purchase a property has a 10% annual interest rate which can be considered your cost of debt, give or take.
Opportunity cost, on the other hand, is the potential gain you’re missing out on when NOT choosing an alternative course of action. For example, if a deal has a potential cash flow of $1,000 a month, the yearly opportunity cost you are incurring if you don’t invest is $12,000 per year.
Knowing what these two factors can help you answer for yourself, whether a hard money loan for your specific deal scenario is worth it or not.
How long does it take to get a hard money loan?
Typically our hard money loans can be closed within 15 days if there are no title issues and an appraisal can be ordered very quickly. We’ve closed some loans as soon as 7 business days.
Do hard money loans require a downpayment?
It all depends on the ARV appraisal and the actual purchase price and rehab required. There are times that a down payment is not needed and 100% financing is possible. However, in most cases, the client typically has to put a down payment, at least the closing fees.
Can I get a loan if I'm a sole proprietor, corporation, partnership, LLC, or trust?
Yes, however all loans must be personally guaranteed.
Can I finance closing costs and fees?
It all depends on multiple factors. Normally the answer is “no” and never on the first deal, however, we review each case based on LTV and other factors. Once we have established an on-going relationship with you, we can be very flexible. We can consider reducing your out-of-pocket expenses. Our goal is to make your experience with GL&L Holdings a satisfactory one.
Is an appraisal required?
Yes, we require one of our approved appraisers to do an appraisal. You may contact us for a list of accredited appraisal company. The appraisal must be ordered by the GL&L Holdings and the appraising company must be a neutral party and certified as well. We can schedule the appraisal for you and require the appraisal fee to be paid in advance or you may solicit your own.
Is a survey required?
Yes, we require a survey on every deal. The title company you select will usually have this done for you. This will help you when you get ready to sell the property, provides you specific information on your property boundaries and protects you against encroaching problems in the future.
What type of insurance do I have to carry?
At closing, we will require a one year, paid in advance or at closing Builders’ Risk certificate of insurance with a vacancy clause. Also, Windstorm coverage will be required for properties located in Brazoria and Galveston Counties as well as certain locations in east Harris County. Flood Insurance will be required for any property located in the flood zone. If you need a policy we can solicit one on your behalf.
What is the maximum amount that I can borrow?
We lend up to 70% of the ARV (After-Repair-Value) of the property. We put together a comprehensive guide about ARV in this blog post.
Can I do a loan as a second lien?
We don’t lend on a 2nd Lien Position. All of our loans must in the 1st Position and guaranteed by a Title Policy that will be paid by the borrower at closing.
What type of properties can I borrow on?
We lend on both residential and commercial properties, and even on empty lots depending on many factors. Learn more about our loan programs here.
What is the longest term I can borrow money for?
We lend based on either a 15-25yr amortization or interest free but always with a balloon term between 1yr-3yrs.
Do you partner on deals?
Yes, we can partner on deals and have done multiple projects in a Joint Venture (JV) scenario.
Shop around and lets us meet or beat whatever offer you receive.
Call us! 832-770-9415
Let’s work together on your next real estate project
Get a customized financing solution for your investment property.