In our increasingly paperless society, the idea of investing cash in real estate might seem like a foreign concept. After all, we hardly rely on cash for anything anymore. We swipe credit and debit cards for everything from plasma TVs to a pack of gum. We hardly even use checks, opting instead for online payments and direct debits from virtual banking accounts. With so many other options available, why would anyone choose to pay in cash? When you learn the benefits that hard money loans offer for house flipping and passive income strategies alike, you’ll understand why so many investors use them to leverage their real estate investments.
Investing Cash Means Investing Fast
Wouldn’t it be nice if the real estate market ran on your schedule? You could invest when you felt like it, and you’d never have to rush to snatch up deals. Sadly, the market keeps its own time, and the properties that offer the best bargains will sell the fastest – with or without you. When a house flipping dream home appears to you suddenly one day in the form of a high-quality foreclosure, the last thing you want to do is wade through a lengthy loan application and risk losing that amazing deal to a super-quick investor. That’s why people who make a career out of house flipping (and even people who prefer to earn passive income through rental properties) often turn to hard money loans. These loans get them the money they need faster, so that the best investments don’t slip through their fingers.
Financing for House Flipping
If you have any experience with house flipping, you know that the purchase price of a property is only one of the costs you have to think about. To turn a profit, you’ve got to raise the value of the home, and the only way to do that is by remodeling and making repairs. Hard money loans are special because you can spend the money as you see fit. You can use it to help actually purchase the house, yes. But you can also use it for lots of other things, like buying a new roof or replacing the siding. You can use the money on all sorts of projects that help increase the value of a home. And even if you choose to turn your property into a rental, by completing your remodeling on time you can rent faster – and that means more passive income.
Don’t Forget the Discounts
The most common reason for investing cash? The discounts, of course. Banks, auction houses, even private sellers – they all prefer cash over drawn-out monthly payments, and to get their hands on more equity faster, these sellers are happy to offer discounts. If you make a living flipping Florida foreclosures, saving a few thousands dollars on every deal can really add up. Sure, hard money loans typically have shorter repayment periods and higher fees, but you can easily minimize the associated costs by refinancing after 120 days. In fact, many experienced investors use these loans as “bridge loans” to help get them through the purchase and remodeling process and carry them through to long-term financing options. When used correctly, hard money loans can save you thousands over the course of your career.
The benefits of hard money loans are clear. It’s a faster process, the costs are lower and you can use your money how and when you want. So while you’ll still want to go paperless for things like your monthly Netflix bill or the weekly trip to the grocery store, when it comes to house flipping or even passive income properties, you know what they say – cash is king. Rule your real estate market by putting a hard money loan to work for you today.