Asset-Based Oregon Hard Money Loans are Fast & Flexible
In real estate, time is money – and fast financing can make or break a deal.
Private money lenders offer asset-based hard money loans approved on a property’s value rather than a borrower’s credit score or financial history. Their speed, flexibility, and customized terms make these loans popular with investors in competitive real estate markets.
But how does a private money lender determine if a property is worth the risk? Understanding how property value affects loan approval is key for any real estate investor looking to secure funding.
The Importance of Property Value in Real Estate Financing
Whether you’re undertaking a fix-and-flip, buying a rental property, or financing a short-term renovation, the property’s value is key to loan approval.
Traditional banks follow rigid lending rules. Private lenders look at both the property’s current value and its potential worth after improvements. This helps them determine the loan amount, risk exposure, and your ability to repay through selling or refinancing.
Private Money Loans & Loan-to-Value (LTV)
One of the primary tools private money lenders use to measure risk is the Loan-to-Value ratio (LTV). It compares the loan amount to the property’s value. For example, if a borrower is seeking a loan of $280,000 for a property worth $400,000, the LTV would be 70%.
Most private money lenders prefer LTV ratios between 60% and 75%, depending on the type of deal and borrower experience. A lower LTV means less risk since the property has more equity to protect the lender.
Appraised Value vs. Assessed Value
To calculate LTV, lenders typically use the appraised value – the professional estimated fair market value of a property. The assessed value is used by local government to determine property taxes and is usually lower than the market value.
Conventional banks are bound by federal regulations to base loan amounts on the lesser of the purchase price or appraised value. Private money lenders have more flexibility and can use projected After Repair Value (ARV) to guide their decisions.
What Do Private Lenders Consider Beyond Property Value?
While property value plays a pivotal role in the approval of an asset-based private money loan, it’s not the only consideration. To mitigate risk and ensure a successful investment, private money lenders evaluate several other factors:
- Property Condition: Is the property in livable condition, or does it need significant renovation? A distressed property with structural issues may be seen as a higher risk despite its potential value.
- Project Budget: Lenders want a clear, well-defined plan with accurate renovation, repair, and maintenance cost estimates. An unrealistic budget can signal poor planning.
- Borrower Experience: Have you previously completed similar projects? Experience can weigh in your favor, especially for fix-and-flip loans or value-added renovations.
- Rental Income: If the strategy involves a rental property, lenders will consider projected monthly rental income, location desirability, and vacancy trends to determine ongoing cash flow.
- Exit Strategy: Whether your plan is to flip, refinance, or resell, lenders want to see a clearly defined exit strategy that ensures they will be repaid in full and on time.
Why Choose a Private Money Lender in Oregon?
One of the biggest advantages of private money loans is speed. While traditional bank loans can take weeks to close, private equity loans can be funded in days, helping you stay ahead of the competition in hot markets like Oregon. Private money lender Gregory M. Russell offers flexible terms to accommodate your unique project and financing needs. We understand that fast, reliable loan approval is key to your success as a real estate investor. Have questions? Ready to finance? Learn more about our hard money loan services. Call 1-888-477-0444 or apply today. We look forward to working with you and helping you to grow your investment portfolio.