Texas Hard Money Lenders


In Texas, hard money lenders are a significant part of the state’s residential real estate industry. They give much-needed funding fast to borrowers — often “fix and flip” entrepreneurs — who will either not qualify for a standard loan or are unwilling to wait after locating an excellent investment property for the lengthy process of receiving financing from a traditional lender.

Given that the Texas housing market has been growing steadily since the 2008 real estate crisis, bringing an increasing number of investors to the state in search of properties, The capacity to get financing quickly might be the difference between obtaining a successful rental property and losing out to another investor (perhaps a hard money lender) who had faster access to cash. Given these facts, serious entrepreneurs may find that hard money loans for the Texas real estate industry are a realistic alternative.

According to the United States Census Bureau, With over 11 million residential units (single-family homes, apartments, condominiums, etc.) inside the state’s borders, Texas is the nation’s second-largest real estate market in terms of housing. Indeed, the state has the second-largest housing supply in the US, after only California, with 15 million total housing units. Additionally, Texas has had a consistent rise in residential real estate prices that have surpassed the nation’s rest since the 2008 recession. As a result of these and other reasons that have brought many real estate investors to the state, Texas hard money lenders have increased, and the Texas hard money lending business continues to grow.

PeerStreet’s Texas Hard Money Lenders

PeerStreet partners with hundreds of hard money lenders across Texas, assisting borrowers in financing investment properties around the state – encompassing all major metropolitan regions, including Dallas-Fort Worth, Greater Houston, Greater San Antonio, Austin, and McAllen. Numerous hard money lenders we associate with within Texas have extensive expertise dealing with the state’s countless local real estate markets. Thus, these lenders are as comfortable examining a $75,000 loan request (the Texas hard money loan minimum) for a single-family home in rural Amarillo. They are analyzing a $5,000,000 loan plan for a luxury penthouse in Downtown Austin.

Although PeerStreet has built a sizable network of hard money lenders across Texas, we have done it gradually and cautiously. We evaluate hard money lenders in Texas based on various objective criteria, including annual and historical loan volume, underwriting parameters, years in business, capacity to deploy capital and years of expertise of the company’s senior management team.

Although each challenging money lender in Texas has its unique set of conditions, lenders usually issue hard money business-purpose loans (between $75,000 and $5,000,000) with a maximum LTV of 75% for non-owner occupied single-family residential buildings. Fix-and-flip, bridge, fix-to-rent, and buy-to-rent are all common uses for such loans. Interest rates typically range between 8 percent and 12 percent, with terms lasting no more than 36 months.

Texas Hard Money Loans Frequently Asked Questions

What are Texas Hard Money Loans?

A Texas hard money loan for real estate is a sort of asset-backed, short-term loan secured by real estate that the borrower does not own. What does this entail? Let us go through each of the three ideas.

This form of loan is asset-backed, which means that a Texas hard money lender will choose whether to provide a loan and on what conditions based on the value of the investment property the borrower is pursuing and other variables such as the borrower’s credit history. This contrasts with traditional real estate loans, which are sometimes heavily weighted toward the borrower’s personal credit history. 

Businesses that have declared bankruptcy may find it difficult to re-enter the credit market. If you look for loan alternatives online, you’ll eventually come across the concept of hard money according to BankruptcyHQ.

Hard money loans are a sort of direct loan made by an investor to a person or a company for the purpose of purchasing and developing real estate. A hard money loan’s terms are frequently tailored to the investor who extends the offer.

The majority of hard money loans in the Texas market are short-term, which means they must be repaid within 36 months. This, again, is in contrast to standard mortgages, which sometimes have 30-year payback schedules. Finally, a Texas hard money loan is often for a non-owner-occupied property — that is, the borrower or its family cannot reside in the property — and such loans are typically issued for commercial reasons, such as renovating, flipping a property or purchasing it to rent to tenants.

Another critical element of hard money loans, whether in Texas or elsewhere, is that these lenders can often make judgments quicker and get money into borrowers’ hands considerably faster than standard lenders. However, these loans may entail a higher interest rate than conventional real estate loans.

Why Should Texas Real Estate Investors Use Hard Money Lenders?

Investors often seek funding from Texas hard money lenders to rapidly obtain a real estate property. Hard money loans in Texas (or any other state, for that matter) are often the ideal choice for real estate investors whose business plan revolves around fast purchasing, repairing, and flipping properties. Additionally, Texas hard money lenders are frequently the best financing option for investors who have identified an attractive, profitable property that is underpriced — and Before another investor discovers it and bids up the price, or worse, purchases it before them (since the other borrower had real money). Also, lending institutions in Texas may be a viable option for an investor who has identified a profitable investment property but does not meet the personal loan requirements of traditional lenders (credit score, assets, income documents, etc.).

In other words, when traditional financing methods do not work for them or do not work quickly enough, real estate investors may realize that a Texas hard money loan is their best alternative.

Loan Criteria for Texas Hard Money Lenders

PeerStreet’s hard money lenders in Texas can support customers that match the following loan criteria:

Property Classifications

  • Residential-Single Family (1-4 units)
  • Absence of Land or Construction from the Ground Up

Occupancy

  • Only non-owner occupied

Loan Amount

  • Between $75,000 and $5,000,000

Type of Lien

  • Trust deeds and mortgages in the first place

Purpose of the Loan

  • Residential Commercial Purposes (Fix & Flip, Fix to Rent, Buy to Rent, Refinance, and Bridge)

Term

  • 36 months maximum (preferably 24 months or less)

Location

  • United States of America (excluding South Dakota and Minnesota)

Loan-to-Value Ratio (LTV)

Loan-to-Value Ratios Maximum:

  • Up to 75% of the “as-is” value, but not more than 90% LTC (determined by purchase price)
  • LTARV equivalent to 70% on building loans (determined by appraisal)
  • Up to a 65 percent loan-to-value ratio is permitted for cash-out refinances.
  • A loan is termed cash-out if the borrower receives more than (a) $75,000 or (b) 10% of the entire loan proceeds.
  • Includes escrow monies and federal tax liens, and taxes on non-subject properties.

Rate of Interest

  • Generally, a net rate of 8% to 12% to PeerStreet.

Positions of Participation

  • Lenders may keep a B-piece or participate in a pari passu capacity alongside PeerStreet.

Liens Juveniles

  • Permitted according to an Intercreditor Agreement

Recourse

  • For entity borrowers, recourse in the form of a personal guarantee is necessary, and at least one of the guarantors must be an owner of the borrower entity. Borrowers on an individual basis are permitted.

Multi-collateral

  • All properties must adhere to PeerStreet’s criteria.
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