Can You Get a Hard Money Loan for a Residential Property?


This is sort of a trick question. Can you get a hard money loan for a single-family home, or a multi-family home, or a condo conversion? The answer is yes. The answer is also no.

Yes, of course you can get a hard money loan for these types of properties — that’s what they were mainly designed for. If you couldn’t, real estate investment would be left to those who are already incredibly wealthy, and don’t need a loan in the first place. More succinctly, nearly no one would be able to make a living from real estate investment.

However, most lenders will not approve a hard money loan for the aforementioned types of properties if they are occupied by the owner. The assumption with hard money loans is that the purpose of the loan is not to renovate or alter the primary residence of the borrower.

What Are the Rules Behind a Hard Money Loan
Hard money loans are ideal for certain types of investment properties — especially if you’re looking to resell the home quickly or to refinance into a long-term conventional loan as a rental property. But in order to get your hard money loan approved, the owner cannot be living in the house, nor can he or she intend to live in the home.

This contingency is what makes a hard money loan work. If the purpose of the property is to be the primary residence of the borrower, the loan would be considered a mortgage, and such loans are subject to different standards, rules and regulations.

Why Hard Money Loans Shouldn’t Deter Real Estate Investors
More likely than not, a real estate investor doesn’t plan on living in their investment property. If they did, it would cease to be an investment … it would be a home. If you see a home that you want to renovate and turn into your primary residence, you’d have to look into a conventional mortgage, rather than a hard money loan.

Basically, it’s all about following the rules of your hard money loan. As long as the work you’re doing on the house stays within the bounds of an investment property, then everything is as it is supposed to be.

What if You’re Renovating a Multi-Family Home?
If your hard money loan is for a multi-family home, such as an apartment building, then there won’t be a problem, as long as you are not an occupant of the building. If your renovations don’t require your tenants to move out of the property, you are free to use the loan to make all the necessary renovations and improvements to the property.

The Rules are Simple
As you can see, you can certainly use your hard money loan to finance a residential property. For most lenders, the only stipulation is that the property cannot be owner occupied. If you are looking for a way to finance the renovation of your primary residence, or if you’re looking to purchase property you want to turn into your primary residence, it’s best to talk to a bank or conventional lender.

Contact us : 
 
Walnut Street Finance
4021 University Drive #200
Fairfax, VA 22030

703-263-8154
 


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