Aberdeen is the county seat of Brown County, located in northern South Dakota. It is the third biggest city in South Dakota, behind both Sioux Falls and Rapid City. It is also considered a college town since South Dakota is home to Northern State University and Presentation College, and Aberdeen has a population of approximately 40,000 people.
Aberdeen is a very affordable city. It is a great place to invest in rentals due to its affordability and being a college town. There usually is great return on investment due to the market for short-term rentals in the state. There is a great occupancy rate and a great walk score.
Right now, Aberdeen is a place with great public schools, great nightlife, great diversity. It has good housing and is a great place to raise a family. Most residents in Aberdeen own their homes, and there are many bars and parks in the city. It is home to many young families and young professionals, and right now, the median home value is $161,800 and a median rent of $685, which makes it very affordable even compared to other big cities in South Dakota.
During the pandemic, Aberdeen has become a seller’s market. Demand is greater than supply in the city. Homes are selling fast and for higher than the listing price. Real estate investors might get into bidding wars in the state because homes are selling so fast, and they also need to put down bids quickly to compete.
Hard money loans might be the best way to invest in real estate in Aberdeen. Hard money loans are predominantly used for real estate transactions, but they’re mostly used for fix and flips, long-term rentals, and more. Their biggest advantage in a seller’s market is their fast speed of approval. Hard money loans can be approved within a couple of days, which is significantly faster than traditional mortgage loans, which can take a month or more to be approved.
Hard money loans can be approved so quickly because they’re based on the after repair value of the loan. Hard money loans do not rely on the financial standing of the applicant, or credit score, like mortgage loans. These loans use the property as collateral. If a borrower defaults on a mortgage, there are very lengthy and expensive foreclosure proceedings. However, a borrower defaulting on a hard money loan is a very fast and expedient process: the lender takes on the property.
Because of this, hard money loans are very risky. They have more unforgiving terms and rates than mortgages. Hard money loans have interest rates of 8–15%, which are tremendously higher than the interest rates of just over 4%. They also have much shorter repayment periods — their repayment periods of more or less a year, which are significantly shorter than the repayment periods of traditional mortgage loans, which have repayment periods of 15 to 30 years. Hard money loans also have lower LTV ratios than traditional mortgage loans, which means they require higher down payments from real estate investors.
It is important, however, not to just trust any hard money lender. Not every hard money lender is reliable and reputable, and some have reputations as “loan sharks.” Also, many hard money lenders are not transparent about added fees during signing, like origination fees, closing costs, and underwriting fees.
At Hard Money Lenders IO, we have you covered — we have made a list of the best hard money lenders in Aberdeen. Look no further for a financing partner for your real estate investment.