Alabama is a great state as a real estate investor because it has a superb return on investment (ROI) in a fast-growing state. Many major cities in Alabama like Huntsville, Montgomery, and Birmingham are hidden gems for investors, leading to greater buying of affordable properties. Compared to other states, Alabama has low property taxes, another factor that makes it more affordable than other states.
Recently, according to Freedom Ventures, Alabama has seen a rise in development, with more startups and internationally acclaimed businesses like Aldi setting their roots in Alabama. Alabama is also a stable market, without stark appreciations and steep declines like other major markets.
In addition, Alabama is a lucrative market with very high capitalization rates. Whether you’re looking to invest in real estate in big cities like Huntsville, Birmingham, and Montgomery, or college towns like Tuscaloosa, Alabama offers significant, under the radar promise.
In Alabama, hard money loans are a great way to fund fix and flips, acquire fast financing for a home, or generate long-term rental properties. They can bypass a low credit score and give a loan solely based on the value of the property. Since hard money lenders focus on the property instead of the history of the borrower, they can approve loans faster than traditional banks.
Overall, hard money lenders guarantee speed, flexibility, transparency, and dependency that many other traditional lenders do not.
In the state, hard money loans can get approved very quickly to achieve fast financing for a loan, for either long-term or short-term loans. It is important to note hard money loans have higher interest rates than traditional loans and very short repayment periods. However, if you need a fast loan to close on the deal you want, a hard money loan is the perfect resource to leverage.
This is a new approach to real estate investing called asset-based investing. For many investors that use hard money loans, speed of approval is more important than other metrics like interest rates.
It is not difficult to obtain a hard money loan in Alabama, a state with low vacancy rates and good cap rates. But you have to be selective about which hard money lenders you trust. Some take advantage of unknowing new investors, so it’s wise to not just take the first offer given to you. A hard money loan also has other high rates in addition to interest, including origination fees and closing costs. If you default on a hard money loan, the lender can seize the property, without all the formal procedures associated with a foreclosure.
A bad hard money loan can set you back in your real estate investing portfolio, and you want to look for a reputable hard money lender that isn’t looking to take advantage of you.
Here are the best hard money lenders in Alabama.