Anchorage is the most popular city in Alaska and is home to almost 300,000 people. It is the urban center of Alaska, and home values have been declining in recent years. However, there have been more jobs due to the oil industry recently bringing new jobs to Anchorage. Anchorage has almost 40% of the population of Alaska, and since it is equidistant from many popular travel destinations like New York City and Frankfurt, Germany, Anchorage International Airport is also a place where refueling happens for international flights.
Anchorage is considered by Niche as one of the best places to live in Alaska. It has great schools, great diversity, and terrific night life. It’s a great place to raise a family. Right now, most residents in Anchorage own their homes, and many families and young professionals live in the city. Anchorage has a median home value of $314,800 and a median rent of $1,320, which are both above the national average.
Right now, Anchorage’s housing market favors buyers. Anchorage right now is a buyer’s market, which means supply of housing exceeds demand. It is a place where sellers have to compete to find buyers rather than the other way around. Since there are so many homes in the market, Anchorage is a great place to rehabilitate a home to stand out.
Hard money loans might be the best way to invest in real estate in Anchorage. Hard money loans are otherwise known as short-term bridge loans and last resort loans, but they are mainly used for real estate transactions. They are used for long-term rentals, fix and flips, and rehabilitation projects for distressed homes.
In a seller’s market, hard money loans usually offer the advantage of fast financing to make a buyer competitive. Hard money loans can be approved within a matter of days, while they can take more or less a month to be approved through traditional financing in mortgages.
However, in a buyer’s market like Anchorage, hard money loans have other advantages — they can qualify as cash in cash-only properties. Cash-only partially means what it sounds like — buyers can only use cash to purchase the property. This excludes a lot of buyers who use traditional financing to buy a home. Sellers prefer cash because they can get the money up front from a limited pool of investors.
But cash only also means a home is so distressed it doesn’t qualify for traditional financing at all. The distressed property usually needs significant repairs to become a terrific real estate investment, and hard money loans can often qualify as cash due to their status outside of traditional financing. Essentially, hard money loans were designed for cash-only homes that need significant repairs.
It’s important to know hard money loans have significant risks as well. They have higher interest rates (8–15%) than traditional financing (which usually have rates just above 4%). Hard money loans also have lower LTV ratios and shorter repayment periods. This means they require higher down payments than traditional financing, and it also means hard money loans need to be paid off sooner. Most hard money loans have repayment periods of more or less a year, which is significantly shorter than that of 15 to 30 year mortgages.
At Hard Money Lenders IO, we have made a list of the best hard money lenders in Anchorage to finance your real estate transaction.