Aurora is the third biggest city in the state of Colorado. It has a population of just over 386,000 people and is located between three separate counties in Colorado. Aurora is known as the “Gateway to the Rockies.” Aurora is known for its food scene, art, recreation, and more. There’s always a lot to do in the city, between breweries, family-owned restaurants, and tons of state parks. Aurora is in the Denver metropolitan area and within easy reach, and for these reasons, the real estate market has been booming in Aurora.
According to Niche, Aurora is a city with an urban suburban mix feel, and is a place where most people own their homes. It’s a very diverse city with lots of health and fitness and outdoor activities, like the rest of Colorado. It’s also a city with great nightlife, weather, and that’s generally considered a great place to raise a family. Aurora is home to many families and young professionals, as well as many good public schools. It has a median home value of $322,200 and a median rent of $1401.
Right now, as of June 2022, Aurora is a seller’s market. It’s a place where demand is outpacing supply and where there’s a housing bubble over real estate in the city. Aurora is a city where homes are selling very fast and for higher than listing price.
Real estate investors in Aurora should consider hard money loans, loans that are predominantly used for real estate transactions like fix and flips and long-term rentals. Hard money loans are mainly used for transactions where an investor buys a home in disrepair, repairs the home, and sells it for a greater profit. In a housing bubble like Aurora, hard money loans give a tremendous leg up because of their speed of approval. Time is money in real estate investing, and hard money loans can be approved in only a couple of days. Traditional mortgage loans can take a month or more to be approved, and in that time, an investor may have already lost out on an ideal property.
But hard money loans also have a lot of disadvantages to complement their speed and flexibility. Hard money loans are known for having extremely high interest rates, ranging anywhere from 8–15%. This is even higher than the average interest rates of mortgages at the moment, which are notoriously high in our current housing market. Hard money loans also have repayment periods of more or less a year, which is significantly shorter than the repayment periods of traditional mortgage loans. Lastly, hard money loans have much lower LTV ratios than mortgages, which means investors need to put down higher down payments than they need to with mortgages.
Hard money loans are different from mortgages because they use the property as the asset, not the credit score of the borrower. This means the after repair value of the property is the basis for the terms and rates of the loan. Hard money loans also use the property as the collateral, which means there’s a very different process for if a borrower defaults on a hard money loan versus a mortgage. If a borrower defaults on a mortgage, there’s a foreclosure. But if a borrower defaults on a hard money loan, the lender takes on the property and becomes the homeowner. They try to fix and flip the home themselves.
Since hard money loans are so unforgiving, it’s important to only trust the best hard money lenders. That’s why we at Hard Money Lenders IO have made a list of the best lenders in Aurora.