Bloomington is the seventh biggest city in Indiana and has a population of just over 80,000 people. It has been known as the “Gateway to Scenic Southern Indiana,” and the city is known for having significant green space. It’s also home to Indiana University Bloomington, which makes it the largest campus of Indiana University.
According to Niche, Bloomington is one of the best places to live in Indiana. It has a mixture of urban and suburban feels, and most people in Bloomington rent their homes. Given Bloomington has so many university employees and students, it is home to many young professionals. Bloomington also has very good schools and has affordable prices in home value and rent compared to the national average.
As a college town, Bloomington is a great place to invest in real estate. Bloomington is a seller’s market, which means prices are higher and homes are selling faster. It also means demand is outpacing supply for housing in the city. Real estate investors and buyers may get into bidding wars for housing.
Hard money loans might be the solution for real estate investing in Bloomington. Hard money loans are otherwise known short-term bridge loans or last resort loans, but their biggest advantage in a seller’s market is their very fast speed of approval. Hard money loans can be approved within only a couple of days, which is significantly faster than mortgage loans, which can take more or less a month to be approved. This is extremely beneficial in a seller’s market where houses are selling very quickly.
Hard money loans can be approved so quickly because of the asset they’re based on — the property. While mortgages are based on aspects of the financial standing of the applicant, like credit score, hard money loans are based on the after repair value of the property. It’s not like credit does not matter — most hard money loans still have minimum credit score requirements of 600. However, since the property is the collateral of a hard money loan, the lender takes on the property if a borrower defaults on the hard money loan, which is different than if someone defaults on a mortgage.
This means hard money loans come with a variety of risks as well. Compared to mortgages, they have high interest rates (8–15%), short repayment periods (more or less a year), and low LTV ratios. Hard money loans can be expensive and very hard to pay off if the real estate investment does not work out. By contrast, the average mortgage has a 15 to 30 year repayment period and an interest rate of just over 4%.
It’s important not to just trust any hard money lender. Some hard money lenders are not trustworthy and may charge extraneous fees upon signing. Others may not be transparent about underwriting fees, closing costs, and origination fees to the borrower. It’s essential to only trust reliable and professional hard money lenders because a hard money loan is such a significant investment, especially for new investors. New investors might have a hard time securing a hard money loan because most hard money lenders require successful track records of fix and flips and other investments.
We have you covered at Hard Money Lenders IO. Here are the best hard money lenders in Bloomington to finance your real estate investment.