Buffalo is the second biggest city in New York, and it’s the county seat of Erie County. Buffalo has a population of just under 280,000. Buffalo is home to a plethora of urban parks and cultural attractions like the Albright-Knox Art Gallery, Buffalo Philharmonic Orchestra, and more. It is also home to educational institutions like the University at Buffalo and Buffalo State College, as well as two major sports teams in the NFL’s Buffalo Bills and NHL’s Buffalo Sabres.
Buffalo is also known for its weather, food, and tourism.
Buffalo is a great place to invest in real estate right now as well for a variety of reasons. In the past 20 years, Buffalo’s economy has revitalized, adding high-tech manufacturing, health, and service-based jobs in light of the decline of manufacturing jobs. However, Buffalo struggled with job loss during the COVID-19 pandemic, and right now, the distressed property market is starting to grow. A lot of people are looking to move into Buffalo, and not many people are looking to leave.
According to Niche, Buffalo gives an urban-suburban mix feel and most residents rent their homes. Buffalo is a great city to raise a family that is very diverse and has great nightlife through restaurants, bars, and more. Many young professionals and families live in Buffalo, and the median home value is $89,800 and the median rent is $776, which makes Buffalo a very affordable place to live.
Right now, Buffalo is a seller’s market. There is a housing bubble where real estate investors are getting into bidding wars. Demand is exceeding supply and homes are selling fast and for higher than listing price.
Real estate investors in Buffalo should look into hard money loans. Hard money loans are also known as last resort loans, but their biggest advantage in a seller’s market is their very fast speed of approval. They can be approved in a couple days, whereas traditional mortgage loans can take a month or more to be approved.
These loans are an alternative source of financing that uses the property as the asset, not the financial standing of the borrower. While most hard money lenders have a minimum credit score requirement of 600 to 620, hard money loans use the property as collateral. If a borrower defaults on a traditional mortgage loan, the bank forecloses on the property. But if a borrower defaults on a hard money loan, the lender takes on the property in a swift procedure that can result in significant profit, but also significant risk.
This means hard money loans also have lots of disadvantages. They have higher interest rates, shorter repayment periods, and lower LTV ratios. Hard money loans have interest rates of 8–15%, repayment periods around a year, and LTV ratios around 65–75%. Mortgages have significantly more forgiving rates and terms, like interest rates of just over 4% on average, repayment periods around 15 to 30 years, and LTV ratios around 80%.
It’s essential not to trust any hard money lender. Not every hard money lender is trustworthy. Some hard money lenders tack on extraneous fees like underwriting fees, closing costs, and origination fees that aren’t well-communicated to the borrower until signing. Other hard money lenders don’t give to new investors because they require a successful history of fix and flips.
We have you covered at Hard Money Lenders IO — we have compiled a list of the best hard money lenders in Buffalo.