Connecticut is a great place to invest in real estate, being close to New York, Rhode Island, and Massachusetts. With a great location as well as being a great place to live, Connecticut has a reputation for having rustic landscapes and more. It is home to many terrific real estate markets, including Hartford, Greenwich, New Haven, and Bridgeport.
Right now, film and tourism are thriving industries in Connecticut. The Connecticut economy is home to many Fortune 500 companies, and the job market is just attracting more and more talent right now. There are a lot of reasons to invest in real estate in Connecticut, including rising home values and great real estate markets. As for drawbacks, Connecticut is not the most tax-friendly for retirees and has property taxes above the national average.
Like much of the rest of the country, and unlike New York City, Connecticut has many seller’s markets. Demand is outpacing supply in Connecticut, and Connecticut is a state where real estate investors have been getting into bidding wars as a result of the housing bubble created by the pandemic. Connecticut is a place where, in most cities, homes are selling fast and for faster than listing price.
Hard money loans might be the best way to invest in real estate in Connecticut. Hard money loans are also known as short-term bridge loans and last resort loans, but their biggest advantage in seller’s markets like Connecticut is their very fast speeds of approval — hard money loans can be approved in a couple days, whereas traditional mortgage loans can take a month or more to be approved.
These loans can be approved so quickly because they’re based on the property as the asset, not the financial standing of the borrower. Hard money loans might require a minimum credit score of 600 to 620, but only new investors really have to rely on financial standing to get approved for loans and get lower interest rates. Hard money loans use the property as collateral. If a borrower defaults on a mortgage, the bank initiates a foreclosure. But if a borrower defaults on a hard money loan, the lender owns the property in a very quick process.
Hard money loans also have plenty of drawbacks because of the risk incurred by the lender. Hard money loans have higher interest rates, lower LTV ratios, and shorter repayment periods than traditional mortgage loans. These loans have interest rates of 8–15%, which are drastically higher than the interest rates of traditional mortgage loans (just over 4% on average). Hard money loans also have LTV ratios of 65–75%, which are higher than the LTV ratios of traditional mortgage loans (which are around 80%). This means hard money loans require higher proportions of down payments from borrowers. Lastly, since hard money loans have repayment periods of around a year, they need to be paid off much faster than traditional mortgage loans.
Because of all these drawbacks, many real estate experts recommend leaving hard money loans to the professionals. It’s difficult for new investors to get hard money loans because most lenders look at the experience of the borrower before approving a lender for a hard money loan. Also, not every hard money lender is the most reliable — some hard money lenders tack on extraneous fees like underwriting fees, closing costs, and origination fees while others just don’t communicate well about these fees.
That’s why it’s so important to find the very best hard money lenders. At Hard Money Lenders IO, we have made a list of the best hard money lenders in Connecticut. Look no further for a partner in your real estate transaction.