Elkhart is a city just outside South Bend, that has a suburban feel and has a majority of homeowners. It is also known as “The City with a Heart” and the “RV Capital of the World” due to its primary industry in town.
Like the rest of Indiana, Elkhart is very affordable. Its median home value is $95,900, and its median rent is $790. It is one of the most diverse suburbs in Indiana. It feels like a small town, but Elkhart
The Wall Street Journal rated Elkhart as a top emerging housing market, due to a thriving RV industry giving jobs and decreasing unemployment in the city. More people have been moving into the city for work, which makes the city a seller’s market.
A seller’s market means demand is outpacing supply in Elkhart. Houses are selling fast and above listing price.
Hard money loans might be the answer for real estate investing in Elkhart. Hard money loans are otherwise known as bridge loans or last resort loans, but they’re mainly used for real estate transactions. In particular, hard money loans can be used for fix and flips, long-term rentals, construction projects, and repairs of distressed properties.
The biggest advantage of hard money loans in a competitive seller’s market like Elkhart is their very fast speed of approval. Hard money loans can close within a couple of days, as opposed to traditional mortgage loans which can take a month or more to be approved. The reason hard money loans can be approved so quickly is that they are based on the after-repair value of the property, not the credit score of the borrower.
Hard money loans use the property as collateral for a loan. This means if the borrower defaults on a hard money loan, the lender takes on the property. This can be very profitable for the hard money lender, but it can also be very risky.
Hard money loans have risks of low LTV ratios, high interest rates, and short repayment periods compared to traditional mortgage loans. This means with a hard money loan, you have to put down a higher down payment than you do with a traditional mortgage. It also means you have to pay interest rates of around 8–15%, while traditional mortgages have average interest rates of just over 4%. Hard money loans also have repayment periods of more or less a year, whereas mortgages have repayment periods of 15 to 30 years.
However, it’s important not to just trust any hard money lender. Hard money loans are inherently risky, and not every hard money lender is trustworthy. Some might tack on extra fees like origination fees or closing costs, and other hard money lenders might not be completely transparent about all the fees they put on the loan upon approval.
New investors in particular may have difficulties getting hard money loans at all, or being vulnerable to scams — not every hard money lender loans to new investors, and some require track records of successful fix and flips. Foreign nationals might also have a hard time getting hard money loans, as requirements such as credit score and other documentation may be a significant barrier.
At Hard Money Lenders IO, we have made a list of the best hard money lenders in Elkhart so you can get started investing in this burgeoning real estate market.