Gloucester is a town in Camden County, New Jersey, with a population of just less than 65,000 people. Its motto is it is a “great place to live, work and play” and Gloucester is a suburb of Philadelphia. It is considered a very clean and well kept community with lots of parks and green space. It is much quieter than neighboring Philadelphia and has a lot of access to shopping, major roads, and public transportation. There is also a very reputable and excellent school system.
Gloucester gives residents a dense suburban feel and most people in Gloucester own their homes. It is home to many coffee shops, parks, and young professionals. Public schools in Gloucester are great, and Gloucester is very, very affordable compared to both the national average and neighboring Philadelphia. It has a median home value of $197,700 and a median rent of $1,172.
Right now, Gloucester is a seller’s market. It is a place where supply is outpacing demand, and real estate investors are getting into bidding wars over prime real estate in the town. It is a housing bubble, much like the rest of the country during the pandemic, where homes are selling fast and higher than listing price.
Real estate investors in Gloucester should consider hard money loans. Hard money loans are an alternative source of financing that is mostly used for real estate transactions like fix and flips and long-term rentals. In particular, they’re known for being used for house flipping. In Gloucester, hard money loans are particularly helpful because they can be approved in a couple of days, as opposed to traditional mortgage loans which can take a month or more to be approved.
Hard money loans can be approved so quickly because they’re more flexible and less regulated than traditional financing. While traditional financing uses the financial standing and credit score of the applicant as its asset, hard money loans use the property as the asset. Credit score still matters, as hard money lenders typically require a minimum credit score between 600 and 620, and new investors need to rely on good credit usually to make themselves more appealing borrowers.
However, hard money loans calculate the terms and rates of their loans using the after repair value of the property. They use the property as collateral. If a borrower defaults on a mortgage, the bank forecloses on a home. But if the borrower defaults on a hard money loan, the lender takes ownership of the property. This means most lenders factor in this possibility when giving loans, and think about whether they can turn a profit on the property themselves.
This is an added risk, which means hard money loans also have a lot of disadvantages. They have higher interest rates, shorter repayment periods, and lower LTV ratios than traditional mortgage loans. Hard money loans have interest rates between 8–15%, which are much higher than the interest rates of traditional mortgage loans (just over 4%). They also have short repayment periods of more or less a year, which are much shorter than the repayment periods of mortgages. Lastly, hard money loans have lower LTV ratios than traditional mortgage loans — they require higher down payments on behalf of borrowers to show greater buy-in.
It’s important for borrowers to only trust the best hard money lenders, which is why we at Hard Money Lenders IO have made a list of the best hard money lenders in Gloucester.