Honolulu is the capital of Hawaii and one of the best places to invest in real estate in Hawaii. It is the most popular tourist destination in Hawaii due to its volcanoes, weather, and more. Every day, Honolulu brings in thousands of travelers and tourism is most certainly thriving in the city.
As the most populous city in Hawaii, Honolulu has about 400,000 people. Many Hawaiians think it is one of the best places to live in the state.
Honolulu has excellent schools and has a robust nightlife. There is also a lot of diversity in the city, and like the rest of Hawaii, Honolulu is home to a significant number of retirees and young professionals. It is also home to the University of Hawaii, and there is always a lot to do within the city. Honolulu is, however, a costly city to buy a home. It has a median home value of $749,000 and a median rent value of $1,534.
Honolulu is a great place to invest in real estate due to its long-term appreciation and its thriving tourism industry. Right now, Honolulu is a seller’s market. This is in line with the rest of Hawaii, but demand is rapidly outpacing supply within the city. Most real estate investors in Honolulu have to buy homes quickly and well above the listing price. Real estate investors might get into bidding wars over real estate.
Hard money loans might be the answer to real estate investing in Honolulu. They provide the fast financing and speed of approval necessary for real estate investing in Honolulu. Hard money loans can be approved within a matter of days, whereas traditional mortgage loans can take over a month to be approved. This fast financing is significant in a seller’s market where time is often more important than money.
These kinds of loans are known as short term bridge loans or last resort loans, but hard money loans are mostly associated with house flipping; they are known for other revenue-generating endeavors like long-term rentals and construction projects.
Hard money loans can be approved so quickly because they’re based on the property, not the applicant’s financial standing. Hard money lenders determine their loan terms and rates based on the projected after repair value of the property. To be clear, credit score still matters as a metric for hard money loans since most lenders require credit score minimums of 600 to 620. However, hard money loans use the property as collateral — if a borrower defaults on a hard money loan, the lender is then responsible for the property.
Hard money loans consequently come with significant risks. They have higher interest rates, lower LTV ratios, and lower repayment periods than traditional financing. This means hard money loans are more expensive, need to paid sooner, and require larger down payments than traditional financing. With interest rates of 8–15%, many borrowers steer clear of hard money loans.
It’s also important not to just trust any hard money lender, since not every hard money lender is trustworthy. New investors are particularly vulnerable to bad deals because not every hard money lender gives to new investors. In addition, some hard money lenders tack on extraneous fees like underwriting fees, closing costs, and origination fees.
At Hard Money Lenders IO, we have you covered. We have made a research backed list of the best hard money lenders in Hawaii — look no further for a financing partner for your real estate journey.