Lorain is a city in northeastern Ohio, just 30 minutes outside Cleveland. It is the third-largest city outside the Cleveland area. As a Cleveland suburb, Lorain is a place with a population of just over 60,000, where most people own their homes and where significant green space is present.
Like the rest of Ohio, Lorain is extremely affordable. With a median home value of $87,300 and a median rent of $697, Lorain is very cheap compared to the national average. With such a low cost of living and low property taxes, Lorain is a nice suburb to live as a suburb for people who might work in the city but not want to live in it.
Right now, Lorain is a seller’s market, which means demand for housing is rapidly outpacing supply. Homes are selling for higher prices than listing and fast. In a competitive seller’s market like Lorain, it’s essential for investors to put in offers quickly.
Hard money loans might be the answer for real estate investing in the Lorain market. They are based on the after-repair value of the property, not the credit score of the borrower or any other attributes of the financial standing of the applicant. While most hard money lenders still require minimum credit scores of 600 to 620, hard money loans use the property as collateral. If the borrower defaults on a hard money loan, the lender takes on the property, which means the lender has to determine whether a property can pay off the hard money loan itself. In some cases, this can result in even greater repayment for the hard money lender, but it also comes with more significant risk.
The biggest advantage of hard money loans is they can be approved very quickly. They can be approved within a few days, whereas traditional mortgage loans can take a month or so to be approved with all the documentation they require. Hard money loans can be approved so quickly because they are less regulated and require less documentation than mortgages, but this speed of approval is especially advantageous in a seller’s market because time is money.
However, hard money loans also come with significant risks. They have higher interest rates (8–15%) than traditional loans, shorter repayment periods (more or less a year), and lower LTV ratios than traditional loans. While most mortgages have 15 to 30-year terms, hard money loans need to be paid off much quicker with a lot more buy-in from the borrower in terms of a down payment.
It’s important to be careful with hard money loans because not every hard money lender is trustworthy. Some might tack on extraneous fees like origination fees, closing costs and underwriting fees. Others won’t be transparent until the borrower signs on the loan. That’s why it’s important to be selective when choosing hard money lenders. New investors, in particular, have a hard time getting a hard money loan because most hard money lenders require a successful real estate investing history. Foreign nationals also have a hard time getting hard money loans due to documentation requirements.
At Hard Money Lenders IO, we have compiled a list of the best hard money lenders in Lorain, and also investors foreign nationals and new real estate investors can rely on. Look no further for the best possible partner in your real estate investing journey.