Maine is the northern most state in New England, and in recent years, it has been gaining popularity as a terrific place to invest in real estate. A lot of people have been retiring in Maine, and Maine is known for its lobster industry, coastline, mountains, and other landscape. It attracts a lot of outdoorsmen, tourists, and others. It has a lot of great cities to invest in real estate, including Lewistown, Bangor, Portland, and Auburn.
Because it is often a hub for retirement and tourism, real estate investors can often invest in vacation rentals and single family homes. The economy in Maine right now relies on healthcare, tourism, and education, but it currently has a young workforce that has a terrific rental market. It’s an affordable place to live with many healthcare options. Rent prices have been skyrocketing recently in cities like Portland, but Maine is also known for being very affordable still and a great place to have short-term rentals like Airbnbs.
Most of Maine is seller’s markets at the moment. The market is hot, and real estate investors are often getting into bidding wars where demand is rapidly outpacing supply. Real estate investors are in a housing bubble where homes are selling fast and for much higher than listing price.
Investors in Maine would benefit from hard money loans. Hard money loans are also known as short-term bridge loans and last resort loans, but their biggest advantage in a seller’s market like Maine is their very fast speed of approval. Mortgages can take a month or more to be approved, which means investors in Maine might lose out on a desired property through traditional financing. But hard money loans can be approved in a couple of days, which gives real estate investors a tremendous advantage because they can help investors put down faster bids. In real estate investing in cutthroat seller’s markets, time is often money.
The reason hard money loans can be approved so quickly is because they’re based on a different asset than traditional mortgage loans. Hard money loans use the property as the asset. They don’t depend as much on the credit score of the borrower. Although they have credit score minimums of 600 to 620 and use good credit to get the borrower better interest rates, hard money loans use the property as collateral in the sense that if a borrower defaults on a loan, there isn’t a foreclosure. Instead, the lender becomes the homeowner and flips the home themselves, which can be profitable, but can also result in significant loss of profits.
This risk manifests itself in the very unforgiving terms and rates of hard money loans. Hard money loans have higher interest rates than traditioanl mortgage loans. Mortgages right now have interest rates of 5.6% for 30 year mortgages, which is very high, but standard in the exploding housing bubble of the summer of 2022. Hard money loans have even higher interest rates of 8–15%, which means they are even harder to pay off. They also need to be repaid in around a year, which is much shorter than the average repayment period of a mortgage. Since hard money loans have lower LTV ratios, they also come with higher down payments from borrowers.
Not every hard money lender is trustworthy, so you can only trust reliable and reputable lenders. That’s where we at Hard Money Lenders IO have you covered — here are the best hard money lenders in Maine.