New York is one of the best states in America to invest in real estate. While most think of New York City as the place to invest in real estate, the rest of the state of New York can also be an immensely profitable market.
Real estate investing in New York is very profitable due to a significant amount of renters, and a lot of people moving away from New York City to single-family homes and metropolitan suburbs. According to Home Union, there are increasingly more visitors to New York, causing a boom in tourism as an industry. There is also a growing job market in the financial and security sectors, and unemployment is at an all-time low in the state. Many huge projects are bringing jobs into the state, especially in New York City.
There is also soaring real estate demand through homebuyers breaking all previous records. With soaring real estate demand also comes increased rent prices. Suburbs are also becoming more popular due to an exodus from New York City.
Right now, most of New York is seller’s markets given the housing bubble across the country from the pandemic. A seller’s market is when demand outpaces supply, and homes sell very fast and for high prices. In seller’s markets, buyers have to put down very fast offers to be able to compete with other real estate investors.
While this won’t be the case forever, hard money loans might be one of the best ways to invest in real estate in New York. Hard money loans are mostly used for real estate transactions like fix and flips, long-term rentals, and construction projects. They’re also known as last resort loans, and in seller’s markets, hard money loans have the tremendous advantage of being approved very quickly.
Hard money loans can be approved in a couple of days, as opposed to traditional mortgage loans which can take more or less a month to be approved. Hard money loans are otherwise known as short-term bridge loans, but the reason they can be approved so quickly is that they’re based on the after-repair value of the property and the property itself, not the credit score of the borrower or the borrower’s financial standing.
Hard money loans use the property as collateral as well as asset. This means if a borrower defaults on a hard money loan, the lender takes on the property. This is a much faster process than a foreclosure, where a bank initiates judicial proceedings that can be very costly and lengthy.
Because hard money loans use the property as the asset, they have significant risks and these risks are reflected in the more unforgiving rates and terms of hard money loans. Hard money loans have higher interest rates and can average 8–15% interest, which is significantly higher than the just over 4% interest rates associated with most houses. Hard money loans also have shorter repayment periods (about a year) than mortgages, which famously have 30-year repayment periods. Lastly, hard money loans have lower LTV ratios than traditional mortgage loans, which means borrowers have to put down higher down payments than mortgages on average.
It’s important to only trust the most reputable and reliable hard money lenders, which is why we at Hard Money Lenders IO have compiled a research-backed list of the best hard money lenders in New York.