Pearl City is a suburb in Honolulu County and is famously the home of Pearl Harbor, the military base that got bombed by the Japanese during World War II. It is bordered by Waimalu and Waipahu. It is a very diverse place to live and has a rich history after a railroad was built, giving people access to the town. Pearl City is known for being a great place to raise a family and for having great restaurants.
Pearl City is also known for its great schools. It has a population just below 50,000 and is a great suburb with a tremendous amount of retirees. Young professionals often call Pearl City their home. According to Niche, the average home value of Pearl City is $667,000 and the average rent is $1,908. However, like the rest of Hawaii, it’s difficult to find affordable housing when supply of housing is not meeting demand.
Right now, it should be no surprise Pearl City is a seller’s market. A seller’s market is when demand is greater than supply and houses sell very quickly and for costly prices. Since there is such high demand across all of Hawaii, real estate investors might get into bidding wars for properties within Pearl City, and the most competitive buyers often have to put down the fastest offers.
Hard money loans might be the best way to invest in real estate in Pearl City for investors. Hard money loans are loans mostly used for house flipping in real estate transactions, but they’re also used for long term rentals, construction projects and repairs of distressed properties.
Speed of approval is the biggest advantage of hard money loans, particularly in competitive seller’s markets. One problem with traditional financing in mortgages is that mortgages can take more or less a month to be approved. But hard money loans can be approved within a couple of days.
Hard money loans can be approved so quickly because they’re not based on the financial standing of the applicant. Instead, hard money loans are based on the property. They’re based on the property as an asset and the hard money lenders projects the after repair value of the property when negotiating the terms and rates of the loan. Since hard money lenders use the property as collateral, if a borrower defaults on a property, the lender takes on the property, which is very different from a foreclosure where there are time consuming and expensive judicial proceedings.
Hard money loans thus come with a lot of risks. They’re called last resort loans for a reason. Hard money loans have higher interest rates than traditional financing, with a 8–15% interest rate on average. This differs significantly from mortgages, which have just above a 4% interest rate on average. Hard money loans also have very short repayment periods. They need to be paid off within a year most of the time, whereas traditional financing can have 30-year repayment periods. Lastly, since hard money loans have lower LTV ratios, they require higher down payments from the borrower.
It’s also important not to trust every hard money lender. The majority of hard money lenders won’t lend to new investors because hard money lenders require a successful track record of investments. Also, some hard money lenders add extra fees without communicating well with the borrower, including origination fees, closing costs, and underwriting fees. It’s important to trust only the best hard money lenders as a result.
At Hard Money Lenders IO, we have you covered in choosing the best hard money lenders in Pearl City. These are the best financiers for your investment.