Stamford is the second biggest city in the state of Connecticut. It has a population of over 130,000, and the population is rapidly growing. Stamford recently passed Hartford and New Haven on the 2020 census, and Stamford is well known to many Fortune 500 companies, making it a huge financial area outside New York City. Financial services dominate the economy of Stamford, showing the economy is thriving in the city (as shown through population growth).
According to Niche, Stamford is one of the best places in America to live for young adults. It is in Fairfield County and rated as one of the best places to live in Connecticut. Most people in Stamford own their homes, and night life in Stamford is thriving. The University of Connecticut has a campus in Stamford, and the median home value of the city is $532,700 while the median rent is $1,812.
Right now, Stamford is a seller’s market. Demand is rapidly outpacing supply in the city, and houses are selling fast and above listing price. People often get into bidding wars in Stamford for prime real estate.
As a result, hard money loans might be the best way to invest in real estate in Stamford. Hard money loans are mainly used for fix and flips, long-term rentals, and construction projects for distressed homes, but their biggest advantage in a seller’s market is their very fast speed of approval. Hard money loans can be approved within a matter of days, whereas traditional mortgage loans can take more or less a month to be approved.
Hard money loans can be approved so quickly because they’re based on the property as an asset, not the financial standing of the applicant like mortgages are based on. To be clear, the financial standing of the applicant still matters. Most hard money lenders require a credit score of 600 to 620. However, hard money lenders use the property as collateral for the loan, making sure the lender takes on the property if a borrower defaults. This is a very different process from a foreclosure, where the bank initiates judicial proceedings.
Because of these differences with traditional financing, hard money loans carry significant risks. They have higher interest rates, lower LTV ratios, and shorter repayment periods than traditional financing. Hard money loans have interest rates of 8–15% and repayment periods of more or less a year, which is much more unforgiving than the traditional 15 to 30 year repayment periods and interest rates just over 4% of traditional mortgage loans. Also, lower LTV ratios means hard money loans fund less of the property, requiring more of a down payment from the borrower.
It’s important to be very selective when choosing a hard money lender, because not every hard money lender is trustworthy. Some might tack on extraneous fees like origination fees and closing costs, while others might not communicate well about fees until signing. As a new investor, it’s important to be especially careful since not every hard money lender gives to new investors since most require a successful track record of fix and flips and other investments.
We have you covered at Hard Money Lenders IO. We have made a list of the best hard money lenders in Stamford. Look no further for the best financing partner for your real estate journey.