Waipahu is a city on the O’ahu island of Hawaii and in Honolulu County. Waipahu means “water forced up” in Hawaiian and is the historical home to sugarcane plantations. Waipahu has great public schools and is known as a place that is very diverse, much like the rest of Hawaii. It has a population over 40,000 people and is known as a suburb of Honolulu County. In Waipahu, most residents own their homes, and there is a lot of green space in Waipahu as well.
Waipahu has a median home value of $626,600 and a median rent of $1343, which are both well above the national average. It is very difficult to find housing in Waipahu. It is an expensive town with an expensive cost of living. Like the rest of Hawaii, there are not many homes available in Waipahu, and there is significant demand that outpaces the low inventory.
As a result, it’s no surprise Waipahu is a seller’s market. Houses are selling fast and for higher than listing price. They are also subject to bidding wars by buyers and real estate investors, which means homes in Waipahu can be in a housing bubble.
As a real estate investor, you might want to look into hard money loans as a means of getting into the Waipahu housing market. Hard money loans are used for fix and flips, long-term rentals, and construction projects, but they have a huge advantage in seller’s markets of being approved very quickly. Hard money loans can be approved within a matter of days, which is significantly faster than traditional mortgage loans, which can take a month or more to be approved.
The reason hard money loans can be approved so quickly is because of their asset. Hard money loans are based on the property, not the credit score of the borrower. While most hard money loans still have credit score minimums, the majority use the property as an asset and based their terms and rates on the projected after repair value of a property. If a borrower defaults on a mortgage, the bank initiates a foreclosure. However, if a borrower defaults on a hard money loan, the lender takes on the property.
As a result, hard money loans are incredibly risky for both the borrower and the lender. For the borrower, hard money loans are risky because they have much harsher terms than traditional mortgage loans. Hard money loans have higher interest rates, shorter repayment periods, and lower LTV ratios than traditional mortgage loans. They need to be repaid within a year most of the time, and they have interest rates of 8–15%. They also require higher down payments from borrowers compared to traditional financing.
It’s also very important not to just trust any hard money lender. Some hard money lenders tack on extra fees or fail to communicate well about fees like underwriting fees, closing costs, and origination fees until signing. Most hard money lenders don’t lend to new investors because they require a successful history of fix and flips, which makes new investors particularly susceptible to scams. Not only is it important to be careful, but it’s important to be selective in choosing reputable lenders who have established themselves as reliable.
At Hard Money Lenders IO, we have made a list of the best hard money lenders in Waipahu to help you finance your real estate investment