Waterbury is a city in New Haven County, the second largest in the county. It is close to both Hartford and New York City. It has over 110,000 people and is the fifth largest city in Connecticut as a result. Waterbury has a reputation as “The Brass City,” due to the manufacturing of brassware in the city and the manufacturing of watches and clocks. It is home to Post University, and has a Metro-North railroad station with very close proximity to Grand Central Terminal in New York City.
According to Niche, Waterbury has a suburban feeling and most residents of the city rent their homes. There are many restaurants, coffee shops, and parks within Waterbury, and it is a great place to raise a family. With a median home value of $130,700 and a median rent of $969, Waterbury is significantly more affordable than the rest of Connecticut and has home values and rents even below the national average.
Right now, Waterbury is a seller’s housing market, which means demand is rapidly outpacing supply in the city. It is a place where homes are selling fast and for high prices. Sellers can sell prices for highing than listing price and have a lot of potential buyers, which leads to bidding wars between potential buyers in Waterbury.
Hard money loans might be the answer to real estate investing in a strong seller’s market like Waterbury. Hard money loans are otherwise known as last resort loans, 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, compared to traditional mortgage loans, which 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, and in particular the after-repair value of the property.
Hard money loans are used for fix and flips, long-term rentals, construction projects, and repairs of distressed properties, and since they are used for repairs very often, the after-repair value projections dictate the rates and terms of a hard money loan. If a borrower defaults on a mortgage loan, the bank has to initiate costly and very tedious foreclosure proceedings. However, if a borrower defaults on a hard money loan, the lender takes on the property since the property is the collateral of the loan, which can be incredibly profitable to the lender.
However, this means hard money loans are also very risky, for both the borrower and the lender. Hard money loans have high interest rates compared to traditional mortgage loans. While mortgages tend to have interest rates of just over 4%, hard money loans have interest rates of 8–15% on average. Also, hard money loans have much shorter repayment periods, which means they have to be repaid much faster than traditional mortgage loans. Hard money loans need to be paid off within more or less a year, while traditional mortgage loans can be paid off in 15 to 30 years. Lastly, hard money loans have lower LTV ratios, which means they require larger down payments from borrowers.
It’s also important to be selective when looking for hard money lenders. Not every lender is trustworthy, especially for new investors who may have trouble finding a lender in the first place.
We have found the best hard money lenders in Waterbury so you don’t have to. Look no further for a great real estate investing partner.