If you are a real estate investor in California looking for quick and flexible financing options, hard money loans may be the way to go. You can use hard money loans to fund your investment projects as a short-term financing option. Unlike traditional bank loans, hard money loans are funded by private lenders or investors and typically have higher interest rates and shorter repayment terms. However, not all hard money loans are created equal.

There are several types of hard money loans, each designed to meet a specific need. Keep reading to explore different types of hard money loans in California that every investor should know, from fix-and-flip loans to bridge loans and beyond.

Fix-and-Flip Loans

Fix-and-flip loans are for investors who want to purchase a distressed property, renovate it, and then sell it for a profit. These loans are usually short-term, with terms ranging from six months to a year. The loan amount is based on the property’s after-repair value (ARV), which is the estimated value once the renovations are complete.

Bridge Loans

You can use this type of loan when you have to bridge the gap between the purchase of a property and the sale of another property. It provides immediate cash flow to meet your current financial requirements. For example, if you’re buying a new property but have yet to sell your current property, a bridge loan can provide the financing you need to purchase it.

Cash-Out Refinance Loans

Refinance an existing mortgage and take out cash at the same time with the help of cash-out refinance loans. This can be useful for investors who want to use the cash to invest in other properties or improve existing ones.

When it comes to cash-out refinancing, the amount of cash you receive is decided by the lender, who considers various factors like your credit history and your property’s loan-to-value (LTV) ratio.

Owner-Occupied Loans

These loans are similar to traditional mortgages but are easier to obtain because the property secures them. It is primarily for investors who plan to live in the property they’re purchasing.

Construction Loans

Construction loans are used to finance the construction of a new property or the renovation of an existing property. These loans are usually short-term, with terms ranging from six months to two years.

Land Loans

If you want to purchase undeveloped land, you can use land loans. The loan amount is based on the value of the land, but sometimes it might be difficult to obtain financing for undeveloped land.

Mezzanine Loan

A mezzanine loan is a type of financing that sits between the first mortgage and equity in the capital stack. It is a hybrid of debt and equity financing that real estate developers and investors typically use to finance large-scale projects. It can be a flexible financing option as it allows you to avoid diluting your ownership stake while providing access to capital to fund your projects.

Hard money loans can be a valuable tool for real estate investors who need to move quickly on a deal. At ARC Private Lending, we offer various hard money loan options to meet the needs of our clients. Contact us today to learn how we can help you finance your next real estate investment in California.