Working with a hard money lender can save you quite a bit of money, and actually help you to make a profit when purchasing real estate. A hard money lender is a private individual with a large amount of cash looking for a more profitable investment than a bank offers. You come into the picture by finding a piece of land, real estate, property, house or whatever that you can purchase for less than its actual value if you pay in cash. It is possible to find property that you can buy for as low as fifty percent of its value if you pay in cash immediately. This is undoubtedly the most difficult part of the process. In comparison, understanding how a hard money loan works is pretty easy.

 

A hard money lender wants to get better interest on their money than the bank offers. However, the hard money lenders Dallas Tx also needs security. The lender gets that security from the actual value of the property that you found. The lender only has to lend you the amount of money that the property will be sold for in cash, which is less than the actual value of the property.

 

As long as everything goes according to plan, the hard money lender makes a great deal with relatively little effort by the higher interest rate they charge you. If you screw up and cannot pay back the loan, then the hard money lender now has a piece of land worth more than the amount they originally gave out in hard money loans Houston Texas. It's not what the lender wanted, and now they have to do the grunt work of fixing it up and selling it, but they haven't lost anything. However, the lender is much happier to earn a profit from interest and let you deal with reselling the property for your own profit.

 

You've successfully secured a piece of land for less than its value by getting a hard money loan. Now, after waiting an appropriate amount of time, you can refinance, mortgage the house with a bank to pay back the hard money lender, and then later sell the house at a profit. You will be able to get a very good mortgage, because you do not need to mortgage the house for its full value, merely a percentage of that value slightly higher than what you paid in cash for it. This is where you make the profit. Read about real estate appraisers here at http://www.mahalo.com/how-to-become-a-real-estate-appraiser/.