If you are seriously considering a Trust Deed Investment, here are the five key criteria when judging whether a loan may be right for hard money!
1. LOAN TO VALUE RATIO
2. TYPE OF PROPERTY
4. CASH FLOW OR INCOME OF PROPERTY
5. EXIT STATEGY
Most Investors know that equity in the property is the key issue in private lending. This is the loan to value ratio. This can vary with the type of property, location, and condition of the property.
The other four issues are also integral factors, particularly the exit strategy. How does the borrower plan to payoff the hard money loan? Remember, both the lender and borrower would prefer to make this relationship as short as possible. The borrower would because he/she is paying very high rates for the money, and the investor, to get more points and be assured the principal is safe!
DRE# 00865708/NMLS# 305266