Without adequate funding, the rehabber’s ability to act quickly, the purchase and renovation of the property may be very limited. There are different rules and strategies that real estate investors use in assessing properties. The following rules are judged by the value of any rehabilitation project:

You must find the worst house in a decent block …
1) Whether his strategy is to “jump” properties, or to celebrate for their rental cash flow, it is important to point out to potential buyers or renters strong potential, as quickly as possible. Therefore, you should look at properties that are maintained properly.

2) Make sure there is no structural damage to property. That could be a fatal blow to their investment.

Making your money when you buy a property, not when you sell!
There are many formulas used for the successful purchase of a rehabbing project. There must always be a comfortable cushion between the purchase price and the selling price of capital goods. This cushion price will help ensure the success of the investment, even if you have repair cost over-runs or clinging to own property and that what was planned.

Every day that the property is not sold or rented immediately its bottom line. The interest, taxes, insurance and utility bills compound daily. The purchase of property at the right price will protect you from Murphy’s law.

What is a “hard money” or “rehabbing loan”?

So, why use a hard money lender? Assets to be purchased could be currently vacant and in need of repairs. It may be older property in a neighborhood that has no potential for revitalization. It may be a mortgage and can be purchased in a short sale. Or you may only need a quick closure to secure a property before finding an investor / rehabber to which you want more to property. Or you may want to buy a run-down piece of property, property rehabilitation, and to refinance rental income. In all these cases, you need a hard money loan because conventional financing is not an option or would take too long to secure. “Hard Money” is just a cost of doing business and an efficient method of doing business as a real estate investor.