Table of Contents
Introduction
Private money lenders play a crucial role in the real estate market, providing borrowers with competitively priced loans that can be obtained quickly. In Arkansas, hard money lenders offer short-term loans, typically lasting between 1 and 5 years. These loans are commonly used for commercial real estate development, fix and flip projects, and rental property investments.
Arkansas: A Unique Real Estate Market
Arkansas is a state known for its stunning natural beauty, with the Ozark and Ouachita Mountains surrounding the area. The state is home to forested areas, rolling valleys, and several moderately sized cities. With a population of around 3 million people, many residents live in cities like Little Rock, Bentonville, Fayetteville, and Fort Smith. Arkansas offers the benefits of small-town living with access to big city amenities. The state’s diverse economy is focused on industries such as aircraft production, steel, tourism, and poultry production.
Affordable Real Estate in Arkansas
One of the advantages of buying property in Arkansas is the affordability of homes compared to many other areas. In August 2022, the average sale price of a home in Arkansas was $156,800, making it one of the most affordable state-wide averages in the country. While higher-priced homes can be found in the suburbs around Little Rock, the overall affordability of homes in Arkansas is attractive to buyers.
Rental Market in Arkansas
A significant portion of the population in Arkansas chooses to rent their homes rather than buy them. According to the U.S. Census Bureau, 67.2% of people in the state own their homes, while 32.8% rent them. This higher percentage of renters compared to other states suggests a demand for additional real estate investments in Arkansas. As of the available data, the vacancy rate for rentals in Arkansas is low at 5.5%.
How Hard Money Loans Work
Hard money loans in Arkansas can help investors finance real estate rental properties that are in demand in certain areas of the state. These loans are secured by a piece of real estate, meaning the lender has the ability to force the sale of the property if the borrower fails to make payments as agreed. This arrangement allows hard money lenders to offer loans to borrowers with lower credit scores or on properties that generate income, despite the higher risk involved.
Arkansas hard money lenders set their own terms and conditions for these loans based on their established guidelines. While lenders offer versatility to meet various needs, hard money loans generally have slightly higher interest rates compared to traditional real estate loans and mortgages. The increased risk involved in lending to borrowers with lower credit scores and income-producing properties leads to higher costs.
Most hard money loans in Arkansas are short-term loans, typically repaid by the borrower within 1 to 5 years, depending on the agreed terms. This short-term nature helps mitigate the impact of the higher interest rate. Borrowers often pay off the loan in full within the short term or refinance it into a long-term loan at a lower interest rate. This flexibility makes hard money loans more appealing to borrowers involved in fix and flip projects, rental investments, and commercial real estate development.
Top Arkansas Hard Money Lenders for 2023
If you’re looking for private money opportunities in Arkansas, these top hard money lenders may be worth considering:
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BridgeWell Capital: With over $500 million in funded real estate investment deals since 2008, BridgeWell Capital offers private money financing throughout the Midwest and Eastern parts of the country. They provide loans for rental properties, fix and flips, and more.
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New Silver: Founded in 2019, New Silver offers a range of private lending products, including fix and flip, rental, ground-up, and personal loans. They provide financing for residential and commercial properties.
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Stratton Equities: Stratton Equities is a nationwide direct hard money lender for real estate investors. They offer loans for various property types, including single-family homes, condos, multi-family units, and commercial properties.
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EquityMax: Based in Florida, EquityMax has been providing hard money loans since 1990. They offer loans for single-family homes, multi-unit properties, residential properties, commercial properties, and industrial warehouses.
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Fund That Flip: Fund That Flip specializes in short-term bridge loans for real estate investors looking to flip properties. They offer competitive loan-to-cost ratios and can finance ground-up construction projects.
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HouseMax Funding: HouseMax Funding provides asset-based loan financing for real estate transactions. They specialize in fix and flip loans, construction loans, and rental loans for urban and suburban communities nationwide.
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Easy Street Capital: Based in Austin, Texas, Easy Street Capital lends nationwide (except in North and South Dakota) and offers competitive interest rates and flexible loan terms. They specialize in fix and flip loans, renovation financing, and more.
Differences Between Hard Money Loans and Traditional Loans
There are several key differences between hard money loans and traditional mortgages from credit unions and banks. Hard money loans are available to borrowers with lower credit scores and can be used for higher-risk properties that require repairs or upgrades. These loans are often based on the after-repair value of the property, making them suitable for properties in need of significant renovations.
Compared to traditional mortgage loans, hard money loans offer faster access to funds. While traditional loans can take 60 to 90 days to close, hard money loans can typically be closed within a few weeks. This quick turnaround time is crucial for borrowers who need immediate financing for time-sensitive real estate opportunities.
In conclusion, private money opportunities in 2023 are available through hard money lenders in Arkansas. These lenders provide short-term loans for various real estate investment purposes, offering flexibility and quick access to funds. With the state’s affordable real estate market and a demand for rental properties, Arkansas presents attractive opportunities for real estate investors.