What is ROI?
ROI or ‘Return On Investment’ means the percentage of invested money that’s recouped after the deduction of associated costs. This is the amount of money gained from an investment. The most basic ROI formula is:
ROI=(Gain−Cost)/Cost.
Hard money loans can provide great ROI if three important factors are taken into consideration. speed, flexibility, and returns are high. The investor wants a return on his investment and you want the use of their money. Its important to note timeline, what the percentage rate is, and what the penalties are if you don’t meet the guidelines. Ultimately this is meant to be a strong relationship where you both win.
Speed
Hard money loans are known for getting you your money fast. Traditional loans can take 2-3 months where as hard money loans can close in 2-3 weeks– some hard money lenders can turn around in just a couple of days!! Furthermore, you may even be able to get a proof of funds letter. These allow you to write offers that aren’t contingent on financing, making you the equivalent of someone that is buying on an all-cash basis. This can open up a new world of deals to you by allowing you to compete with deep-pocketed investors.
Flexibility
The best properties are frequently out of the box. They might need physical labor or could be located in areas where reliable comps are hard to find. As a property investor, you might also have a non-traditional profile. Whether you have high debt levels that come from multiple investment properties, credit issues stemming from past challenges or other characteristics that might make it hard for you to go the traditional route for a loan, hard money lenders have the flexibility to look past them and approve you for financing to purchase a property.
High Returns
The sweet spot for hard money loans is properties that offer the potential for high returns over a relatively short period. Given that hard money lenders charge higher origination points and interest than traditional lenders, a stabilized cash flowing asset at market price may not have enough return to absorb the cost of a hard money loan. However, assets with the potential for significant upside can.
Yieldi can provide you with the capital you need to get a great ROI. Check out some frequently asked questions, to see if our loans are right for you and your next investment!
