Hard Money Lenders Pittsburgh: Quick Access to Capital
- Published on
- 15 min read
-
Kelsey Morrison Former EditorClose
Kelsey Morrison Former EditorKelsey Morrison worked as an editor for HomeLight's Resource Centers with seven years of editorial experience in the real estate and lifestyle spaces. She previously worked as a commerce editor for World of Good Brands (eHow.com and Cuteness.com), and as an associate editor for Livabl.com. Kelsey holds a bachelor’s degree in Journalism from Concordia University in Montreal, Quebec, and lives in a small mountain town in Southern California.
Are you eyeing a new real estate opportunity in Pittsburgh and considering a hard money loan to make it happen? Whether you’re planning to flip a historic row house in the Strip District or invest in a rental property in Squirrel Hill, Pittsburgh’s hard money lenders offer the flexibility and speed that traditional loans often lack. A hard money loan is a valuable alternative for those dealing with tight project timelines, limited upfront capital, or credit challenges.
Not just for seasoned real estate investors, hard money loans can also help homeowners bridge the gap when buying and selling homes. In this article, we’ll dive into the essentials of hard money lending in Pittsburgh, discuss how it works, what it costs, and explore alternatives for those looking to leverage their home’s equity. Discover if a hard money loan aligns with your real estate goals in the Steel City.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.
What is a hard money lender?
A hard money lender is a private individual or company offering short-term, asset-based loans secured by real estate. Unlike traditional banks, which emphasize the borrower’s credit and income, hard money lenders in Pittsburgh focus on the property’s value. Their clients typically include house flippers and those purchasing rental properties, who need quick access to funds and flexible terms.
Hard money lenders use after-repair value (ARV) — the estimated value of a property post-renovation — to determine loan amounts, lending a percentage of the ARV to ensure profitability and security. Interest rates for hard money loans range from 8% to 15%, with repayment periods from 6 to 24 months. Additional costs can include origination fees, closing costs, and points. If a borrower fails to repay, the lender can seize the property to recover their investment.
How does a hard money loan work?
If you’re considering a real estate investment in Pittsburgh, it’s important to understand the ins and outs of hard money loans. These loans provide unique advantages for quick funding and flexible terms. Here’s an overview of how they typically work:
- Short-term loan: Hard money loans usually have a repayment period of 6–24 months, unlike the longer 15- or 30-year terms of traditional mortgages.
- Faster funding option: Need funds quickly? Hard money loans can be approved within days, a much shorter timeframe than the typical 30 to 50 days for conventional loans.
- Less focus on creditworthiness: Hard money lenders prioritize the property’s value over your income or credit score.
- More focus on property value: These loans are secured by the property and depend heavily on the loan-to-value ratio.
- Not traditional lenders: Unlike banks, hard money loans come from private investors or lending companies.
- Loan denial option: People with poor credit who have significant home equity might turn to hard money loans after being denied by traditional lenders.
- Higher interest rates: Expect to pay higher interest rates due to the increased risk associated with these loans.
- Might require larger down payments: Often, these loans require a larger down payment, sometimes between 20%–30%.
- More flexibility: With fewer regulations, hard money lenders can offer flexible terms, including varying debt-to-income (DTI) ratios and conditions to help avoid foreclosure.
- Potential for interest-only payments: These loans might allow for interest-only payments initially, providing additional flexibility.
What are hard money loans used for?
Hard money loans meet specific financing needs in the Pittsburgh real estate market. These loans are often sought by investors and homeowners who need quick access to funds or have difficulty securing traditional loans. Ahead, we’ll explore common uses for hard money loans:
Flipping a house: Pittsburgh home flippers can benefit from hard money loans due to the fast access to capital for purchasing and renovating properties. This allows them to quickly buy, refurbish, and sell homes.
Buying an investment rental property: Investors looking to buy rental properties can utilize hard money loans to secure deals quickly, especially for properties needing immediate repairs. These loans help landlords make necessary updates and start generating rental income sooner.
Purchasing commercial real estate: Hard money loans work well for commercial real estate deals due to their fast approval and closing times. This quick turnaround is vital when you need to secure a valuable property without delay.
Borrowers who can’t qualify for traditional loans: Individuals with significant home equity but poor credit may seek out hard money lenders. These loans are based on the property’s value rather than the borrower’s credit score, offering an alternative financing option.
Homeowners facing foreclosure: Homeowners nearing foreclosure can use hard money loans to refinance debts or gain time to sell their property. This can provide a temporary solution to avoid losing their home or damaging their credit further.
How much do hard money loans cost?
The cost of hard money loans is generally higher than traditional loans due to the increased risk for lenders and the benefit of quick, flexible funding. Here are some typical costs:
- Interest rates: These can range from 8% to 15%, depending on the lender’s risk assessment.
- Origination fees: Lenders may charge 1% to 5% of the total loan amount as an origination fee.
- Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative costs.
- Points: Lenders might charge points (a percentage of the loan amount) upfront, which can add to the initial cost of obtaining a loan.
There are many online calculators available to help estimate these costs.
Alternatives to working with hard money lenders
If you’re a homeowner looking to tap into your home’s equity, here are several alternatives to consider:
Take out a second mortgage: A home equity loan or HELOC can provide necessary funds using the equity in your home, typically at a lower interest rate than hard money loans.
Cash-out refinance: This approach allows you to refinance your existing mortgage, withdrawing cash to fund new projects, often with more favorable rates than hard money loans.
Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower interest rates, making it a cost-effective option.
Use a government-backed loan program: Programs through the FHA, VA, or USDA can assist in purchasing homes with lower down payments and interest rates.
Peer-to-peer loans: These loans are provided by individual investors via platforms like LendingClub or Prosper, offering a viable alternative with different terms compared to hard money loans.
Specialized loan programs: Explore specialized financing options for fixer-uppers or refinancing investment properties, especially if you want to replace an existing hard money loan.
Request a seller financing option: Sometimes, sellers may offer to finance the purchase themselves, which can lead to lower closing costs and fewer eligibility requirements.
How to buy before you sell
Sometimes, a dream house pops up on the MLS just as you’re starting to think about selling your current place. Whether it’s a well-maintained Victorian in the North Side or a sleek downtown condo, HomeLight offers a solution for Pittsburgh homeowners through the Buy Before You Sell program.
The Buy Before You Sell (BBYS) program enables you to leverage your existing home’s equity to make a stronger, non-contingent offer on a new property. If your home qualifies, you can have your equity unlock amount approved within 24 hours, without any cost or commitment. This approval allows you to buy your next home with confidence and sell your current home vacant, avoiding the inconvenience of moving twice.
Here’s how HomeLight Buy Before You Sell works:
Although there’s a flat fee of 2.4% of your current home’s sold price, the potential savings in other areas might outweigh the cost. You could save on moving expenses, temporary housing, and even the final purchase price of your new home. Plus, HomeLight’s BBYS fees are generally lower than the 9.5% to 12% interest rates on bridge loans, making it a cost-effective choice for many homeowners.
3 top hard money lenders in Pittsburgh
Traditional lenders can be a solid choice for real estate financing, but they often lack speed and flexibility. If you need to act quickly on a real estate opportunity in Pittsburgh, the following hard money lenders might be the way to go.
CCC Holdings, LLC
CCC Holdings is a Pittsburgh-based private lending company focused on supporting real estate investors in Allegheny, Butler, Beaver, Washington, and Westmoreland counties. They specialize in hard money and rehab loans, financing up to 100% of purchase and rehab costs. Loan terms range from six to 12 months, and amounts fall between $30,000 and $600,000. Closing can take as little as 21 days, and CCC Holdings is even open to working with first-time investors.
Lending clientele: Residential real estate investors
Loan criteria: Up to 70% of ARV
CCC Holdings, LLC has a 5-star rating on Google based on a limited number of reviews. Past clients praise owner Rick’s real estate knowledge, quick response times, and professionalism. “I am a repeat customer who has used CCC Holdings, LLC several times now with absolutely no complaints!” reads a review. “Rick is professional and easy to work with and always on top of things! Looking forward to my next project!”
412-638-9980
close.fund
Founded in 2011, close.fund provides loans for real estate investors in Pittsburgh. To date, they have helped over 480 clients flip homes, expand rental portfolios, and begin new construction projects. Their services include fix-and-flip loans, hard money loans, multifamily property loans, and new construction loans. According to their website, close.fund’s company values include “unparalleled customer service” and “competitively priced lending solutions.”
Lending clientele: Residential real estate investors
Loan criteria: Contact close.fund for details
close.fund boasts a 5-star rating on Google based on more than 20 reviews. Customers mention the company’s excellent service, lighting-fast closings, and reasonable underwriting process. “This is one of the easiest lenders we have ever worked with!” shared a client. “Everything they said they were going to do, from timelines to underwriting, was delivered above and beyond expectations, and not to mention their rates were better! We will never use anyone else for bridge or hard money lending!”
412-606-7271
M&M RE Holdings
M&M RE Holdings is a Pittsburgh-based hard money lender that has been in business for over 15 years. The company offers competitive rates, interest-only payments, and no prepayment penalties or fees on hard money loans. Loan amounts range from $50,000 to $200,000 per project, and approvals take three days or less. Repeat borrowers can benefit from discounts and funding of multiple concurrent deals.
Lending clientele: Residential real estate investors
Loan criteria: Up to 60% of ARV
M&M RE Holdings is accredited by the Better Business Bureau and holds an A+ rating. They also have a 5-star rating on Google based on a very limited number of reviews. “To date, [M&M RE Holdings] has worked with us on 11 investment opportunities, and we have been extremely pleased with all phases of those projects,” reads a client testimonial on the company’s website. “We have found them to be extremely professional and ethical in all aspects of the business.”
646-526-7304
Investing in real estate?
Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.
Should I partner with a hard money lender in Pittsburgh?
Determining whether a hard money loan is right for you depends on your individual needs and investment goals. These loans are ideal for real estate investors in Pittsburgh who need quick access to funds for projects with fast turnaround times or when traditional financing isn’t feasible. If you can manage the higher interest rates and shorter repayment periods, a hard money loan could provide the flexibility and speed necessary for your investment plans.
However, if you’re a homeowner looking to use your home’s equity to purchase a new property, HomeLight’s Buy Before You Sell program might be a better option. This program allows you to make a strong, non-contingent offer on a new home while avoiding the high costs associated with hard money loans. With a flat fee, you can streamline your move without the stress of temporary housing.
Consider your long-term financial strategy and seek advice from a financial advisor to ensure your choice aligns with your overall goals. If you’re searching for real estate agents in Pittsburgh who understand hard money lending, HomeLight can connect you with top professionals in the area.
Header Image Source: (WoodysPhotos)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.