Hard Money Lenders Wisconsin: Flexible Loan Options
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Are you hoping to finance your next real estate acquisition in Wisconsin with a hard money loan? Hoping to flip a historic home in Milwaukee or invest in a rental property near Madison’s vibrant downtown?
Hard money lenders in Wisconsin can provide the flexibility and speed to get it done quickly. Hard money loans are a useful financing solution to conventional loans, particularly beneficial for those with short project timelines, limited initial capital, or credit issues.
Even if you’re not a real estate investor but need to bridge the timing gap between buying and selling a home, we’ll share some alternatives to help you leverage your home’s equity. This article will guide you through the basics of hard money lending in Wisconsin, helping you decide if this financial tool aligns with your real estate investment or home-buying goals.
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 that offers short-term loans secured by real estate.
Key Features
- Collateral Focus: Prioritizes the property’s value over the borrower’s creditworthiness.
- Client Base: Popular among real estate investors, including house flippers and rental property buyers.
- Loan Determination: Based on After-Repair Value (ARV) — the estimated property value after renovations. Lenders typically offer a percentage of the ARV.
Costs and Terms
- Interest Rates: Typically range from 8% to 15% or more.
- Repayment Period: Usually between 6 to 24 months.
- Additional Costs: Include origination fees, closing costs, and points (a percentage of the loan amount paid upfront).
Risks
- Asset Seizure: Failure to repay can result in the lender seizing the property to recover its investment.
How does a hard money loan work?
If you’re a real estate investor needing a financing option that provides speed and flexibility, connecting with hard money lenders in Wisconsin could be beneficial. Here’s a quick rundown of how hard money loans work:
- Short-term loan: These loans usually have a repayment period of 6–24 months, unlike the 15- or 30-year terms of conventional mortgages. Some lenders may extend the term up to 36 months if needed.
- Faster funding option: When you need to close a deal quickly, hard money loans can be approved within days, compared to the 30 to 50 days typical for a mortgage loan.
- Less focus on creditworthiness: Approval relies less on your credit score or income history and more on the property’s value.
- More focus on property value: These loans require collateral, such as a home, and are based on the loan-to-value ratio of the property.
- Not traditional lenders: Individual investors or private lending companies usually provide hard money loans, not traditional banks.
- Loan denial option: These loans are often used by those with poor credit who have been denied a mortgage but possess significant home equity.
- Higher interest rates: Due to higher risk, these loans have higher interest rates than traditional mortgages.
- Might require larger down payments: Borrowers may need to provide a larger down payment, sometimes up to 20%–30%, depending on the property’s value and loan specifics.
- More flexibility: With less government regulation, hard money lenders in Wisconsin can set flexible credit scores and debt-to-income (DTI) criteria, and loans can help avoid foreclosure.
- Potential for interest-only payments: Unlike traditional mortgages, hard money loans may allow for interest-only or deferred payments initially.
What are hard money loans used for?
Hard money loans play an essential role in Wisconsin’s real estate sector, offering solutions for quick financing needs and flexible terms. Here are some scenarios where these loans are particularly useful:
- Flipping a house: Wisconsin home flippers can benefit from the rapid funding of hard money loans. These loans provide the necessary capital to purchase and renovate properties, facilitating quicker sales and higher returns.
- Buying an investment rental property: Hard money loans allow fast acquisition and necessary renovations for those investing in rental properties. This speed helps investors start generating rental income without the delays associated with traditional financing.
- Purchasing commercial real estate: Hard money loans are often the go-to for commercial real estate transactions due to their swift processing times. This quick access to capital is vital for securing valuable commercial properties in a competitive market.
- Borrowers who can’t qualify for traditional loans: Those with substantial home equity but poor credit can turn to hard money lenders in Wisconsin. These loans, focused on the property’s value, offer an alternative financing route when traditional loans are not an option.
- Homeowners facing foreclosure: Hard money loans can provide a lifeline for homeowners nearing foreclosure. They offer a way to refinance or gain the time needed to sell the property, helping to avoid the detrimental impact of foreclosure.
How much do hard money loans cost?
Hard money loans generally cost more than traditional loans due to the higher risk for lenders and the convenience of quick, flexible funding. Typical costs include:
- Interest rates: 8% to 15% or higher, based on risk assessment.
- Origination fees: 1% to 5% of the loan amount.
- Closing costs: Legal, appraisal, and administrative fees.
- Points: A percentage of the loan amount charged upfront.
Online calculators can help estimate these costs.
Alternatives to working with hard money lenders
If you’re a homeowner looking to leverage your current home’s equity, here are a few options to consider:
1. Take out a second mortgage: If you have substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide the needed funds at a lower interest rate compared to a hard money loan.
2. Cash-out refinance: This option allows you to refinance an existing property, pulling out cash to finance your new investment. It often comes with lower interest rates than hard money loans.
3. Borrow from family or friends: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a more affordable option.
4. Use a government-backed loan program: Programs offered by the FHA, VA, or USDA can assist in purchasing homes with lower down payments and reduced interest rates.
5. Peer-to-peer loan: These loans are provided by individual investors through lending platforms like Funding Circle, functioning similarly to hard money loans but often with different terms.
6. Specialized loan programs: Consider specialized loans for fixer-uppers or investment property refinancing if you already have a hard money loan and seek to replace it.
7. Request a seller financing option: In some cases, sellers may agree to finance the purchase themselves, which can result in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing pops up when you’re least expecting it. Maybe it’s a rare mid-century modern home or a two-bedroom condo within walking distance of your job.
If you’re a Wisconsin homeowner wanting to buy a new home before selling your current one, HomeLight offers an innovative solution that streamlines the process.
The Buy Before You Sell (BBYS) program allows you to leverage the equity in your existing home to make a stronger, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved in 24 hours or less, with no cost or commitment required. Once approved, you can confidently purchase your next home and then sell your current one vacant, avoiding the hassle 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 you could see in other areas might outweigh the cost. For example, you might save on moving expenses, temporary housing, and even the final purchase price of your new home. On top of that, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
3 top hard money lenders in Wisconsin
Traditional lenders might not be the solution for every real estate investment. If you’re looking to move quickly and capitalize on an opportunity, explore the hard money lending options available in Wisconsin.
The Hard Money Co.
The Hard Money Co. offers fast and flexible hard money loans for real estate investors, closing deals within 7-10 days. Their loans are backed by assets, allowing investors to maximize leverage and free up their own capital.
Lending clientele: Real estate investors
Loan criteria: Up To 65% ARV
The Hard Money Co. has earned a 4.7-star rating on Google based on over 80 reviews. Reviews praise the company for their responsiveness, professionalism, and supportive service.
414-269-5300
Best REI Funding
Best REI Funding, located in Green Bay, focuses on building long-term relationships with real estate investors. Best REI Funding primarily uses funds from private individuals or retirement accounts, emphasizing a people-helping-people approach.
Lending clientele: Real estate investors
Loan criteria: Up to 70% of ARV
Best REI Funding has a Google rating of 4.3. Customers highlight their efficiency, knowledgeable staff, and supportive service. “This, hands down, is the best lender I have ever had to deal with. They are very knowledgeable, quick, and they do not over-promise and under-deliver,” wrote one reviewer.
888-341-2282
Mach1 Lending
Mach1 Lending, located in Milwaukee, offers hard money loan programs tailored for real estate investors and developers. They specialize in providing quick, flexible, and reliable funding solutions, often closing deals in as few as two days.
Lending clientele: Real estate investors and developers
Loan criteria: Call the company for details
Mach1 Lending has a Google rating of 4.9 based on more than 40 reviews. Customers praise their professionalism, timely communication, and customer-focused approach.
262-264-8606
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 Wisconsin?
Choosing a hard money lender in Wisconsin should be guided by your investment needs and financial strategy. Hard money loans are well-suited for real estate investors who require fast funding and are comfortable with higher costs and shorter repayment periods. These loans can be an excellent option for quick property acquisitions and renovations in Wisconsin.
If you’re a homeowner aiming to utilize your home’s equity, consider HomeLight’s Buy Before You Sell program instead. This program offers a more cost-effective and straightforward solution, with a small flat fee and competitive offers.
For assistance in finding investor-friendly real estate agents in Wisconsin connected to reputable hard money lenders, let HomeLight help you find the right professionals.
Header Image Source: (Stockholm Paris Studio/ Unsplash)
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