Setabay Private Hard Money Lender: February 2017

Wednesday, February 8, 2017

The burning answers most residential hard money lenders leave out?

Say you have just taken up residence in Massachusetts and have decided to take on the real estate market. After coming down from your lobster roll high you have realized you know absolutely nothing about real estate. You wife knew this before you finished your explanation of your half-cocked scheme to take over the Cape Cod market.

You remembered that you still have to pay for regular expenses, student loans, car note and daycare tuition for your toddler. Upon calculating all the expenses, you decide to go to your local bank for loan information.

Once they see the type of credit score you are packing they politely decline. After recovering from that hay-maker you decide to be successful the hard money route is the best option for you. But, there are some things you need to know before you take on a residential hard money lender.

When it comes to hard money loans there is some fine print you need to read

While these loans are great in a pinch sometimes they could carry a few negatives. For example, if you have done a little research you probably read that your credit score really does not matter. Most residential hard money lenders will not deny you a loan based solely on your credit score. Often they will grant you a loan based on the amount of collateral you can use.

Although many lenders do this do not start jumping for joy just yet. There are some lenders that will judge how quickly you will be able to pay off your loan by your credit score. That combined with a less than decent amount of collateral, while unlikely, you could be refused a loan.

When working with residential hard money lenders there are many fees

Fees, there will always be fees and expenses when you are taking on real estate. If you are considering a hard money loan certain actions are required to get the loan. For example, to get a hard money loan you need to pay for a title policy, insurance and you need to get the property appraised, as well. After this is done you still have to take potential repairs into consideration.

Speaking of repairs, when you are applying for a hard money loan there is an after-repaired-value that needs to be calculated before you receive your loan. Basically, what this means is once the property is appraised and the potential repairs are assessed, the loan will typically not exceed 70 percent of ARV. If there are more repairs that occur later on in the rehabbing of the property your residential hard money lender will require you to provide the correct documents and estimates before they lend you more money. This is called a “draw request.”

Are residential hard money lenders interested in interest?

Simply put yes, typically hard money loans tend to have higher interest rates. Usually, if you go through a bank you could get a lower rate, but like we said before you have bad credit. You are high risk to the Bank of Massachusetts so you have to pay a little more for your loan. Will it be extremely pricey? It could be, but there is give and take when you are in the real estate business. Some properties will be winners and others will have you in a daze with lobster hanging from your mouth.

In the right conditions, a hard money loan can be a godsend, on the other hand you could end up paying back a lot of money if you choose the wrong Cape Cod. Before you choose your next loan, you need to do extensive research on the company’s policies and the lender, well.

Happy senior business man making his notes at work Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: residental hard money lenders,residential hard money lender

Should you consider a fractional investment as a residential hard money lender?

Entrepreneurship, in general, is an extremely tough and time-consuming profession. Sure, you will always find people that are running businesses, but at what cost? Most of them would live much happier lives if they would delegate a lot of the work they deal with. So, what does this have to do with someone who is a residential hard money lender?

As far as entrepreneurship goes, the real estate market is one of the toughest to grow a successful business. For hard money lenders, there is a very large amount of financial risk that is associated with real estate. Most of the time, yes, you will get your money back. Could there potentially be pushback? Yes, but most of the time you will receive your investment back.

For those bigger deals, however, you may want to take a look into pursuing a fractional investment. Basically, fractional investment is the inclusion of multiple parties that are willing to invest with you. Usually, each party receives an equal amount of ownership in the deed of trust when lending to potential borrowers. If you are just starting your lending career this may be one of the best options that you should consider when you are starting your lending career.

So, what are some of the advantages of fractional investments?

One of the biggest advantages that you immediately get from having fractional partners is the number of people you have on the team. Suppose you have started a firm and thankfully you have taken on a new client, but you have little knowledge on residential hard money lending. In this case, having two or three people that have knowledge in the industry could greatly benefit your business.

With more people that are investing in the same property, it could potentially cut out a lot of competition. When you are starting out you want as many friends as possible and as little enemies as possible. In the real estate business, you are going to encounter tons of people that will try to scalp those great finds. By adding more people to your company’s roster this could give you more money, experience and lower risk.

Those are the advantages, but what are the pitfalls of fractional investment?

With everything good, there is something bad lurking in the background. For the right people, this type of investing is great, but you are liable to run into a few issues if you and your partners are not on the same page. Fractional investing allows lenders to partner on investments; this means each person has an equal amount of stake in the property.

Without the proper amount of communication with your fellow residential hard money lenders, things could go terribly wrong. One of your investors could possibly get cold feet on about a residential property that you had agreed on. If you do not have enough money to fund the changes the property needed you could miss out on a lot of profit.

So as a residential hard money lender do you need fractional investors?

Depending on the market you should consider fractional investing. Will you always get your way? Most likely no, but if you are an inexperienced lender it would help greatly if you had someone that could mentor you for your future clients that you take on. Having more investors does mean having more money that you could put into your project, as well. You should definitely weigh all the options before you commit to fractional investing.

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Monday, February 6, 2017

Important Facts about Commercial Real Estate Loans

So you’re all set to apply for multiple commercial real estate loans, but are you really? In other words, do you know everything you need to apply?

As a savvy business person, you’ve probably done everything you could possibly think of to get ready for the world of commercial lenders, brokers and more. So, first off, give yourself a hand. Most people simply do not take the time to do the necessary research when it comes to non-residential or commercial real estate loans. Of course, it can be difficult to want to research such a topic if you are not in a true need of a non-residential loan. The truth is unless you are a business owner, the phrase commercial real estate loans just isn’t a point of interest and that’s perfectly okay.

However, as we have already established you aren’t most people. You want to be fully apprised of all things real estate and you are dying to find out if you missed any important key facts in your research. Thus, let’s get down to business. If this is your first time at the commercial real estate rodeo, there are essentially three important facts to know about non-residential real estate loans.

For starters, it cannot be stress enough that securing a commercial loans means much more than stellar credit history or strong personal financials. Good credit and matching personal financials are great. But, when dealing with a commercial real estate lender, they want to talk business i.e. what’s the current condition of the property (this includes photos, current mortgage, etc.), what are the projected day-to-day operations along with a whole host of other business-related matters such as up-to-date rent roll documentation, proof of additional incomes, new capital improvement and more. Do some of these things sound unfamiliar to you? If so, there’s no need to panic. The potentially good news is that there different sources or rather different commercial real estate lenders, besides banks. Thus, you may need the above-mentioned items plus more or you may need other required documentation that is applicable to your specific property type or lender.

The Differences between Lenders

As briefly suggested, another important fact about non-residential real estate loans is that their lenders come in all shapes and sizes. In other words, you can choose the traditional route of portfolio lenders such as banks, credit unions commercial lending corporations. If you are not the traditional commercial borrowing kind, you can also choose from government agencies such as Fannie Mae and Freddie Mac or you can choose others lenders including CMBS Lenders (transferred trust), SBA Loan (property and equipment), Private Money Lenders (for non-conventional qualifiers) or insurance companies (tailor made loan packages). The point is you’ve got a lot of options, so don’t be afraid to explore.

Recourse and Non-Recourse Advice

The third must-know for non-residential real estate loans is the difference between recourse and non-recourse loans. In short, a recourse loan means you, the borrower, are responsible in the event of default—collateral and all. A non-recourse means if things go south, the lender can typically only go after the collateral i.e. the property.

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Friday, February 3, 2017

Benefits of working with a Commercial Lender

Dealing with Commercial real estate lenders can be beneficial for a variety of reasons. However, what really matters when it comes commercial real estate lenders is your end-goal with your commercial financing.

Securing commercial financing clearly starts with doing proper research on potential commercial real estate lenders. After doing your due diligence and narrowing down your lender options next comes the fun part of assembling your loan application package and hopefully getting approved. But, you may be wondering what comes next? In other words, you have the commercial financing and you move forward with your business venture, but what are the real benefits you will incur?

Well, these are both great questions that even your detailed business plan may have overlooked or rather only touched upon lightly. Therefore, let us go over what a commercial loan and acquired property really mean for your business. For instance, your commercial property becomes more than just a building or multi-family housing that you own. In fact, in many ways, you are now an investor, which means that your property has the potential provide an additional source of income on a regular basis ( leasing out the property is generally the most common way that a commercial property provides an additional income stream.). Moreover, your commercial property provides an excellent appreciation of asset value.

Furthermore, your commercial property or venture can help your current business grow by being a significant source of equity. A prime example of increased equity is when you are interested in obtaining more financing; your commercial property can help you obtain more without spending more. What is more, besides being a source equity, income, and appreciation of asset value, your commercial property can help you do even more with your business in terms. As briefly mentioned, finding the right lender for your commercial venture can open other business doors if you will. The wrong lender, on the other hand, may not put you in the position you need to be in order to repeat these down-the-line benefits. Thus, as you can see this first step is crucial to your bottom-line and end-goal.

Dreams come true with the Right Commercial Real Estate Lender

So, now that you know what is remotely possible with your commercial property or investment, let us take a step back and discuss how you can find the right lender for you. Of course, doing your own research cannot be stressed enough, but it is important to remember that when doing your lender research that you also need to be thinking ahead. In this instance, thinking ahead means comparing and contrasting loan types as well as thinking about your long-term goals with said property.

Commercial Real Estate Lenders - A Win-Win Solution

Ultimately, the best thing you can do to ensure that you find the right lender and are able to use your commercial venture in a beneficial way, it helps to reach out to your top five lenders. In doing so, you will be able to figure out the true potential of your future property as well as find out which lender understand your niche and your financing needs.

Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial real estate loan,commercial real estate lenders,commercial real estate lending,commercial lenders,commercial lendng

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