Setabay Private Hard Money Lender

Monday, September 11, 2017

Tips for your First Fix and Flip Property and Texas Commercial Real Estate Loan

House flipping can be a lucrative venture. Learn from others who have come before you—their mistakes as well as their successes—and the types of Texas Commercial Real Estate loans that work for these projects.

This Texas Commercial Real Estate investment strategy is making a comeback after its decline following the subprime mortgage crisis with 2016 seeing 6 percent of home sales falling into this category. But it has definitely changed over the years. At one time, investors simply bought a property, did little to it, and waited for the prices to increase. Nowadays, investors are adding value by making cosmetic changes such as remodeling a bathroom or kitchen.

The first step is, of course, finding a property that will turn a profit. Expand your search by checking out websites such as Auction.com or HudHomeStore.com, foreclosure notices found at the county recorder’s office, and local banks for REO properties. Many regional banks will list these types of properties on their websites. Search for Notice of Default (NOD) and always check for liens.

You’ve found your property. Now, before you get excited, get it inspected. Many first time flippers lament that they did not do due diligence when it came time to inspecting the property. It is always best to get a home inspection as these can throw light on all types of issues including those that are not readily observable such as a cracked foundation. Before you make an offer, you’ll need to determine the After Repair Value (ARV). From this, you’ll deduct the purchase price, renovation costs, and commission costs if you are working with a real estate agent. Include holding costs such as taxes, insurance, interest payments, utilities and the time it will take to fix and flip. After all, you want your first Texas Commercial Real Estate investment to be profitable!

If you’re not use to city ordinances and there is no construction license hanging up in your garage, be sure to check local laws regarding renovations and building. If you’ve decided to do the work yourself and avoid construction fees, don’t forget getting those pesky building permits, particularly if working on the plumbing, electrical or structure of the home. While on the topic of licenses, if you don’t have your real estate license, consider getting a real estate agent on your team. And if you’re not a contractor or you’re construction challenged, consider making your first property one that can be improved with cosmetic changes instead of a major structure over-hall.

Funding the Operation

Texas Commercial Real Estate often requires more of a down payment than an owner-occupied property. Since the subprime mortgage crisis, it is even more difficult to find a low or no-down payment loan. Options include obtaining a home equity line of credit on your owner-occupied home, conventional loans which require a fairly substantial down payment and take some time to fund, or a hard money loan from a private investor.

A bridge loan from a hard money lender is often used by fix-and-flip investors to obtain capital.

At Level 4 Funding, we work with hundreds of private hard money lenders. We offer 3 to 60 month terms with an APR starting at 7.99 percent. Call us for a quick no obligation quote.

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 loans,commercial lending,commercial mortgage

Advice for First-Time Texas Commercial Real Estate Investors

Texas Commercial Real Estate investing can be a very lucrative investment strategy. Here are a few tips to help first-time investors succeed.

With the instability in the Asia and the resulting tweets in America, some are wondering if another crisis fueled by instability is at hand. While the politics of the world can be unnerving, those that have been in real estate investing for some time are still betting that the double-digit return that many have seen in the last few years will continue to climb. After all, in an unsteady world, the solid aspect of land can feel a little more secure than the ticker symbols of Wall Street. Here, then, are a few tips for those thinking about entering this investment strategy.

Know your strengths. While that goes for many walks of life, it is particularly true in the Texas Commercial Real Estate industry. Though many investors now sit behind polished mahogany desks, there was a time when these same individuals had hammer in hand or a real estate license under their belt. The key is profits. If you can renovate a distressed property or sell it once it is ready to go on the market, you increase the often slim margins. If you’re considering buying and holding in order to build equity and your portfolio and create multiple streams of income, know your numbers—the rent that particular market will sustain and the bills that are coming out of it, and don’t forget the property taxes. Set a goal of 6 percent returns for your first year and don’t forget maintenance costs which are usually calculated at 1 percent of the property value.

Get the down payment. Texas Commercial Real Estate investments are different than owner-occupied properties and often require higher down payments. Depending on the type of loan and your credit score, you will need anywhere from 10 to 30 percent of the property’s value as a down. When you’re ready to get that first property, don’t plop down your money on the first distressed building you find. Take into account the market and community—is it located in a good school district, a fairly decent neighborhood, and is there a growing job market? These factors are important whether you are planning on buying and holding or fixing and flipping. And remember, change is inherent in this industry.

Some Investors use Hard Money Loans

Texas Commercial Real Estate investors use hard money loans for several reasons. Private hard money lenders are not held to the same restrictions that conventional lenders are inundated by. This leads to quick approval and funding. They are also hard asset-based lenders meaning that they pay less attention to your credit score or creditworthiness and more to the value of your asset or collateral.

Private hard money lenders offer asset-based loans that can be funded in less than a week.

There are several unique programs that those in this industry use on a regular basis. At Level 4 Funding we offer bridge loans and construction loans. Both are short-term loans, anywhere from 3 to 24 months that offer interest only payments, quick access to capital, and no minimum credit score requirements.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, September 8, 2017

Making Money on Peer to Peer Lending Platforms

Peer to peer lending offers an exciting investment opportunity. However it is important to be aware of the risks involved and some tools that may help you succeed.

Just how do you make money in Peer to Peer (P2P) lending? The concept is simple. You invest in specific loans and earn interest as the loan is paid back. P2P sites measure the risk of specific borrowers defaulting and assign interest rates to loans depending on the risk involved. As with any investment, the higher the risk, the higher the return (or the higher the interest rate charged to the borrower). Two popular P2P platforms are Lending Club and Prosper. Both of these platforms will charge you a percentage of the interest you earn as the loan is paid back. Usually this fee is one percent of the amount that the borrower repays. Opening an account on P2P sites is easy and requires a minimal investment, often only around 25 dollars. Lending Club claims that the average return for investors during the first three quarters of 2016 was roughly 6 percent. Given these returns, P2P lending can demonstrate yields much higher than an ordinary bank account.

But as with any investment your success depends upon your ability to diversify and to understand the risks involved before you begin the process. Above all manage risk by investing in many different types of loans. Prosper claims that portfolios on its site exceeding 100 notes (i.e. Loans) demonstrate consistently positive returns. The low investment threshold on many of these sites, means you can potentially fund hundreds of loans, each with different grades of risk. However even with diversification, success is not guaranteed. An obvious risk is that the P2P platform could default or even fall prey to hacking, threatening your investment. This method of investing is also relatively new and untested during periods of prolonged recession. Various economic conditions could result in unpredictable defaults among borrowers.

However third party tools can make it easier to diversify and spread risk

Tools like NSRInvest and Lending Robot automate the investment process. This makes it easier to diversify and invest in the best loans. Often attractive loans are full-funded within in minutes on P2P sites. These tools can help you avoid complicated process of analyzing each loan you may want to invest in. They link to your P2P investment account, select loans based on the criteria you set and automatically invest your funds in loans matching those criteria.

However considering the risks involved in this type of investment you may want to limit its impact on your portfolio.

Even with third party tools that help you diversify and spread risk, it is important to remember that this industry is new. It hasn't yet demonstrated consistent returns over a long period time. There is also the more immediate risk that P2P sites could crash, resulting in irreparable loses. Considering these factors it is probably best to avoid putting too much stake in P2P lending as a major investment. Nevertheless peer to peer lending offers a novel way for you to make money, by acting as a commercial lender. If you choose to invest this way, make efforts to diversify, consider the risks and use third party tools to automate the investment process.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Financial CHOICE Act and Dodd Frank Repeal: Will fewer regulations result in more commercial lending?

The Financial CHOICE Act recently passed the House of Representatives. The bills passage reflects the broader trend of undoing many provisions of Dodd Frank. But what impact will these changes have on commercial lending?

The Trump administration and Republicans in general argue that the Dodd-Frank Act, passed in 2010, has stifled the growth of small businesses. The Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs), takes aim at what Republicans claim are the onerous provisions of Dodd-Frank. Whether or not the Financial CHOICE Act becomes law, these developments represent a broader trend to undo financial regulations implemented in the wake of the great recession.

The Bill allows banks to opt out of Dodd Frank regulations if they have enough cash on hand. It eliminates restrictions on proprietary trading ( i.e. banks trading on their own investments). The bill limits the purview and reach of the Consumer Financial Protection Bureau by putting it under the authority of the executive branch. It changes the terms of bank stress tests and according the author of the bill it eliminates the possibility of future government bail-outs to banks that are deemed “to big to fail.” It would be easy to discuss the nuances of each of these provisions, but it is more worthwhile to consider what the broader trend of undoing Dodd-Frank and other financial regulations will mean for small business lending.

The impact of regulations has more to do with individual bank examiners than regulations themselves

An article on Forbes, points out that it is the overall culture of bank examiners and not specific regulations which has the greatest impact on banks willingness to lend to smaller businesses. Bank examiners may deem a loan risky, even if it is performing well. This results in an immediate cost to banks by forcing them to increase their cash reserves. This additional expense forces the bank to increase its lending standards to prevent similar costs in the future. Many small business owners cannot meet these higher standards, leading to a decline in small business lending. Repealing specific regulations wont change the fact that regulators themselves are not incentivized to increase the number of loans issued to small businesses.

The provisions of the Financial CHOICE Act and further efforts to repeal Dodd-Frank will likely only minimally impact commercial lending. It is important to note that the decline in lending to smaller businesses has more to do with the shock of the recession than any specific regulations. The decline in small business lending was observed prior to the passage of Dodd-Frank. Conditions in the economy, rather than specific regulations, seem to be greater factors in determining the of banks to lend to smaller businesses.

It is difficult to tell whether the lighter regulatory burden imposed by the Financial CHOICE Act will have any discernible effect on commercial lending.

Dodd-Frank may have compounded the preexisting decline in small business lending by traditional banks, but repealing it will likely to do little to reverse this trend. The risk averse culture at banks and regulatory agencies is probably the main reason for the decline in small business lending.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Future of Regulations in the Alternative Lending Industry

The proliferation of online commercial lending has lead to a debate as to how this new and vital industry should be regulated.

The online alternative lending industry, known collectively as Fin-Tech, has exploded since the end of the great recession. According to a report by Harvard Business School there is a noticeable decline in loans by traditional lending institutions for less than 250,000. FinTech lenders have emerged to meet the ever-growing demand for small business financing.T hese groups leverage technological advances to make the lending process more convenient for small businesses. Many use algorithms to speed up the approval process and can approve loans within a few days. This is in stark contrast to traditional banks, who often only approve commercial loans after many months. The convenience and speed of FinTech lenders means that this industry is only likely to grow. PriceWaterhouseCooper projects that FinTech lenders could capture up to 25 percent of the revenue earned by traditional banks within a few years. But there is a stark regulatory void when it comes to online small business lending.

There is no standard for what online lenders need to disclose to small business borrowers. The Truth in Lending Act, which protects many consumers from predatory loans, simply doesn't apply to commercial borrowers. This lack of transparency enables some predatory online lenders to conceal high interest rates. These lenders can offer loans with 300 percent interest rates, which the borrower may not be aware of. Online lenders can conceal hidden fees throughout the process, by charging borrowers exorbitant pre-payment penalties and charging full interest even if the loan is paid off early. There is also no standard of reporting by alternative lenders to regulatory agencies, potentially allowing borrowers to take out many loans from a variety of sources. When it comes to commercial loans, brokers don't have to disclose any potential conflict of interest. This leaves room for bad actors to promote the most expensive loans in order to earn the highest fees. The potentially devastating combination of expensive loans, loan stacking and a lack of transparency on the part of lenders and brokers, puts the entire Fintech industry at risk.

What would a successful regulatory framework look like for the Fintech Industry?

What is needed in the Fintech industry is a regulatory framework that is coherent, consistent and supports innovation. The Harvard Business School Report, mentioned above, makes many suggestions but it touches on a few broad themes. There needs to be a legally enforceable standard of disclosure in the commercial lending industry. Small business borrowers should be aware of the APR, default rates and overall borrower satisfaction for any loan they may take out. There needs to be a national regulatory framework to replace the patch work of agencies that exist now. As it stands consistent monitoring and reporting within the Fintech industry is difficult considering the many regulatory agencies that exist. There needs to be a standard of conduct for both lenders and brokers. Brokers and lending organizations should be obliged to disclose any conflict of interest they may have to potential borrowers.

These basic regulatory standards are vital for protecting the Fintech industry

Encouraging innovation is crucial and online alternative lenders are a vital source of credit for small businesses. But encouraging innovation shouldn't come at the expense of basic protections for both borrowers and lenders. If the FinTech is to serve small businesses in the future these ideas should be implemented so that the industry remains viable in the years to come.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Thursday, September 7, 2017

Equity Crowd-Funding: Things to Consider

Equity crowd-funding developed fairly recently and gives new businesses the opportunity to sell shares of ownership in their business in exchange for funding. But there is considerable risk involved with this type of commercial lending.

What is equity crowd funding? It is similar to rewards based crowd funding, but differs in that borrowers offer shares, rather than rewards, as incentives to potential investors in order to fund their business. Investors buy a stake in startup companies on accredited online platforms. This type of commercial lending was legalized by the JOBS Act in 2012. Since the law was implemented 1.27 billion dollars has gone to over 6,000 companies. Startups can raise up to one million dollars per equity crowdfunding campaign. Investors are more likely to consider the borrowers idea rather than the borrowers credit score. Making equity crowd funding ideal for businesses with a clear growth potential or for entrepreneurs with a well thought out and realistic idea.

One benefit of equity crowd funding is that there is no debt involved. You are selling shares in your future business so there is no need to plan for any loan repayments. Throughout the process your ability to market your idea may be more important than your credit score. This allows those without good credit or sufficient collateral to raise the funds they need to start their businesses. Another benefit is that a successful crowd funding campaign translates into future marketability for your business. If you can convince investors to fund your start-up you’ll likely be able to convince potential customers as well.

But this method of financing is both risky and potentially very expensive. If you are seeking over half a million dollars you are required to provide detailed documentation to financial authorities. This means you will likely have to hire an experienced account to prepare the documentation required. The crowd funding campaign itself presents an additional expense. If you don't have the skills or knowledge to promote your idea to potential investors you may have to hire an outside marketing agency. There is also the expense of fees charged by equity crowdfunding platforms. Many of these sites can charge up to 12 percent of the total amount raised.

Equity crowdfunding presents a real benefit, but only in specific situations

If you have a strong idea, have confidence in its potential, believe in your ability to convince potential investors and are willing to give up some ownership in your future business then equity crowd-funding may be right for you. If this is not the case it probably best to consider other financing options.

There is always the potential that your crowd funding campaign will fail. Ask yourself if it is worth the risk.

You must make a significant investment up-front in order to pursue equity crowdfunding .The financial documentation, the platforms fees and the expense of any equity crowd funding campaign must always be considered against the backdrop of potential failure. Even after all the expenses involved, an equity crowd funding campaign can still fail. Meaning all the money you spend on a your campaign could wasted. It is important to consider whether you are willing to risk these expenses before pursuing equity crowd funding.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Peer to peer lenders: The right source for your Commercial Loan?

Peer to peer lending is an innovative type of commercial lending that connects borrowers and lenders directly. It is important to understand how the Peer to Peer lending process works and to ask yourself the right questions.

First, what is Peer to Peer (P2P) lending? Sometimes referred to as “social lending”, P2P lending occurs on online platforms that link borrowers with potential investors. These websites act as intermediaries between both parties. They perform the underwriting process and facilitate transactions between borrowers and lenders. This removes the middleman (i.e. the bank) from the lending process. Because of the savings and convenience involved, P2P financing is growing rapidly and is expected to be a 150 billion dollar industry by 2025. Considering this rapid growth, P2P lending may seem like an attractive option but you should be aware of the process and the advantages and disadvantages involved.

What does the P2P lending process entail? You the borrower sign up on a P2P lending site such as Lending Club or Prosper. After joining you submit a loan application, describing the amount you want to borrow and what you intend to use it for. The site then reviews this information, reviews your financial records and credit score and assigns your loan a certain risk factor. Once your application is approved by the site it is then posted. Potential investors then decide whether or not they are willing to fund your loan, how much they want to invest and what the terms the loan should be. Your proposal then remains on the site until it is fully funded or you withdraw your application.

What are the main benefits of P2P lending? Processing is much faster than traditional commercial lending. Because the process occurs online there is a minimal amount of paperwork involved. P2P platforms act as facilitators between individuals, both borrowers and investors and the lending process can potentially be more personal. Individual lenders may be willing to overlook a poor credit score if your application is compelling and well thought out. This may result in better terms and lower interest rates than you would receive through traditional financing.

But there are drawbacks in Peer-to-Peer lending that you should take into account.

Even though loan processing may be faster on P2P sites, it may take a considerable amount of time before your loan is fully financed. This mainly depends on the P2P platform and whether your application is auctioned. In certain circumstances you may be required to present additional documentation or take further steps to secure the funding you need. These additional steps can be time consuming and potentially complicate the process.

Considering Peer-to-Peer commercial lending is about asking yourself the right questions

Considering how the P2P lending process works you should first ask yourself how quickly do you need the money? Depending on your situation it can take a long time before your loan is fully financed. If you need your funding within a specific time frame, you may want to evaluate other financing options. Consider your financial standing as well. See the various loans your credit score qualifies you for on a variety of P2P lending sites. Compare this to other sources of financing and find the one that offers the best terms. However knowing how the peer-to-peer lending process works, as well as the benefits and risks will help you decide if it is the right financing option for you.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Setabay Private Hard Money Lender

Monday, September 11, 2017

Tips for your First Fix and Flip Property and Texas Commercial Real Estate Loan

House flipping can be a lucrative venture. Learn from others who have come before you—their mistakes as well as their successes—and the types of Texas Commercial Real Estate loans that work for these projects.

Funding the Operation

A bridge loan from a hard money lender is often used by fix-and-flip investors to obtain capital.

Advice for First-Time Texas Commercial Real Estate Investors

Texas Commercial Real Estate investing can be a very lucrative investment strategy. Here are a few tips to help first-time investors succeed.

Some Investors use Hard Money Loans

Private hard money lenders offer asset-based loans that can be funded in less than a week.

Friday, September 8, 2017

Making Money on Peer to Peer Lending Platforms

Peer to peer lending offers an exciting investment opportunity. However it is important to be aware of the risks involved and some tools that may help you succeed.

However third party tools can make it easier to diversify and spread risk

However considering the risks involved in this type of investment you may want to limit its impact on your portfolio.

The Financial CHOICE Act and Dodd Frank Repeal: Will fewer regulations result in more commercial lending?

The Financial CHOICE Act recently passed the House of Representatives. The bills passage reflects the broader trend of undoing many provisions of Dodd Frank. But what impact will these changes have on commercial lending?

The impact of regulations has more to do with individual bank examiners than regulations themselves

It is difficult to tell whether the lighter regulatory burden imposed by the Financial CHOICE Act will have any discernible effect on commercial lending.

The Future of Regulations in the Alternative Lending Industry

The proliferation of online commercial lending has lead to a debate as to how this new and vital industry should be regulated.

What would a successful regulatory framework look like for the Fintech Industry?

These basic regulatory standards are vital for protecting the Fintech industry

Thursday, September 7, 2017

Equity Crowd-Funding: Things to Consider

Equity crowd-funding developed fairly recently and gives new businesses the opportunity to sell shares of ownership in their business in exchange for funding. But there is considerable risk involved with this type of commercial lending.

Equity crowdfunding presents a real benefit, but only in specific situations

There is always the potential that your crowd funding campaign will fail. Ask yourself if it is worth the risk.

Peer to peer lenders: The right source for your Commercial Loan?

Peer to peer lending is an innovative type of commercial lending that connects borrowers and lenders directly. It is important to understand how the Peer to Peer lending process works and to ask yourself the right questions.

But there are drawbacks in Peer-to-Peer lending that you should take into account.

Considering Peer-to-Peer commercial lending is about asking yourself the right questions

About Me

Total Pageviews