Monday, August 6, 2018

The Benefits of Discovering Hard Money Loans

Many consumers believe that hard money loans are only for questionable deals or for a last resort. But the truth is that these are legitimate loans with many great features.

Most people think that hard money loans are far from being a legitimate or realistic option when borrowing money. The image is only slightly higher than a loan shark, but that is due to ignorance and does not really apply to a hard money loan. In reality, a hard money loan is simply a loan that is secured by real estate, is normally for only a shorter time frame and is funded by a private lender and not a traditional bank or lending institution. Hard money terms tend to range from about one year to as long as five years. The loan requires a monthly payment which is comprised of principal and interest or in some cases only interest as well as a final balloon payment at the end of the term.

One of the great benefits of hard money loans is that the approval for the loan is not based on the borrower’s personal credit history or even his or her income. This fact makes it much easier for someone who has less than perfect credit to qualify for hard money. The main qualification for a hard money loan is the property’s current market value. The lender uses what is called the loan to value ratio to determine how much money can be borrowed. In most cases, the lender will loan no more than 70% of the current market value of the property. This is the lenders limit so that there will always be equity in the property. In the event of the borrower defaulting on the loan, the lender has the ability to sell the property to recover his or her full investment.

Hard money lenders are normally willing to offer loans for almost any type of property including an investment single-family home, multi-unit properties, commercial properties and even land parcels. This broad range of properties makes hard money a great for construction loans for a speculative property, fix and flip investors, and the purchase of large investment residential or commercial properties.

Who Can Benefit From Hard Money Loans?

Real estate investors tend to favor hard money for many reasons. First, the loans require much less documentation and application paperwork. In addition, the loans fund in as few as 5 days which is substantially less than a traditional loan which can take months for approval. Making an offer to a seller and specifying that the buyer is using hard money, is often seen as a huge advantage by sellers and can set an offer apart in the event of a multi-offer property sale.

No Credit – No Problem

Borrowers who have no credit or have a poor credit history are not going to be able to secure a loan from a traditional lender. But hard money offers those borrowers a legitimate option for their lending needs. Understanding what hard money is and how the loans can be used is an important step in making the best choice when searching for a loan.

Owner Occupied Hard Money Loans

There are conventional loans and hard money loans for owner occupied properties. Learn the upside and downside of owner occupied hard money loans.

You may have heard of “hard money” loans for construction purposes. Private hard money loans are actually used for multiple investment opportunities including consumer purpose/owner occupied hard money loans. If you intend to occupy the property you are seeking to purchase, then you need to look into consumer purpose and owner-occupied loans. The borrower intends to occupy/live in the property that they are seeking the loan for—In other words, your primary residence. These types of loans can be used for paying a tax lien, helping a family member, or bill consolidation, as long as the loan is tied to any form of real estate.

Since the financial crisis of 2008, the tighter lending regulations, closing time frames, documents and disclosures involved, and borrower protections has led to the whole process with private lenders being one that is overly onerous. A great Plan B could be private consumer loans. Properly underwritten and compliant are appropriate for borrowers who cannot qualify for Plan A (conventional loan).

If you are a real estate agent or mortgage professional, your clients may want to utilize this loan source if they do not qualify for a conventional loan and do not want to lose the purchase of a home.

Consumer Bridge Loans

The consumer bridge loan, short term in nature, is a good loan to consider when you’re in a time of near-term challenges or when conventional financing is not an option. Here are the many reasons for securing a bridge loan:

· If you have a home to sell AND looking to buy a home.

· If you are looking to downsize and do not want to “double move”.

· Bankruptcy, foreclosure, short sale or job time.

· Challenges when it comes to down payment.

· Personal situations such as divorce or probate situations.

· If you are seeking to avoid tax, and do not want to liquidate other assets (stocks, 401K, etc.…).

· 1031 exchange’s

· Fallout from a reverse mortgage

Terms are usually as follows: 5 to 7 days to close, requires a purchase component, a maximum term of 11 months, a typical interest rate of 9.9%, and 2-3% points plus doc and admin fees.

Long-term private consumer loans, although less common, can help individuals in certain situations.

One of these scenarios is a person with credit challenges that cannot be resolved in 12 months. Credit seasoning is a term to describe the time it takes a borrower’s credit to reach a level to qualify for a conventional loan. Another reason for this type of loan is that the borrower has not been in their current position for 24 months. The borrower may qualify for the long term 30/30 loan: A 30-year loan with fixed payments on 30-year amortization.

Additional reasons for a 30/30 loan include: self-employed, hard to document income, income history inconsistent, credit issues, bankruptcy, already own home and you need to refinance, and the purpose is consumer in nature. Terms may include the following: could close in as little as 5-7 days, no prepayment penalty, interest rate of 8.99%-9.99%, and 2-3 points plus doc & admin fees.

Word of caution: If the lender tells you that they can do a loan that does not fit into the above guidelines or seems “to good to be true,” check reviews and backgrounds before proceeding. You can be assured that when obtaining a loan with Level 4 Funding, you’re working with ethical, knowledgeable individuals that have been in the business for over 20 years. Call us for a no-obligation quote.

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

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: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Qualifying for Owner Occupied Hard Money Loans

There are many reasons why a borrower would consider owner occupied hard money loans. Consider these motives when making your next decision on where to obtain financing for an owner-occupied property.

You apply for a conventional residential mortgage from your local bank or credit union only to be turned down. Don’t give up on your dream. Your other option is a residential hard money lender for your primary residence. This can be a viable solution in the following scenarios:

· Your credit is classified as poor

· Your history shows a recent loan modification, short sale, bankruptcy or foreclosure

· You currently joined your employer and have less than 2 years of provable employment

· You have your own business and are classified as self-employed

· You are seeking a bridge loan for short term purposes

You locate the perfect residence and receive a conventional mortgage only to find out your lending bank or credit union is unable to perform while in escrow. Now is a good time to consider owner occupied hard money loans. The approval and funding process of a residential hard money lender is much short that a conventional bank or credit union which will keep you from losing the investment property. After the house closes, you always have the option to refinance with a conventional loan. Since Dodd-Frank, many lenders will not even consider residential owner occupied hard money loans because:

· Additional documentation is required

· The hard money lender requires additional licenses

· Time to fund the loan increase due to mandatory recession period

· Compared to investment loans, the residential hard money loan has additional risks

A very small amount of Hard Money Lenders will provide owner occupied business purpose loans, however the borrower only benefits if:

· They own the primary residence

· The primary residence that the borrower owns has a sufficient amount of equity

· The funds the borrower receives will be used for a business purpose

Hard Money Loans for Consumer Purposes

Lenders are few and far between when a borrow wants to obtain owner occupied hard money loans for a property. If you plan on living in the home, this will be considered a primary residence purchase. If you are seeking to cash-out for your equity, this also classifies you as a primary residence loan. If the funds of the loans are to be used for family, personal, or household use, then regulators will classify the loan as a Primary Residence loan

Subject to Federal regulations are residential hard money loans due to Dodd-Frank which requires a lender to verify both the borrower’s expenses and income. To verify income a borrower can submit W2’s, pay check stubs, or tax returns. A borrower will be required to keep their debt-to-income within the required ratios.

A residential hard money loan is intended for a short period of time, usually 3 to 5 years.

Before closing the loan, a borrower will be required to submit a plan to obtain long-term financing, or a different exit strategy, depending on the situation. At Level 4 Funding, we can help you come up with the best solutions to your present funding needs. Give us a call to discuss your unique requirements. The world of real estate investment is creating millionaires every day—don’t delay on taking those first steps into a very lucrative business.

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Sunday, August 5, 2018

Learn About Hard Money Loans Before You Take the Plunge

Are hard money loans too good to be true? Learn the truth about this often-misunderstood investment opportunity.

Are you a typical real estate investor seeking the best opportunity and the next best purchase? While years of experience often affect the pursuit and tactics used to find the next property, finding ways to finance your project is faced by beginner and professional alike.

On a rental property that you are analyzing to invest in, how you will be financing your investment is always on your mind. Covering your costs that come along with purchasing your investment property is another hot topic. When purchasing a rental property, hard money loans can be used to purchase the property. A little more due diligence and investigation is to be done before committing to using this type of loan to purchase your property.

Have you been wondering just what a hard money loan is? These loans are secured by real estate and the value of the investment property rather than the credit worthiness of the borrower. The term of these loans usually has a maximum of 12 months and have higher interest rates than traditional loans. The source of the funds for these loans is from private money lenders. When Should you Consider Obtaining a Hard Money Loan?

Hard money loans are perfect partners in certain situations. Some of these are:

· Turnaround Situations

· Short term financing

· A problem in your life has caused your credit to be “challenged”. If the investment property that you are seeking to invest in has substantial equity, this should overcome any credit challenge.

Brokers offer loans through private hard money lenders to real estate investors secured by one or more properties. Unlike banks, these lenders charge higher rates and fees but move much more quickly. Their main focus is the value of the collateral (property) for the loan. There is less focus on the borrower’s financial status and credit score. A typical hard money lender may be a mortgage broker with high net worth clients who will invest in the loans. Lenders have certain criteria when deciding if they will provide hard money loans.

Hard Money Lenders Differ from Each Other in a Multitude of Ways

Some of the aspects that different lenders look at include:

Deliverability of the loan, risk of loss based on the amount/underlying asset value, borrower strength, and what the borrowers repayment plan is. Then the hard money lender will look at the property itself including: the actual worth of the property, how much improvement is needed for the property and what will the actual value be after the improvements, how easy the property bill be to foreclose on if the borrower defaults, and how quickly will it be to sell the property in the market that it is located in should the borrower default.

Remember, real estate investing is risky. Explore all possibilities and get your ducks in order before proceeding.

Rejections come in all forms, but some of the main reasons lenders turn down a loan are:

· The loan is outside of the lender’s lending parameters

· The lender wishes not to lend to a particular borrower

· The loan requirements for a loan fall outside the lenders capital

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Saturday, August 4, 2018

How to Choose a Hard Money Lender

With today’s tight bank lending restrictions, you may not qualify for traditional financing and need to seek other avenues to finance your project. Regardless if you need capital for purchase or refinancing of either residential or commercial property, you may need a specialized approach—a hard money lender.

If typical mortgages cannot be secured, then a hard money bridge loan may be an alternative. These loans are secured by real estate, carry higher interest rates and are short-term in nature. Consider the following a checklist when choosing a hard money lender.

· Requires sufficient capital. The hard money loan company you want to work with must have enough capital to service multiple short-term and long-term loans at the same time. These loans run one to two years, although some loans may have terms up to seven years or longer.

· Proven track record. A veteran lender that has a proven track record who knows the complexity and difficulty to structure a hard money loan will put you at ease and make you feel more comfortable with the process.

· A diverse portfolio of lenders. When seeking out a hard money loan for your project, look for a lender with a deep bench of investors who are varied in projects that they finance and have the depth in net worth to create varied loan structure solutions. When you verify that the hard money lender has a deep portfolio of investors then this assures you more loan structure options.

· Shortened turnaround time. You have done your research, visited a number of properties and located your new project. Your offer to buy has been submitted and accepted. Now you need to finance the project. Time is of the essence and you need a hard money lender who can put together financing quickly. In narrowing your search for a lender, you need to discuss this with the lender upfront.

What Other Benefits are Available?

To improve your chances of investment success and continued training, lenders will have programs, software and tools they will offer with the loan to assure their investment is in good hands. Do not be afraid to ask what tools the lender is willing to provide. A reputable hard money lender will be invested in your success and, let’s face it, they do not want the property back.

Make your list of the pros and cons of each lender when making your final choice.

Now you have located your property, your offers been accepted, and you’ve spent time locating and narrowing down the lenders that you would like to use. The next step is to spend hours talking with varied lenders and contact the BBB. Find out which tools each lender will add in with the loan to help with your success. Make up your Pro and Con List. On your list, add the lenders capitalization, BBB ranking, do they offer financing in the state of project, provide tools over the competitor’s, and which one is eager to work with the type of project you are investing in. Now is the time to choose, finance your project and begin.

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Friday, August 3, 2018

How do Hard Money Lenders Differ from Each Other?

Know your lending options so that you are educated on what to expect when you’re ready to obtain that first commercial loan. There are several things to consider when evaluating hard money lenders.

The following are the varying differences you will encounter when obtaining a commercial loan:

· What is the loan to value ratio of your project? If the ratio is high, the more cash that you will receive for your project.

· What is the minimum and maximum loan amount of the lender?

· Are the hard money lenders that you’re talking with direct lenders (funds in house) or are they a broker? Brokered loans can delay delivery unless dealing with agents that have an extensive rolodex.

· Is the lender local or what geographic region do they serve? Where is your project located?

· What are the closing costs and interest rate?

· Can they close the loan quickly? Are they responsive to you and your project?

· Is the lender trustworthy and experienced in the type of project you are seeking to fund?

When searching for hard money lenders, a Google search will produce hundreds of options. Be sure to look for the following:

Experience. The lender you are talking with should have plenty of experience in the real estate industry as well as experience in the niche industry of hard money loans. An experienced lender will have knowledge in the specifics of hard money loans. The experienced lender will also have the knowledge of procedures and regulations that must be followed which will simplify the process.

Licensed. A hard money lender should hold licenses with state and local real estate bureaus and associations. If the lenders originate consumer loans, then they should be registered with Mortgage Licensing System (NMLS).

Rates and Terms should be Competitive. Look out for lenders who charge interest rates that seem too good to be true. This may be indicators that the lender you are talking with or negotiating with is either unexperienced or untrustworthy.

Transparency is Key

Some lenders will use a bait and switch tactic. Published rates that are very low are often used to attract novice investors looking for the best deal. In all communications, a reputable hard money lender should be clear and upfront about rates, fees and terms.

Quick funding is one of the most common reasons that real estate investors choose to obtain capital from a lender specializing in hard money.

You locate the real estate you want to invest in, your offer is accepted, and now the clock runs, and time is of the essence. You may be choosing this type of lender because of the time-consuming process a conventional lender takes to approve a loan. Then, of course, there is the massive documentation that is needed with a conventional lender. Hard money lenders are known to deliver the loan quickly. As many an investor will tell you, if you do not get the loan funded quickly, you may very well lose the deal. If the lender you’re working with cannot fund the loan in an expeditious manner, you may want to seek capital elsewhere.

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Wednesday, July 18, 2018

Considering a Fix & Hold? Read What This Broker Says First

Broker Explains Why Arizona is Tops for Investment Properties

Most of the people we help at Level 4 Funding work in the fix-and-flip industry. They use hard money loans to purchase a property, make repairs, and get it back on the market quickly. We’ve recently interviewed several clients who do just this. However, hard money loans are also utilized by borrowers who need to move quickly in the market; particularly if they’re trying to grab up an investment property before someone else does. This unique angle is attractive to a different category of real estate investors; perhaps those who fix-and-flip, but also those who fix-and-hold in situations where a traditional bank loan won’t suffice. Realtor Chris Mendenhall of Harcourts Prime Properties spoke with us on this front and gave us a few insights for those hoping to make smart real estate investments.

Chris has Been in Real Estate Since 1987

A true veteran of the industry, Chris began his career as a real estate broker more than three decades ago. Although he works primarily in north Los Angeles County, he also serves Orange, San Diego, and Riverside Counties. Chris was working in lending during the 90s crash, helping buyers with their loan applications. “It was a tough time,” he says. “There were only 12,000 sales that year, in an area with 12,000 realtors.”

His Current Focus is on Asset-Based Auctions

Working with Harcourts Prime, Chris’ current focus is on asset-based auctions. He helps sellers get top dollar for their properties within a very short period of time and also gives buyers the chance to purchase property at public auction using a transparent process. Unlike other auctions, buyers can see everything from home inspections to pest inspections prior to making a bid. Despite the quick turnaround, Chris says most properties are grabbed before they make it to auction. Those that do land in the hands of trusted auctioneer Ben Brady, who has handled $4.5 million in properties over the past year alone.

Chris Says Arizona’s the Place to Be for Fix & Flips and Fix & Holds

One of the most recent deals that left Chris in awe was a 26-unit building in Phoenix, which was purchased by investors with the intent to flip and hold. “Mark changed their lives,” Chris says of Level 4 Funding partner Mark Gowlovech. “He helped them generate close to one million dollars in equity.” After a few rounds of funding, the property, which was purchased for next to nothing, now has a value of about $1.5 million and is filled with renters on month-to-month leases. When asked what he thinks of the industry, Chris compared the Arizona market to California. “Arizona’s a better place to do it,” he explained. “It’s easier to rent. The laws are more favorable.”

Focus on the Numbers if You Plan to Get into the Industry

Aside from working in Arizona over California, Chris gives investors some additional advice: “Identify a property that has the numbers. It’s all a numbers thing. Not, I like this color or I like this floorplan,” he explains. He also adds that working with someone like Mark is advantageous. “He has tools that really help his clients,” and ensures they’re making smart investment decisions.

Work with Chris or Learn More About Hard Money Loans

Chris says he often works business professionals who run into situations in which properties have to get to market quickly and the sale must be handled by a neutral third party, which is quite common when it comes to the legal realm, especially family law. Harcourts Prime Properties is only in California thus far, with plans to expand across the US in the near future. If you’d like to connect with him, you can visit his LinkedIn profile, follow him on Facebook, or visit his site ChrisMendenhall.HarcourtsPrime.com.

Level 4 Funding, on the other hand, helps people in California, Arizona, and Texas. If you need funding for a project, such as a multi-family dwelling or general fix-and-flip, and a traditional bank loan isn’t a viable option, learn more about how we can assist you.

Technorati Tags: fix and flip,hard money loan,hard money loans,hard money lender

Setabay Private Hard Money Lender

Monday, August 6, 2018

The Benefits of Discovering Hard Money Loans

Who Can Benefit From Hard Money Loans?

No Credit – No Problem

Owner Occupied Hard Money Loans

Consumer Bridge Loans

Long-term private consumer loans, although less common, can help individuals in certain situations.

Qualifying for Owner Occupied Hard Money Loans

Sunday, August 5, 2018

Learn About Hard Money Loans Before You Take the Plunge

Hard money loans are perfect partners in certain situations. Some of these are:

Hard Money Lenders Differ from Each Other in a Multitude of Ways

Saturday, August 4, 2018

How to Choose a Hard Money Lender

What Other Benefits are Available?

Make your list of the pros and cons of each lender when making your final choice.

Friday, August 3, 2018

How do Hard Money Lenders Differ from Each Other?

How do Hard Money Lenders Differ from Each Other?

Wednesday, July 18, 2018

Considering a Fix & Hold? Read What This Broker Says First

Broker Explains Why Arizona is Tops for Investment Properties

Chris has Been in Real Estate Since 1987

His Current Focus is on Asset-Based Auctions

Chris Says Arizona’s the Place to Be for Fix & Flips and Fix & Holds

Focus on the Numbers if You Plan to Get into the Industry

Work with Chris or Learn More About Hard Money Loans

About Me

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