Setabay Private Hard Money Lender

Monday, December 10, 2018

WHO ARE ARIZONA HARD MONEY LENDERS?

Arizona Hard Money Lenders are not shady looking lenders that conduct business in parking lots and restaurant bathrooms. But, when you hear, ‘hard money lender, that is what many people imagine.

As with every profession—there are always a few ‘bad’ that ruin it for the many ‘good.’ And example of that is police officers. They have a reputation because of a few bad apples—same goes for Arizona Hard Money Lenders. In prior years some lenders were loaning money to exceptionally high-risk borrowers. Arizona Hard Money Lenders have always used the borrower’s real estate as collateral. However, these past lenders were funding deals in which the likelihood was high they would foreclose on the properties.

Today, these types of lenders are no longer in the market. Unfortunately, the disgrace they brought continues to create a stigma for borrowers that would greatly benefit from working with Arizona Hard Money Lenders.

WHAT EXACTLY IS A HARD MONEY LOAN?

A Arizona Hard Money Loan is a short-term loan ranging typically ranging from six to twelve months, but can be extended up to five years. They are secured by real estate and funded by private investors. The monthly payments are interest only payments —and the final payment on the loan is where it is due in full.

Arizona Hard Money Lenders are concerned with the value of the borrower’s property versus the borrower’s FICO score and income. Arizona Hard Money Lenders are able to finance borrowers that banks have rejected. This is because Arizona Hard Money Lenders don’t have to follow the rigid guidelines that are set forth with traditional banks. Because they are private individuals they are able to set more flexible loan terms.

Not all deals will work with a hard money loan. For example, if a borrower has good credit-without foreclosures and bankruptcy—and is buying a primary home, a Arizona Hard Money Loan would not benefit them. They will be approved for a conventional mortgage with 15-30 year loan terms.

Investors use Arizona Hard Money Loans for various reasons.

Mainly because of the insanely fast approval.

When an opportunity arises an investor has to move swiftly so not to lose the deal. Applying for a loan with a bank can take up to two months to get funded—compare that to the ten days it typically takes a hard money lender to approve a borrower. In real estate, investors are competing and receiving a quick close will secure their deal. Arizona Hard Money Loans are most ideal for: land loans, Arizona FIX AND FLIP LOANs, construction loans in Arizona and any borrower with bad credit or a new job. Arizona Hard Money Lenders can ultimately work with any borrower that has enough hard-assets to back the deal. You can find a local hard money lender in your area by googling them or attending a real estate investor club meeting. Find a lender that you can create a long-term relationship with. The more deals you make and pay back, the better your interest rate and loan terms can become. They aren’t the scary loan sharks from the movies—they want to help. When you win, they win.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

WHAT IS PRIVATE MONEY LENDING?

Private money lending in Arizona is when a private individual or organization lends money to a company or individual. This type of lending does not adhere to traditional qualifying guidelines, as banks must do.

Everyone is familiar with what a mortgage is—when a bank lends money to purchase a property or for renovations of a property. But, where does an individual go when a traditional mortgage won’t work for them? Many times borrowers are denied a conventional loan because of their credit worthiness or income. Other times the borrower may not have the time to wait, sometimes months, for approval from the bank.

WHY USE PRIVATE MONEY LENDING?

Because these loans are funded by private investors versus traditional banks-they are referred to as ‘private money loans.’ The loans are based almost exclusively on the value of the property instead of the borrower’s credit worthiness or financial history. The loan amount is determined by the loan-to-value ratio (LTV). There are many reason when a private money loan is the better alternative.

* You don’t have enough private financing from friends and family.

* Your credit score is not high enough and your financial history doesn’t meet traditional lender requirements.

* You have a property investment opportunity and don’t have the time to go through the lengthy bank loan process.

* You want to fix and flip and need quick access to funding.

Although Private money lending in Arizona does not have the

strict guidelines as traditional lenders, there are still requirements.

Private money lenders are concerned with the value of the property that will serve as the collateral more than your credit. However, individual terms will depend on the lender you work with and your unique situation. Most private money lenders only work in certain geographic areas—so, look for a local lender. Your interest rate will depend on your experience. As you gain experience, your lender may offer lower rates—find a lender you like and stick with them. Property type makes a difference, as well— is this a condo, duplex, single family residence). And, your business plan—along with a scope of work and insurance information— will add into the equation of your terms. As with traditional banks, private money lenders do have an underwriting process. Fortunately, this process is much faster than a traditional bank’s underwriting process. It doesn’t take long to be approved and receive your funds due to the speed of the underwriting process. After pre-approval the private money lender will order an appraisal of the property. As long as the property meets lender criteria the money will be dispersed for the property. Private money lending in Arizona is quick and helpful. It is beneficial for borrowers to work with either a local lender or a lender that is familiar and comfortable with the geographic area you are looking to purchase your property. Private money lenders build on relationship—the more you work with your lender, the more money you will both make.

EVERYTHING YOU NEED TO KNOW ABOUT ARIZONA HARD MONEY LOAN

A Arizona Hard Money Loan is an option for real estate investors when traditional lenders don’t work for their situation. Instead of using your credit score and income to base approval for a loan—they use property as a hard asset and use that property as collateral.

A Arizona Hard Money Loan is simply an asset-based loan. As you know, the most significant factor affecting loan approvals is FICO scores. Lenders want borrowers that have shown a solid payment history because this shows their ability to repay the loan.

Hard money lenders use a different approach to lending—they base it almost solely on collateral. Because of this they place less concern on an applicant's credit history. Why? Because if the borrower defaults they can foreclose on the property, sell it and generally still make a profit.

HOW ARIZONA HARD MONEY LOAN WORK

Arizona Hard Money Loans aren’t necessarily for everyone, but there are many situations where these loans are beneficial to the borrower. One scenario is starting out flipping houses—you probably wouldn’t have enough money to buy the property with cash. This is an example of a time a Arizona Hard Money Loan would make sense.

Typically, Arizona Hard Money Loans are very short-term loans ranging from six to twelve months—however, they are known to be extended out up to five years depending on the situation. These loans are generally have higher interest rates than conventional loans—hence, investors don’t want their loans for a long period of time.

A plus with a Arizona Hard Money Loan is how quickly the loan process takes. These loans can close in a matter of only a few days—and it is a rare occurrence that the process takes longer than two weeks. Arizona Hard Money Loans allow investors opportunity to purchase more properties with less upfront capital—which means a larger profit.

Arizona Hard Money Loans are very different than a traditional loan. They offer much greater leverage to the investor and they finance deals much quicker than traditional loans. Because hard money lenders are not as concerned with the borrower’s financial situation there isn’t the amount of paperwork and the long waiting period as there is with a bank. Because hard money lenders make their own rules and regulations, unlike banks, there is more flexibility with their loans. Although, they do have underwriting it is a much simpler process than conventional mortgage underwriting. Approval is based on the value of the property—and although they will look at your credit history and finances they are still able to finance a loan based on hard-assets.

You are able to get many different loans from a hard money lender.

Bridge loans, construction loans in Arizona and Arizona FIX AND FLIP LOANs are only a select few of the many loan options hard money lenders can provide. Generally speaking, borrowers can obtain a Arizona Hard Money Loan for any property— airbnb, single-family residence and the list goes on. Find yourself a property and then find yourself a local hard money lender.

FIVE BENEFITS OF ARIZONA HARD MONEY LENDING

When you find an opportunity for a good real estate investment—you need help financing the property. There are many reasons that traditional funding is not the best option—such as slow approval and financing, strict term regulations and tons of paper work.

In a competitive market you need quick reliable financing. Without it you can easily lose your deal. Sellers feel confident working with borrowers financed through a hard money lender because they know the funds will be readily available and the deal will go through.

WHY USE ARIZONA HARD MONEY LENDING?

1. Flexible Loan Terms— Bank lending guidelines are extremely strict and rigid. Basically, all loans have the same terms other than a small fluctuation of interest rates. Arizona Hard Money Loans are not “one size fits all.” Each property is different, as is each borrower, and Arizona Hard Money Loans reflect that diversity.

2. Fast Funding— A traditional bank can take months to process an approval. When an investor falls into an opportunity where they need immediate funding. Hard money lenders are in the same professional arena as investors and they understand the need for speed. Hard money lenders can have your money to you in less than two weeks.

3. Less Required Documentation—Before issuing a loan, banks require a plethora of paperwork. This paperwork takes time—usually, a borrower will have to resend the same documentation more than once. All this paperwork is a hassle. Hard money lenders don’t need to know every detail of your financial life. They only need to know what qualified collateral you have. Their concern is not your credit or your employment history—because it is asset-based.

4. Less Papers To Sign— You will not have the piles of papers to sign with a hard money lender as you do with a bank. Signing your name hundreds of times is tedious and a gigantic time waster. All this signing slows the process down. With ARIZONA HARD MONEY LENDING you won’t have a fraction of the amount of paperwork. You will get your money faster and be headache free.

5. No Hidden Fees—When you are signing your life away at a bank, you get to a point where you aren’t 100% sure what you are signing anymore because you just want it to be over. While you are signing your John Hancock—you are agreeing to hidden fees. The bank officials are conditioned to nonchalantly go over these fees with you and superficially explain what they mean. Once you sign on the line you are committed to pay—even though you didn’t really understand what you were signing. Hard money lenders will have your repayment plan laid out for you with simple terms—there isn’t enough paper work to slide in hidden fees.

When you work with a hard money lender it is straight forward and quick. They want you to succeed as much as you want to succeed. It is always a win-win.

Overwhelming amounts of paper work and looking deep into your financial life can cause a borrower some heavy anxiety. Hard money lenders will make the lending process as painless as possible.

ON RENTAL PROPERTY LOANS IN ARIZONA

It’s a lot harder these days to get financing on an investment property.

Approval for financing is much more difficult if you don’t have excellent credit and a viable, sufficient monthly income—lenders welcome those borrowers with open arms, but what about the rest of us?

When you borrow for a rental property it is called non-owner occupant financing. If you are planning on purchasing a rental investment there are various options. If you are working with the right lender—they can help you strategize both a short-term and long-term plan to ensure you keep your finances straight. Getting a mortgage for an investment property loans in Arizona can be tricky.

WHICH TYPE OF RENTAL PROPERTY LOAN IN ARIZONA IS BEST FOR YOU?

Buying as a Straight Rental Property— This will be a conventional loan from a bank. You will be applying to buy an investment property. You will be required to put down at least 20% of the purchase price for a down payment—plus closing costs and costs for renovations. You will also need at least a 720 FICO score, a strong cash reserve and a healthy monthly income.

Buying as a personal residence— This will also be a conventional loan, but you will be buying it as your home. You are allowed to buy a home and reside in it for 12 months—then, rent it out. Because it will be purchased as a personal residence you are qualified for an FHA loan. With FHA financing you can put down as little as 3.5%. The terms of the rental don’t change when you move out and your tenant moves in. This is a good option for a borrower who doesn’t intend to buy multiple properties.

Hard Money Loan— A hard money loan is an option if you either want to buy an investment property loans in Arizona and continue to live in your own home or you want to purchase multiple rentals. These loans are financed by private money investors and aren’t required to follow the strict guidelines set by Fannie Mae and Freddie Mac. Because they offer such flexibility, residential Arizona Hard Money Loans are used by many types of investors. These loans have fast approval and borrowers receive funds within two weeks. This speedy process is also helpful in a competitive housing market. Banks can take months to produce funding—all the while, investors lose their potential property. Borrowers who have been through foreclosure, bankruptcy or have poor credit can still qualify for a residential hard money loan.

It is important that you educate yourself on rental property before becoming a landlord.

Investing in rental property is not always easy, but if you start early—you can have a nice rental property income stream.

THE DIFFERENCES IN LOANS TO FLIP HOUSES

It’s getting a reputation as the quickest way to become a millionaire—flipping houses. The first step is making sure you get financed.

It is possible, and not that uncommon, to flip houses with no money down. These loans are referred to as Arizona FIX AND FLIP LOANs. There are a few different methods when financing a house flip.

The more houses you flip at a time, the more money you make—common sense, right? But, who has the cash reserve to do one deal at a time let alone multiple deals. This type of stress can limit your deals. Every borrower searches for the lowest interest rate. But, time is what a house flipper should be focused on. Conventional lenders tend to shy away from house flipping and that makes perfect sense. You already have a primary residency and then you ask for a second mortgage—the bank knows you won’t be living in two places at one time. If you have to default on a loan, it’s definitely going to be the house you are flipping before your home. This is where a borrower needs to learn about different loans to flip houses.

WHAT LOANS ARE AVAILABLE TO FLIP HOUSES?

Home Equity Line of Credit— This is not overly common when it comes to house flippers and isn’t recommended as the first strategy you take—but, it is a possibility and one to investigate. The interest rate will attract borrowers. The downside— they are highly risky and if you don’t follow the strict guidelines and requirements you could find yourself in a heap of trouble.

Retirement Account/401K— This is a possibility because it is money you already have. So, why not just use it? For starters these accounts are taxed heavily for early withdraw and you will accrue several punitive fees. Also, that is your future and do you really want to bet your future on a house? This is best suited for experienced house flippers. If you choose to go this route make sure you have the help of a financial professional.

Arizona Hard Money Loans—These loans work for first time flippers and veteran flippers alike. They are short-term loans—typically, between six months and three years. However, because these are financed through private money lenders they don’t have to follow the Fannie Mae Freddie Mac guidelines. They have much more flexibility when it comes to loan terms. As with all loans—there are pros and cons. The con with a hard money loan is the interest. They vary from 7%-15%. And, although that may seem a little steep—keep in mind that these loans are interest only payments until the end of the loan. At the end of the loan the payment is due in full. Since the point of flipping a house is to get the rehab done as soon as possible and sell the property these loans work out for both the borrower and lender. Another benefit to Arizona Hard Money Loans is most lenders do not impose early payment penalties.

Looking at multiple possibilities, when it comes to funding for your project,

should be your goal. Not every loan is beneficial for every borrower.

However, for a newbie house flipper that doesn’t have high cash reserves looking into hard money funding is definitely your best bet. Find a local lender that is experienced in flipping houses, ask questions and make sure you ask about extra fees and any possible penalties.