Setabay Private Hard Money Lender

Friday, January 11, 2019

How Your Credit Score Impacts Arizona Hard Money Loans

It is important that borrowers understand how a low credit score can impact Arizona Hard Money Loans. But it is also important to know that it does not eliminate the potential for a loan.

The Internet is full of stories about borrowers who managed to get Arizona Hard Money Loans without having good credit. And the fact is that there are lenders who will make loans to borrowers with a credit score in the low 500’s. But it is also important that borrowers understand that even though the loan approval is not based solely on your creditworthiness, your credit score will have some impact on what you pay to use the lender’s money.

Arizona Hard Money Loans are also called asset-based loans because the loan is approved and funded based on the value of the property being purchased. This property becomes the collateral and is the lender’s security in the event that the borrower defaults on the loan. But the lender is more interested in having the borrower repay the money and the interest than having to go to the trouble of foreclosing on a property and selling it to recover his or her funds.

The best way for a hard money lender to be certain that the borrower will repay a loan is to look at the borrower’s credit score and credit history. A high credit score means that this borrower is very likely to repay the loan with no issues which decrease the lenders level of risk. But a person with poor credit is less likely to repay the loan which means the lender is facing a greater risk. Many hard money lenders are willing to accept that higher risk that comes with a low credit score but in return, the lender is going to charge a higher interest rate.

Low Credit Will Cost You

A credit score below 600 will still get you a hard money loan, but you can expect to pay as much as 20% interest on the money being borrowed. In addition, the lender might not be willing to loan you as much money as he or she would a person with a higher credit score. And you might even pay additional fees for the increased risk the lender is assuming. As a private lender, the fee structure and interest rate are up to the lender and are not regulated in the same manner as a traditional lender.

Arizona Hard Money Loans Are An Option

As a borrower with bad credit, there are not as many traditional loan options available to you. And even with a score in the low 500’s, hard money is still available but at a higher cost. The most important facet for any borrower is to evaluate the total cost of all loan options that are available and select the one which offers the best overall cost and terms. Using hard money could be costly but if it is the only option, it will allow you to begin to rebuild your credit and your assets.

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
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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Arizona Rental Property Loans: Advice for first time investors

Want to get into the rental property business, but don't have a couple hundred thousand dollars lying around? First-time borrowers of Arizona Rental Property Loans, may go to banks only to get denied time and time again, others may go hat and hand to family members, but what if I told you there was a better way?

First-time real estate investors often turn to banks to finance their first purchase because banks offer the cheapest loans.

Getting a mortgage on a rental property from a bank is a bit like running an obstacle course. Applicants jump over increasingly high hurdles when it comes to documentation and eligibility. The process can take months and even after all that rigamarole, your application still gets denied.

Certain borrowers might never qualify when it comes to bank financing:

People with credit issues, or self-employed people without a fixed income. You might want to get into the rental business to improve your financial situation or increase your income, but it is for those same reasons you might never qualify, so where can you turn?

First-time borrowers might be tempted to get Arizona Rental Property Loans from friends and family

If you are just getting into the rental business, it doesn't seem likely that you are in touch with a big circle of real estate investors.So you might consider financing your first deal with the help of friends and family members.

"Yeah Uncle Joe, do you have 300,000 you could lend me?"

Well if Uncle Joe just happens to have a cold 300 K in cash lying on his coffee table, you risk many awful Thanksgiving dinners if things go south and you aren't able to pay him back. Terrible meals that are full of cold stares as everyone chews their food in awkward silence.

But the real disadvantage with getting money from private individuals is that finding people with hundreds of thousands of dollars lying around is not easy.

Given everything we've learned, sometimes it helps to make a list of pros and cons.

Bank financing:

• Pro- low-interest rate

• Con- you might never qualify.

Private investors

• Pro- easy to qualify; if a person trusts you they'll probably give you the money

• Con- you may never find enough money to buy the property in the first place.

What if there was a source of financing that combined the best of both worlds? A place that had the money of a bank, but someplace you could actually qualify?

Arizona Hard Money Lenders could be the right help for first-time rental property investors

With hard money, eligibility comes down to the value of the property your borrowing against, your job, your credit and other hold ups from the bank are not an issue. You can qualify.

Also, these people are professional lenders which means, unlike Uncle Joe, they have the money to close your deal. But there is a catch, yes there's always a catch.

Some claim hard money is too expensive. It is expensive there’s no denying that. But hard money gives first-time rental property owners the money they need to get their foot in the door. The strategy with hard money and rental properties is usually as follows: take out a hard money loan, secure a tenant, get a steady income to improve your credit score and then refinance to a long-term bank loan.

If you rely on a bank to get your first investment loan you might never qualify, if you rely on money from friends and family, you might never get the money needed to close.

With hard money you might actually stand a chance of becoming a real estate investor.

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.

Requirements For Arizona Hard Money Loans

Arizona Hard Money Loans are not the same as traditional bank loans. And because of that, the requirements for these loans are also quite different.

Arizona Hard Money Loans differ from traditional bank and mortgage company loans in many ways, so it only makes sense that the requirements for these loans would also focus on different criteria. But for many borrowers, it is the different qualifications that make hard money so appealing.

Borrowers who have no credit will have a very difficult time getting a loan from a traditional bank because the approval process is based on the applicant’s credit score. The bank feels that without a credit history and a strong credit score, the borrower represents too much of a risk and the bank will decline the loan application. But Arizona Hard Money Loans are asset-based, meaning that they are based on the value of the property being purchased more so than the borrower’s personal credit history. So a person with no credit history can still qualify for hard money.

Likewise, a person who has bad credit is also going to be denied by a bank or a mortgage company with applying for a loan. In some ways, having bad credit is worse than having no credit at all. But a hard money lender is normally willing to lend to a person who as a 550 credit score or better. What the hard money lender is looking for is proof that you have an income so that you can repay the loan that you are requesting.

Fix and Flips

If the borrower is going to use the hard money for a fix and flip project, the lender could also be interested in the experience level of the borrower. Fix and flip projects can be tricky and therefore represent a higher risk to the lender. Each lender is free to set his or her own requirements but most will want to see the records of a few successful projects before they are willing to loan hard money for fix and flip projects. There is an added risk with any property undergoing renovations as until the project is completed, the property value could actually drop and no longer be worth as much as the balance on the loan.

Down Payments

Because the loans are based on the value of the property being used as collateral, the lender wants to be assured that the property will always be worth more than the balance of the loan. This ensures that if the borrower defaults on the loan, then the lender can take possession of the property and sell it to recover his or her investment. For this to work in the lender’s favor, the borrower must often make a large down payment on the property. In some cases, the lender will require as much as 25% down to be certain that the property holds instant equity. Understanding the requirements of Arizona Hard Money Loans also helps to explain some of the benefits and drawbacks and how the loans can be best used.

Thursday, January 10, 2019

Arizona Fix and Flips Loans: Advice for Renovations

Use the proceeds of Arizona Fix and Flip Loans sparingly. Fix and flip financing is expensive, so avoid committing to projects that hinder resale of your home at all costs because you need to pay off your loan as soon as possible.

Just because you add something to a flip doesn't mean that something adds value. Keep your rehab projects as simple as possible, ensure that the result appeals to a wide range of buyers, and that you'll finish your rehab before your loan comes due.

If you don't keep the scope of your rehab as narrow as possible, disaster might be right around the corner.

With Arizona Fix and Flip Loans risk less by not wasting your money on the following:

• Fixed use rooms: Say a flipper has a property located in the yuppie section of town, the area's teeming with young professionals. The investor thinks adding an office would be nice. They spend about five grand on built-in desks and shelving. The room becomes a beautiful configuration of fixed geometry. The efficient and fixed storages solutions should appeal to buyers in the area, right? Well, not exactly. Most buyers gripe about the fact that they can't use the room as a bedroom, "we plan to have children, we can't have them bouncing their heads off of all these hard edges." Given the lack of an extra bedroom our flipper has to sell the home at a discount, the office didn’t add value. In fact it made his home harder to sell.

• Extensive reconfigurations: Say a rehabber wants to play architect. Her property has a generous section of vacant space at the end of the hallway. "Master bathroom? Everyone wants a master bathroom, right?" Images of dollar signs flash through her eyes, This reconfiguration will add 20 K to her total loan amount, but bullheaded she charges forward, knocking down various walls, diverting sewer lines, weeks and weeks pass, but things stay on schedule. But the ponderous city inspector has a problem, "the pipes you've installed are a centimeter too small. “Now to even list her home, she'll have to rip the walls apart again and start from scratch.so Its unlikely she will resell the house before her loan comes due.

She will have to pay back that loan, even though her property isn’t listed yet. The likely outcome is she will default.

Use Arizona Fix and Flip Loans on the most basic

renovations possible, to avoid the danger of default.

Are office conversions and luxurious master bathrooms inherently dangerous in and of themselves? Of course not. But do yourself a favor and follow a few basic rules when it comes to rehabs:

• Don't convert a room for a fixed use: Offices aren't inherently bad, but if you add built-in desks, or features that redefine the use of a room you narrow the number of potential buyers. Not only are such conversions expensive they rarely return much value when it comes to the resale value.

• Renovate only as necessary: So, a master ensuite is an essential convenience every buyer expects right? Not always. Updating existing bathrooms is one thing, but reconfiguring an entire layout, installing new plumbing and creating a new bathroom from scratch is quite another. Such an endeavor not only costs a pretty penny, but it also takes a long time, and it will probably add only a few extra thousand to the list price.

In short, avoid seemingly nice features might put off buyers and additional time-intensive projects will keep you from listing your home and thus paying back your loan.

So don't undertake renovations that restrict potential buyers, or projects that hinder your ability to list your house.

Arizona Fix and Flip Loans: Why you need to look past the property line

With Arizona Fix and Flip Loans, you don't want to borrow against a house won't sell in the end. Why don't you consider factors outside the house before you put in an offer? Looking past the front yard for things that could doom your project from the start.

No matter how good a deal might seem, and no matter how attractive the result of your rehab project, certain homes will only sell after pigs take flight. Location, location and location, yes this cardinal rule of real-estate holds for flips as well, but its more like location, location, and properties in specific areas will never sell.

Loans for Flipping Houses should never be taken out for certain types of properties:

• Properties next to ugly sights: Say a house flipper combs through the listings, and there's a foreclosed home listed at, only 75 thousand, He's looked over the description and seen some photos of the interior, the project should be short work. But when he pulls up, the looming sight of a half-naked woman proudly presenting a vodka bottle between her breasts blocks out the sun. Something the description didn't mention: the house has an east facing exposure to a garish billboard. No matter, he will go forward as the profit projections are just too good to pass up. After work he finishes work, trodding couples argue as husbands sneak glances up at the luminous sight, they never even look at the house. No one puts in a bid at his asking price so our flipper has to sell off the property at a steep discount.

• Properties next to deranged neighbors: Another flipper finds a prospective property that is selling for only 75 K when they regular price in the area is 300. Before putting in an offer, she visits the location only to discover something smells, a strange spectacled woman dressed in sackcloth has been emptying her litter boxes into the backyard of the house. Well, 225 in resale profits it seems to be deal is just too good to pass up. Our investor calls the police and the neighbor is promptly cited. Yes, the litter box disposal activities stop but now our investors made an enemy. After work on the house is done, and buyers begin to show up, the woman is dancing, menacingly half naked on the front lawn. She calls the police again, but the woman is not doing anything illegal, she's just humming spinning in circles, which isn't against the law.

Will the house sell? Well unless the neighbor is involuntarily committed, it seems unlikely.

With Arizona Fix and Flip Loans look beyond the

property line and try to find features that make a house unsellable before you apply.

If your browsing the internet and find a deal that seems too good to be true, it probably is. No property description is going to list features like "right next to scenic high-tension wires, neon billboards or demented neighbors." You can avoid all this risk by doing s+omething straightforward, walking through a house, even talking to the neighbors before committing to a project.

Commercial Arizona Fix and Flip Loans: How to Evaluate a Property

Before taking out Arizona Fix and Flip Loans on commercial properties, you need to get a sense of what a property might be worth after you've fixed it up. Welcome to the obscure and confusing world of commercial property valuations. This article will endeavor to explain in the simplest possible terms why you can't just rely on comps when it comes to commercial flips

If you are in the flipping game hopefully you know everything, there is to know about comps. You look for properties with similar features, see what they sold for and badda-bing you have a sense of a property’s potential.

Commercial property valuations are the subject of MBA dissertations, meaning they aren't simple. In the end, comparable sales won't give you a real sense of what a commercial property might be worth.

You might be prospecting through various listings and come across two apartments to flip, a 4-unit apartment building selling for 75 and a 5 unit one selling for 150. Conventional wisdom says one unit won't make much of a difference in the end, so the one listed at 75 is a better deal, right?

How to look beyond the comps before taking out Arizona Fix and Flip Loans

Commercial properties are valued based on the income generated, you can't just rely on comps; income must be accounted for to assess a property accurately. So how do you do that?

Using income to evaluate a property is done per the following formula:

Net Operating income/cap rate

What is a cap rate one may ask? Annual income/property value. But who determines the cap rate? No one knows precisely, owner set rents and therefore income and the market set the value of a property.

For the sake of illustration, let's say the cap rate for both properties is 7.7%, and the average rent in the area is 1,500 per unit. You may walk through and get the same estimate when it comes to repairs on both properties, 450 thousand.

The four-unit apartment still looks pretty attractive, but hold on let's use the formula:

4 unit building can earn, 72 K a year

72,000 /.077= 935,064-450= you'd earn 335 thousand dollars given the rehab. Well, that's good, and you might be asking yourself how much difference can a single apartment make?

The 5 unit building can earn, 90 K a year

90,000/.077= 1,168,831, you'd earn about 568,831 dollars on this deal basically an extra 200,000 dollars because of one apartment. Had you relied on conventional fix-n-flip wisdom, i.e., That a bedroom only adds so much value or that a lower sales price is always better, you would have missed out on 200 K in returns.

Use the income approach to get a sense of how much money you

can make before taking a commercial Arizona Fix and Flip Loans

Reality isn't as clear-cut as the examples above, but the message is clear, you can't evaluate the potential of a commercial flip based on comps.

Getting a sense of how much income a property can generate gives you a sense of its potential, use formula, NOI/cap rate. Set the NOI based on the average monthly rent that you could charge per unit and use the prevailing market cap rate. Perform these evaluations before you take out a loan. That one piddly apartment unit could result in 100's of thousands of extra dollars in returns on your next commercial flip.

Why Are Owner-Occupied Arizona Hard Money Lenders So Hard to Come By?

There are many Arizona Hard Money Lenders out there, but only some of them are owner-occupied hard money lenders. Read on to find out why this is and what you can do about it.

You’ve probably seen a ton of Arizona Hard Money Lenders that lend for residential and commercial properties. In research, you might notice that Arizona Hard Money Lenders that lend for owner-occupied properties are few and far between. But, why?

Compared to other types of loans, owner-occupied loans are more difficult for hard money lenders. Residential and commercial real estate loans have fewer restrictions than owner-occupied loans, making them easier for lenders to process and approve. These traditional Arizona Hard Money Loans can be approved very quickly and without the need for good credit or loan histories, giving them clear appeal.

Owner-occupied homes require much more work due to state regulations. When a borrower offers up his home as collateral for a hard money loan, he is giving the lender control over the property until the loan is paid back. If the loan is not paid back in time, the lender has the ability to take the property. Clearly, this poses a conflict if the home owner is occupying the property. In an effort to protect home owners from hard money lenders, states have put rules in place to make this process more secure.

Owner-occupied Arizona Hard Money Lenders must place applications for these types of loans under higher levels of scrutiny. The state and federal governments have rules in place that require lenders get specialized licenses to lend owner-occupied loans. Lenders also must be more detailed in their analysis and approval process than they might for other types of Arizona Hard Money Loans based on governmental regulations. It can be easier for lenders to simply not offer owner-occupied loans than to go through the processes of getting the correct licenses and having to go through borrowers’ information very carefully.

How Can I Get My Owner-Occupied Loan?

The key to getting your owner-occupied loan is to be able to prove you can make your loan payments. It’s important for lenders to be sure you can verify your ability to pay the loan before they will lend to you. Knowing information about your loan going in can make it easier to get just because you won’t have any surprises. For example, knowing your loan amortization is important. With hard money lender SetaBay, your loan will be fully amortized over 30 years, allowing you to pay in smaller amounts over time.

Search for an owner-occupied money lender near you.

Although there aren’t too many owner-occupied Arizona Hard Money Lenders out there, they aren’t impossible to find. SetaBay, for example, is approved to lend owner-occupied real estate loans and they even offer great benefits for borrowers. Low rates are available, there is the potential for 100 LTV financing, and they have no pre-payment penalties on their loans. For anyone looking for an owner-occupied loan, consider SetaBay.

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

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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions