Setabay Private Hard Money Lender

Wednesday, January 16, 2019

Take Advantage of the Builder’s Market with Spec Home Financing in Arizona

The demand for homes is high, but supply is low. Due to this, spec home construction and spec home financing are a growing trend intent upon meeting market needs.

The housing market has been on the rise for the past year. Real estate has grown. Housing prices have risen amid the bustle of sales and demand for property. However, the growth has created a shortage of existing properties available on the market, and with a shortage of available homes has arisen a demand for more homes to be constructed.

Real estate investors dealing with the construction of residential homes have recently found spec homes to be a profitable niche, some may even argue more profitable than flipping or renovating. The latter two dealing with primarily acquiring distressed properties in order to either sell or lease. While these types of investments are not without their perks, they can become difficult at times when distressed real estate is scare. Such is the state of the current market, where fewer homes, even distressed ones, are available and demand continues to rise. Where flippers and renovators need to scrounge for available properties in lessened conditions, builders of spec homes may purchase a lot and build thus circumventing the dilemma of a property shortage.

The beauty of spec homes, and one of the plausible reasons for the increased demand for them, is that they are meant to fit the needs of various, possible clients. Where some builders may build a home for an individual client, furnish the home with specific aesthetics, and cater to an individual client’s needs, spec home builders are concerned with creating attractive, up-to-date, and cost-effective homes attract a larger audience.

Spec Home Financing Sets Construction in Motion

Spec home builders generally need to acquire financing to further their projects. To start, a plot of land is needed to build upon. One problem with acquiring financing is that Conventional lenders such as banks typically frown upon lending solely on lots devoid of housing. Rarely are these loans acquired by builders. On the other hand, hard money lenders serve as one of the principle sources for spec home financing due to the fact that they are concerned with the value of the land in the current market and the amount of collateral given to secure a loan on a given property.

Spec home financing with hard money is quick and efficient.

Home Financing in Arizona with hard money is quick. When the right property for building upon is available, spec home investors can pull the trigger on its purchase and rely on quick funds to secure its acquisition. Though hard money loans for spec home financing may have a higher initial rate than their conventional counterparts, it can be bridged out of once property is built. Finally, hard money lending is person to person basis, even project to project basis, lenders are there to help borrowers every step the way. For more information on spec home financing in Arizona, talk to your hard money broker at Level 4 Funding.

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.

How You Can Earn More Money with an Arizona Fix and Flip Loans

With a decrease in homes acquired from distressed sales, in gross profits on flip homes, and in housing prices, fix and flip loans help investors stay in the game and generate more income by flipping more homes per year.

According ATTOM Data Soulitions’ home flipping report for 2018, the average home flipped home sold for $65,520 over the original purchased value. This is nearly $5,000 less than the average a year ago. Experts consider that the decrease in this amount is due to the reoccurring difficulties of finding distressed property. Distressed property traditionally has been a niche for flippers wishing to purchase property well under market value. The incentive for purchasing this property type is that it can be renovated and sold for a better profit than renovating a non-distressed home: in the most recent quarter, an average of $65,000.

With less distressed homes on the decline and a shortage of available homes, flippers are having to turn to other means to acquire property. The low-hanging fruit seems to have been taken. It is time to climb higher. Perhaps a home is available and a decent buy at a distressed stressed sale. But other methods may be necessary, such as advertising the purchase of homes for cash, sending out email campaigns, beating around the bushes of local neighborhoods and acquaintances to find extra business, or developing relationships with local wholesalers. Building a pool of resources outside of the conventional distressed sale to find property worth flipping has become a growing necessity.

Though the decline in returns for flip homes and the availability of distressed property is currently a market trend, there is still money to be made, and the right homes are out there to buy. With an average net of $30,000 per flip, flipping two or more houses per year can easily provide a supplementary or primary income after establishing a pool for finding new flip homes.

Fix and Flip Loans Can Increase Total Annual Returns

There are other ways of further monetizing by using fix and flip loans in Arizona to acquire more real estate rather than acquiring with personal cash. Where alone an individual investor can may be able to purchase a property to flip one or a number of houses, a private or hard money lender is able to greatly increase this amount. While the cost of financing using hard money is high, fix and flip loans allow flippers to flip more houses per year thus increasing the total potential earning than flipping, without the limits of personal cash flow.

Contact your hard money broker at Level 4 Funding to find fix and flip loans right for you.

Building a pool of potential properties using means other than distressed sales, finding properties off the beating path, and using financing to purchase more flip houses per year are becoming the growing trends in the market. If the latter is of interest to you, contact your hard money broker at Level 4 Funding to find fix and flip loans in Arizona that are right for your flipping business.

Expectations of Arizona Fix and Flip Loans

Lina was a divorced mother of three living paycheck to paycheck until she started flipping houses. Here is her story.

In March of 2009 Lina Jerome’s life felt like it was falling apart. Her husband had left her and their 3 daughters. Not left as in living in separate houses—left as in left the country not to be heard from again.

Lina had worked as a teacher’s assistant and her husband had been the bread winner. After he had left her financial world began to crumble. All three of her girls were in different extra-curricular activities and all three went to different private schools. She had to pull them all out of their schools and return them to public schools. Many dinners were Top Ramen and grilled cheese. Times were tough, and as Lina looked toward their future she didn’t see change coming.

DREAMS DO COME TRUE

After months of struggling and worrying Lina saw a “We Buy Ugly Houses” flyer on her front door. Her house wasn’t ugly, but Lina was curious about the sign.

When she inquired, she was given the run down on flipping houses. She figured she could flip houses. And she did. Her bank would not finance her due to her present financial issues and her lack of monthly income. Traditional banks are less than comfortable lending you money while you transition financially.

After being turned down by her bank of 20 years, she found a private lender, also known as a hard money lender. In April of 2010 she found a perfect property. Then price tag was $109,000—with about $6,000 worth of rehabbing. Lina was approved for $116,000 Arizona Fix and Flip loan within 15 minutes; her funds were dispersed in 13 days. She worked with a contractor and had the house rehabbed within 6 months. During that 6 months she paid only interest on the loan. The newly renovated home went on the market and was sold within a week. Lina’s loan was $116,000; she sold the home for $205,000—making Lina an $89,000 profit in less than 7 months. After paying the interest on the loan, the fees associated with the loan and her contractor she still walked away with close to $50,000 in profit.

Not only did this change Lina and her daughters’ lives completely, but she found that she loved waking up and going to work each day. Today Lina flips three to four houses a year and averages close to $200,000 in profit.

“Yes, Lina’s story is inspiring—but I don’t have the money to do that and I definitely don’t have the credit to flip houses in Arizona.”

That is the beauty of a hard money loan. It is an asset backed loan; the lender is far more concerned with your hard assets than your revenue stream or credit. If the borrower defaults on the loan the lender has the option to foreclose on their assets (mainly real estate). Where there is a will there is always a way- you can flip houses in Arizona. Find an Arizona local hard money lender and start making your financial dreams your financial future.

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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Expectations of Residential Arizona Hard Money Loans

Whether you want to rent out duplexes or buy a Arizona fix and flip property, finding financing can be quite difficult.

It isn’t just borrowers with bad credit that find themselves in an uphill situation when looking for financing. Even qualified borrowers find themselves struggling to secure the loans they need. What do you do when the bank turns you down and you have exhausted your options? That is where Arizona hard money loans come to into play. These loans are an attainable option for residential buyers with unique needs.

Residential Arizona hard money loans are also called equity-based or private money loans. Typically, these loans are used by real estate investors that want to purchase properties that the bank won’t finance. Many borrowers aren’t aware that these loans can also be used on homes, as well. The terms are different than a traditional bank loan.

TERMS OF ARIZONA HARD MONEY LOANS

These loans not only help buyers that have run into credit problems, they also work well for borrowers who need approval quickly. Arizona hard money loans are a more flexible option. Arizona hard money loans do not have to follow federal guidelines, as banks are required to do. They have their own underwriting department which allows this flexibility.

Typically, Arizona hard money loans have:

* Term: 1-3 years

* Rates: 7-12%

* Lender Fees: 1-10 points

Who uses residential Arizona Hard Money Loans?

Arizona hard money loans are utilized by a variety of different borrowers. Often, investors, purchasing a quick Arizona fix and flip property, use these loans because they can be financed so fast. Here are some examples of when a Arizona hard money loan is necessary:

1. Buyers have a mortgage on another property.

2. Property doesn’t meet the requirements of FHA lenders.

3. Buyers need to finance quickly.

4. Banks are unwilling to finance.

5. Buyer has poor credit.

6. Buyer has a recent foreclosure or bankruptcy.

7. Buyer has a recent short sale

8. Buyer has less than 2 years of employment history with their current employer.

If you want to find a hard money lender, find a local lender. Having a lender that you can see versus working with one thousands of miles away has benefits. Developing a relationship with your lender is important when it comes to any hiccups. Typically, local lenders are very easy to find, especially if you are already in the industry. Many sponsor local networking events. You can also find a local chapter of the Real Estate Investors. Another option is to look at Yelp and find one closest to you with good reviews.

Where does hard money come from?

Make sure when you meet with you hard money lender you ask how they are funded. A lender that is not privately funded is most likely going to be funded using institutional funding. Institutional funding will be subject to the same underwriting as a bank. What that means is the approval requirements will be stricter and the loan will not close as quickly as with a privately funded lender.

When searching for a residential loan, it is crucial you know everything about your lender and feel comfortable.

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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

What Is an Arizona Fix and Flip Loan?

What exactly is house flipping? Simply put, it is when a real estate investor buys houses, repairs them and sells them for a profit.

The definition of house flipping may be simple, but it is not as easy as it may sound. If it is done correctly, it can turn a handsome profit. There are two essentials when flipping: property and money.

To find the rehab property that matches what you’re looking for there are a few options:

1. Search MLS: The Multiple Listing Service (MLS) is a database put together by real estate brokers that lists property according to geographic region. Licensed real estate agents are the only ones that have access to MLS. You will need to connect with an agent to be privy to MLS.

2. Auctions: Auctions are a fantastic opportunity to find a property at a very low price. Most auctioneers will require you to put 10% of the purchase price at the time of winning the bid. After 30 days you will lose your down payment and property if you have not settled.

3. Wholesalers: Wholesaler’s business is finding rehab properties, getting them under contract and then finding a buyer who will flip it. Basically, you will be paying an extra fee for the wholesaler to find the property.

BEFORE APPLYING FOR A FIX AND FLIP LOAN IN ARIZONA

There are a few things that all potential flippers must understand before seeking the funding for their investment; understanding these things will speed up the process and make your lender believe you know what you’re doing, which will benefit you when it comes to approval time.

1. Create a Business Plan: This is a thorough analysis of your property that contains—the exact address of the property, comparable sale prices for nearby homes, your strategy, timeline and financial projections; this is called the ‘scope of work.’

2. Estimate Renovation Costs: Your entire project will fail if you don’t borrow enough from your lender. To get a realistic grasp on your renovation costs you will need the help of an appraiser and contractor.

Finding the right lender is the most important component of your Arizona Fix and Flip loan.

Hard money lenders have proven to be the best option for Arizona fix and flip financing. House flipping in Arizona in a short amount of time is the main reason Arizona hard money loans work most effectively for these projects.

Arizona hard money loans are short-term loans secured by real estate. They are also referred to as rehab loans. One attractive part of these loans is their lower qualifications for approval. Borrowers can receive approval and funding in as little as 2 weeks. Hard money lenders concern lies in the property and potential value than about the borrower’s credit and monthly income.

These loans do have higher interest rates; however, they can not only finance the property, but can also finance the renovations. Lender fees and closing costs are typically taken out of the loan. Borrowers can reduce their overall financing costs by paying back the loan early because these loans are not known to have a prepayment penalty.

Arizona hard money loans can work for a variety of people. When an investor requires a fast closing, an investor has poor credit or when more money is needed than a bank is willing to approval. Regardless of your situation a hard money lender will be able to finance you much quicker than a traditional lender.

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 and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

The Dangers of Flipping: Loans to Flip Houses Help Alleviate Risk and Secure Returns

Though the flipping market is not as easy as it once was, it is still possible to eke out a living one renovation at a time, especially with loans to flip houses.

After the Great Recession, after a great deal of people lost residential properties, it was easy for real estate investors to run into short sold, foreclosed, or wholesale units. Many people were getting out of homes fast, and wholesale acquisition prices were low and enticing, if an individual could find the money to invest in them. At this time, flipping became a favorable means to an end for real estate investors since they could buy relatively cheap property from banks and furnish relatively inexpensive renovations generating a product to be sold at top retail value. The recipe: buy a house from the bank, renovate it, put in granite counter tops, and paint the exterior. Boom. A favorable retail price was within reach.

Fast forward to 2018. Flipping has become increasingly popular. Television shows on HGTV and other networks have glamorized the notion of “easy money” that can be acquired through flipping homes. Add to this the self-proclaimed gods of real estate advocating that by heading their tutelage individuals can have overnight success in flipping and make an innumerable fortune. Listen to the radio or the television, the ads are there. The publicity has driven many to try their hand in the business.

Understanding These Risks, Flipping Is Still Profitable

On top of a growing trend for individuals to enter into the flipping market, the housing market experienced a recent uptick. Houses recently rose in demand, a lot. Real estate agents are scrounging for homes that can be sold. Prices are high and homes, even distressed ones, are fewer and fewer to come by. To recap, that means a lot of people looking for flip homes with few units to be found on the market. Competition.

That being said, flipping houses is still a means of investing and receiving returns. Flipping is still capable of being profitable, but the game has changed and become seemingly more difficult in regard to property acquisition. A solid game plan is needed since it now takes some beating around the bushes, email campaigns to find sellers, possibly a relationship with a successful wholesaler. Work, not “easy money” nor “low-hanging fruit.” Finding the right piece at the right value, estimating correctly the needed renovations, and managing the flip correctly are all factors directly affecting return. On top of that, there is financing. Loans to flip houses in Arizona are a huge factor in the flipping business.

Loans to flip houses can help you establish a foothold in real estate investment.

The recent market trends published by ATTOM Data Solutions, suggests a growing number of individuals are using hard money loans to flip houses in Arizona. Other professionals indicate that this is due to a raise in housing prices requiring more money to invest or that it is due to a desire to use financing to increase the total amount of flips per annum. Nonetheless, understanding how to receive loans to flip houses in Arizona is essential for many to receive the returns that they need without burning through savings and cash flow. If flipping is the way to go and you have assessed the risks of the trade, then start your path to generating the returns you need. Talk to your broker at Level 4 Funding to secure the lending source that is right for you.