Setabay Private Hard Money Lender

Tuesday, January 22, 2019

Arizona Hard Money Lenders Versus Conventional Lenders, How They Differ

More and more individuals and companies are turning to Arizona Hard Money Lenders for their current real estate investment funding needs. Its important to know the difference between hard money and conventional lenders before deciding which loan is best for your needs.

The traditional lenders such as a national lender, your local bank, credit union or local mortgage broker realize a majority of their business from underwriting consumer mortgages or loans on a primary residence. Several of the largest mortgage guarantors, Freddie Mac and Fannie May, guarantee mortgages for consumers in the United States. When a consumer applies for a residential mortgage, the traditional lenders need to follow the lending guidelines set by both Freddie Mac and Fanny May. As a result, the consumer mortgage market is highly regulated. Before the housing crisis in 2008, the underwriting standards were very loose, and many people received mortgages that they could not afford. So, after the crisis, the U.S. Government established new standards that tightened lending standards for consumer mortgages that lenders had to abide by. Some of the highlights of the new standards are demonstration of more income, more savings, and better credit. Due to this, it takes longer to get a loan and much more documentation.

There are several differences between conventional lenders and Arizona Hard Money Lenders. The main differences are: First, most Arizona Hard Money Lenders do not lend on residential residences (unless you seek out a hard money residential lender). These lenders tend to lend to borrowers who invest in properties looking to flip the property and make a profit. Since they lend to investors and businesses, the lenders are less regulated then consumer lending. Second: Arizona Hard Money Lenders do not sell their loans to a second party. The lenders either lend their own money or money from investors. They loan based on investment criteria such as their win risk tolerance and lending experience.

Third: Arizona Hard Money Loans are typically short term in nature, terms range from one year to five year where typical residential loans can run 20 or more years. The hard money loan needs to be repaid in full at the maturity of the loan or converted to a conventional loan. Fourth: There are borrowers of Arizona Hard Money Loans with low credit scores, dings on their credit, do show enough income, or are self-employed. Some borrowers carry too many mortgages currently to qualify for a conventional loan. Without Arizona Hard Money Lenders, these people have no choice but to not get involved in the fix and flip industry.

After Repair Values of a Property

Fifth: Current conditions of a property are what a conventional lender looks at. Traditional lenders tend to avoid lending to rehabbers, though there are a few exceptions. Properties for conventional lenders must be livable right away. Arizona Hard Money Lenders look at property’s value after rehabbing of the property. Some of the expense for rehabbing can also be rolled into the hard money loan.

In this current market, cash is king, making the speed with which you can obtain a hard money loan very appealing.

Sixth: Ability to compete with a cash offer: You have located a property and a cash offer comes in. You cannot compete with that offer unless you work with a hard money lender. The ability for the lender to act quickly is an advantage. A hard money loan could possibly close in as little as 3 days, have minimal paperwork, and the property you are seeking to acquire can act as the collateral. If you are looking to go the route of a hard money loan, then you will need to do your due diligence and research various lenders. Call us at Level 4 Funding for a no obligation quote.

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 you Need to Know About Fix and Flip Loans

A growing segment of today’s real estate investment strategies is the fix and flip model. There are several key factors to be aware of if you are looking to obtain your first Arizona fix and flip loan.

While today’s reality TV shows on fix and flipping homes may make flipping houses and making money seem like a done deal, it is not quite as easy as it appears in this thing called “real life.” There exists the real possibility that you can lose money as well as make it depending on how you manage your project and capital. Let’s take a look at the number one roadblock many just starting out in this field run into—the money to obtain their first property.

So, just what are Arizona fix and flip loans? It is a type of loan that many in this segment of real estate investing turn to in order to get into this sometimes-lucrative investment strategy. It is a short-term loan, made by non-conventional lenders. What is a non-conventional lender? These types of loans are typically made by private investors or investment groups and are considered hard money loans. The Arizona fix and flip loan is exactly what the term says it is—a loan used to purchase a property you plan to fix up and sell.

With a Arizona fix and flip loan, you can expect a term of six to twelve months, an interest rate in the range of 12% to 21% (if you have used Arizona fix and flip loans previously, then you may expect a lower rate), a no prepayment penalty (depending on the lender), and a loan http://applewoodfund.com/arizona-fix-and-flip-loans/amount that lies between 60% to 75% depending on the value of the property.

The Advantages of Arizona fix and flip loans

When you have located a property that you have an accepted bid on, speed is essential. These loans can be closed in as little as a few days to one week. This is an advantage for the real estate investor. This is compared to a conventional lender where it may take the conventional bank 30 to 60 days for an approval. In addition, the conventional lender will require mounds of paperwork. A fix and flip lender will care less about debt-to-income ratios, your credit score, and even your income. The property is not considered as current value but the after-renovation value. The fix and flip lender will also look at the market the property is located in, if the borrower seems trustworthy, and if the numbers in the business plan submitted by the borrower makes sense.

Unfortunately, there is also a downside to these loans. At Level 4 Funding, we can help you determine if this type of loan is right for your specific real estate investment.

Some of the downsides of Arizona fix and flip loans are the higher interest rates, shorter terms, and higher costs upfront such as points and origination fees which can make it harder to turn a profit on a project for the first time (inexperienced) investor. As an inexperienced investor, you make consider taking on a partner that is experienced in fixing and flipping homes. Taking on a partner will make it easier to secure funding. If you are considering venturing into becoming a real estate investor, you will need to develop a business plan and run the numbers on the target property to make sure the project makes sense. The ideal project entails obtaining a property that you can purchase well below the value, and quickly fix and flip the property in a short period of time for the increased market value.

The Facts About an Arizona Owner-Occupied Hard Money Loan

An Arizona owner-occupied hard money loan requires the borrower to live on the property. With the tightening of underwriting for conventional mortgages, individuals are turning to these types of loans.

Since the financial crisis in 2008, the U.S. regulators have tightened the regulations on home mortgages. Higher credit scores, more cash, and increasing credit worthiness are all things that have changed. If you are in a situation where one or all of these items will prevent you from getting a conventional home mortgage, then you may want to look at an owner-occupied hard money lender. These are loans that the owner of the property will be living in the property that the loan is being secured for.

If you are in a situation where you cannot be approved for a conventional mortgage, then an alternative may be the owner-occupied hard money loan. If properly underwritten and the loan is compliant with government regulations, this could be a great alternative. The hard money loan is also a great alternative for real estate agents or mortgage professionals whose clients may not be able to purchase a home going the conventional route.

Another type of hard money loan is the consumer bridge loan. This type of loan is short term in nature, with terms that start as low as three months. The purpose of the loan is focused on borrowers who cannot secure a conventional loan. Some of the reasons that a conventional loan is not an option is: the borrower has one existing home and is seeking to purchase a new home, downsizing, short-term problems the borrower faces such as foreclosure, bankruptcy, or insufficient amount of time on a new job, a short sale, not enough cash for a sufficient down payment, divorce or probate, avoiding the need to liquidate assets such as stocks, 401Ks, 1031 exchanges, and fallout from reverse mortgages. Conventional lenders will usually not make a conventional loan if any of these situations are present.

The Terms for a Bridge Loan

The terms for a bridge loan are: closes in 5-7 days, but could be longer, the term is eleven months maximum, typical interest rate is 9.9% and expect to pay points in the range of 2-3% plus admin and doc fees.

There are Arizona Hard Money Lenders that offer loans with longer terms. At Level 4 Funding, we often extend existing loans for current lenders and can help you find the right type of loan for your current real estate project.

An Arizona owner-occupied hard money loan is, as the name states, a hard money loan for a longer term on a private owner-occupied residence. These are less common. Most times, when a borrower seeks this route, it is because of credit issues that cannot be resolved in 12 months. A borrower will need to have his credit “seasoned” and it may take longer than a year. The borrower may be either self-employed or has a short time on the job. These types of loans could close in as little as 5-7 days, but expect longer, there is no prepayment penalty, and you will need to pay points in the range of 2-3% as well as admin fee and doc fees and debt ratios that must be below FNMA requirements. Other loans terms that a private lender could offer are 20/20 and maybe 15/15. Finally, do your homework, conduct due diligence and research the lender to make sure your loan is in compliance with BRE regulations. Here, at Level 4 Funding, we offer some of the best interest rates in the market. Call us for a no-obligation quote.

Your Guide on How to Obtain Arizona Rental Property Loans

Obtaining your first rental property can seem like an enormous undertaking. Finding the right Arizona Rental Property Loan is often the first obstacle to overcome.

You’ve probably read in the news about what a great time it is to get into the rental property business, a.k.a. being a landlord. Now you need to figure out how to obtain mortgage financing to enter into being a landlord by purchasing your first rental property. Since the 2008 economic crisis, it is much harder to obtain financing; however, for people with good credit and income sufficient to support the mortgage payment, there is plenty of money to finance their project. If you are seeking a property to purchase and not live in, then this is considered non-owner occupied (NOO).

To improve your possibility of obtaining Arizona Rental Property Loans to begin your landlord business, you may want to consider purchasing a rental property that also provides you with a home residence. This will require that you live in the property for a twelve-month period of time which will qualify you for an owner occupant (OO) loan. An owner- occupied property qualifies you for the best terms and, with FHA financing, you may be able to put down as little as 3.5%. When you are ready to make it a complete rental, then the original terms stay in place. This is the best option for you to start being a landlord.

Additional reasons this makes sense are:

· While residing in the property, you will find any problems that may not have been apparent upon inspection such as leaks.

· While residing in the property, you will be able to determine the upgrades and renovations that the property will need, and you are not burdened with two mortgage payments.

· As a landlord living in your investment property, you will be able to purchase a property with greater value.

Down Payments

If your desire is to just buy a rental property, then you will need 20% to 25% as a down payment for most Arizona Rental Property Loans. You will also need to pay for the closing costs and renovation costs. You will need approximately $40,000 cash for the purchase of a $120,000 property.

For a conventional mortgage, you will need good credit to qualify for financing. There is a chance that the lender may include rental income to help your debt-to- income ratios.

Today, the cost for mortgage loans is considerably higher than they were years ago. Even higher are the Arizona Rental Property Loans for non-owner-occupied properties. If you are seeking a loan which banks classify as a small loan, $100,000 or less, then the costs are considerably higher. These small loans could be 5% higher. You will then need to add in the additional costs such as origination fees, appraisal, underwriting, title insurance, and escrow costs. While these figures may seem a little overwhelming, the news is right: this is a very good time to become a landlord and invest in real estate for rentals. Educate yourself on ownership of rental properties, do your own due diligence, and call us at Setabay for a no-obligation quote.

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

How to Secure Arizona spec home financing for Construction

Spec home financing is the term used for obtaining a construction loan on a property that does not yet have a buyer. They differ from a conventional loan in a few key metrics.

A spec loan is an industry term used for financing construction of a property, residential or commercial, that the builder has not sold yet. Spec loans are a small percentage of the total construction loans made. To secure an approval for your project you will need to do more leg work compared to a conventional lender. There are, however, lenders out there—as long as your project has good profitability. Due to the fact that Arizona spec home financing is a loan for a construction project that has no committed buyer, this type of loan is much riskier than other construction loans. If you locate land that is completely unimproved, you will improve your chances of qualifying for a loan, so you can build on the lot.

The project you choose should be able to be completed within a solid time frame. You want to look for an acquisition that can be completed quickly since construction loans are short term loans. They last only as long as the project lasts. The loan is paid out in draws with the consideration of the percentage of completion. By starting a project that can be completed quickly, you minimize the lender’s risks. Because the loan draws are based on a percentage of completion, they tend to be small in the beginning and increase as building ensues. You would be well advised to have a cash reserve before beginning your project.

The land is your equity. Using your land as collateral for Arizona spec home financing may increase your chances to secure the construction loan for your project. Some lenders may require you to put the land up for additional collateral for the construction loan. The land could even be used as your whole or partial down payment.

If You Do Not Have Experience, Bring in a Partner

To see yourself succeeding in securing the construction loan, you may want to consider bringing in an experienced partner to demonstrate to the lender your ability to complete the project and show a profit. Bringing in a partner with credit that is better than yours can also improve your chances of securing Arizona spec home financing for the project as well as demonstrating that the project is more creditworthy. If you are short on cash, bringing in a partner can also help with a down payment. They can also assist with improving the asset picture when applying for the loan, particularly if the debt to equity ratio would benefit. Lastly, know when bringing in a partner that you will be reducing your projected profit by giving a share to the partner you bring in.

Develop a business plan that is compelling.

Since you have not secured a buyer yet for your project, you will need to “sell” your lender on your project. You need to tell a story why your project will succeed as well as develop projected financials that are detailed and show how you will produce a profit. You will need to work hard to convince the lender that your project is a risk that he wants to invest in. You will need to develop where your project begins, what your view is as far as how you will develop it, and where the project will be at the end. Every lender will want to know your exit strategy—the “end of the story” that tells him how you will repay the loan. We, at Level 4 Funding, are happy to assist you in developing your strategy for a successful project. Call us for a no-obligation quote.

The Good, Bad, and the Ugly of Hard Money Loans in Arizona

For some people, Hard Money Loans in Arizona are fantastic options. This, however, is not true for everyone. Read on to know whether or not you should pursue a hard money loan.

At this point, you might be wondering what Hard Money Loans in Arizona actually are. If you are new to the real estate investing world, you may be unfamiliar with the term. In layman’s terms, they are short-term loans. The term of the loans range from one to five years. They are an alternative to conventional mortgage loans. Compared to conventional loans, Hard Money Loans in Arizona offer three main benefits to this type of funding:

1. Speed: When you apply with a conventional lender for a loan for real estate, it is a painfully slow process. As a borrower, you will need to adhere to strict requirements. Arizona Hard Money Lenders are less concerned with meticulously verifying the borrowers every detail, but more concerned with the collateral. Since the hard money lender is more concerned with the collateral, the process moves must faster, so the borrower can jump right on the property.

2. Flexibility: Compared to the conventional lenders, Arizona Hard Money Lenders do not use the same set-in-stone process. The hard money lender is more concerned in establishing and cultivating a relationship with the investor. Each project will be evaluated on the merits of the project. When seeking funding, the hard money lender you will be speaking to is an individual as compared to conventional corporate lenders.

3. Easy Approval: Most people utilize a Hard Money Loans in Arizona to fund their real estate project. The most important factor is the collateral to Arizona Hard Money Lenders. The credit score and financial history are not important factors. If you have located a property that you need to jump on immediately, your financial situation is not a deciding factor making funding that much easier.

Are Hard Money Loans in Arizona Right for Me?

If you have experience as a flipper or a first timer that has a working relationship with a contractor, and you are able to make a profit fairly quickly, then this is a perfect source of funding for you. However, for a number of people, this may not be a solution for you. Understand that the hard money lender avenue comes with higher interest rates, up to 15%, closing costs, points, (percentage of the loan amount) and organization fees.

At Setabay, we offer flexible terms and some of the lowest rates in the industry. We are able to provide these unique properties because of the hundreds of private investors that we partner with.

You have located an opportunity that needs you to move quickly before it is swept out from you. You may want to speak to an Arizona Hard Money Lender. Research lenders in the area that the property is in. If you go to a lender outside the area that the property is in, make sure that the lender offers loans in that area. Sit down with the lender and discuss the project. The lender will help you understand your options, find the right terms for your project, and will work with you to help make it happen.