Setabay Private Hard Money Lender

Wednesday, January 23, 2019

Arizona Hard Money Loans Explained

Many real estate investors turn to Arizona Hard Money Loans in order to fund their projects. It’s important to understand the difference between these types of loans and conventional mortgages before signing on the dotted line.

Traditional lenders are designed to serve companies with good credit. There is a requirement that the company has strong monthly cash flow. In addition, the lender will require the principal to sign a personal guarantee. The personal guarantee is in lieu of putting the asset up as collateral. Arizona Hard Money Lenders, on the other hand, require that the asset (target property) be used as collateral. Less emphasis is placed on the borrower’s credit and cash flow. The hard money loan loosely represents a traditional mortgage.

Arizona Hard Money Lenders are not counting on you repaying your loan back; this is why your credit is not a big consideration. The value of your collateral is the primary consideration for your loan. Arizona Hard Money Lenders are similar to other short to medium term loans with high interest rates. The terms of the loans are from less than one year to five years. The underwriting process will vary between lenders; however, you can expect interest rates to be between 9% to 21%.

The property that you are seeking to acquire will determine the amount of the loan you will qualify for. The more valuable the property, the larger the loan. This is non-negotiable. Each Hard money lender will have their niche market that they lend such as commercial or residential, so you will need to do a lot of leg work to find the right lender for your project. You will need to develop a business plan for the property showing the cash you have available and how the loan is going to be repaid. In the business plan, you will need to reference your experience in real estate. If you are new to fix and flip, you may consider taking on a partner that has experience. A drawback is that this will lower your profit, but it will be more impressive to the lender when considering the loan. Your credit will be looked at only to determine your interest rate. Here again, the right partner with good credit can lower your interest rate.

Paying Back the Loan

The loan to value (LTV) will be one consideration in the terms to repay the hard money loan, others will be the area the project is in and the terms you negotiated. Remember, the more risk the lender has to take, the high the interest rate. In addition to the interest rate, you will also need to pay closing costs, points, and origination fees, and these fees are often paid upfront for the loan.

Make sure you have reviewed all documents in their totality before signing. It’s important to fully understand just what you are getting into.

The loan operates like an installment loan. Your loan will accumulate interest and you make monthly payments (in most cases) until the loan is paid off. If you can, you may want to pay off the loan early because of the high interest level you will be paying. There is a special niche that Arizona Hard Money Loans service. It includes if you have located an acquisition and have to act quickly or if you have bad credit, you may want to consider using a hard money lender. At Level 4 Funding, we work with hundreds of private Arizona Hard Money Lenders that specialize in various segments of real estate investing. Call us to find out if we have the right lender for you.

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 Arizona Hard Money Lenders Work

If you are seeking an alternative to a conventional mortgage lender, then you may want to look at an Arizona Hard Money Lender. Loans with these lenders type of lender, for the most part, is based on the collateral.

An Arizona Hard Money Lender will be able to act fast—in as little as a few days—while conventional lenders will make you jump through hoops and drag their feet for 30 or more days. Traditional lenders are concerned with your credit score, how you are going to repay them, and your income to repay the loan. If your history is solid and you have a great credit score and your ability to repay the loan is verifiable, then you should not have a problem getting approved for a loan. The process is painfully slow. If there are any negative entries on your credit report or income that is not verifiable to the lender’s satisfaction, you will more than likely be turned down. You will be faced with a longer process at a traditional lender. The approach by an Arizona Hard Money Lender is different. The Hard Money Loans in Arizona are short term loans ranging from 1 to 5 years. The interest that these types of lenders charge is higher than traditional lenders, so you will not want to keep the loan for much longer than the 5 years.

Speed, flexibility and percentage of approvals are a few of the reasons why investors turn to private lenders.

Speed: the hard money lender is mainly focused on the property or collateral and not your financial position the Hard Money Loans in Arizona can be closed quicker than conventional loans. A private lender does not want to take possession of the property; they do not spend hours looking over a loan application, verifying your income, looking over your bank statements and so on. If this is not your first rodeo and you have a relationship with a lender, the approval process can move much faster.

Flexibility: The terms and conditions of Arizona Hard Money Lenders can be more flexible than traditional banks. Private lenders do not have a standardized underwriting process. They evaluate each deal individually. You might be able to charge the repayment terms.

Approval: The collateral is the most important factor. If the property is an investment property, then the lender may be able to lend on the full value of the property. Arizona Hard Money Lenders may not look at your credit report and if you have a foreclosure this is less important compared to a conventional lender.

Hard Money Loans in Arizona can be expensive. Depending on the lender, interest rates can be double digit and you may pay origination fees and/or several points.

Where the collateral is located is important. You will be able to locate An Arizona Hard Money Lender more easily if the property is in or near a metropolitan area. You will need to contact real estate agents and investors to find names of lenders or individuals that make Hard Money Loans in Arizona. Once you establish your relationship with an Arizona Hard Money Lender, you can build on that relationship for future projects. Call us at Setabay to see if we are the right lenders for your next project.

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

What are Arizona Hard Money Lenders?

There are many misconceptions surrounding Arizona Hard Money Lenders. Learn the truth so that you can take advantage of the many loans that they offer real estate investors.

Hard money lenders in Arizona finance projects that other types of lenders, such as conventional banks, will not. Private lenders that provide money for real estate deals are known as Arizona Hard Money Lenders. The property that the investor is trying to finance becomes the collateral for the loan. These types of lenders evaluate the return-on-investment (ROI) and potential business of the targeted investment. The loans are short term in nature, usually up to a year, and can carry higher interest rates, organization fees, and points (a percentage of the loan amount), as well as closing fees.

Since the targeted property is the collateral, private lenders are willing to finance projects that conventional lenders are not willing to. If the borrower defaults on the Hard Money Loans in Arizona, the lender simply repossess the financed property and sells it to recover the investment of the lender. Repossessing the property is a solution of last resort. A successful hard money lender stands to make thousands on each successful project from the high interest they charge, often as high as 18 percent.

Compared to conventional lenders, Arizona Hard Money Lenders have a number of distinct benefits:

· Move faster: On a conventional loan, the approval process can take months. Real estate investors need to act fast to purchase a property before a competitor underbids them. An Arizona Hard Money Lendercan approve a loan in a matter of days.

· Offer more financing: When seeking a loan from a conventional lender, they may require 30% down. An Arizona Hard Money Lender will offer a loan of as much as 80 percent of the purchase and as much as 70 percent of the rehab costs.

· More properties can be financed: The maximum that conventional lenders can finance are up to 10 properties whereas Arizona Hard Money Lenders can finance more than 10 properties and are not limited by the number of projects. Arizona Hard Money Lenders can also finance large projects.

· Requirements to meet: Private lenders are less concerned with the borrower’s credit score, financial history, employment history or other factors that a conventional lender would take into account. The hard money lender is more concerned with the value of the target property. You will need to present to them a business plan for the project identifying how you will repay the loan. The business plan will also detail how the advance or draws, also known as progress payments, will be taken on the project. The business plan will also detail how you will engage contractors to rehab or build your project.

At Setabay, we offer rates as low as 5.99 percent. We work with hundreds of private investors, many of which specialize in various types of real estate investment strategies.

Since there are many Arizona Hard Money Lenders in the country, each has their own set of criteria for approving or denying loans. Do your due diligence and research, and when you find a lender that is willing to work along with you then build a relationship with the lender for future projects. Building a relationship may result in offering you better terms and fees for your many projects that you will be adding to your portfolio.

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

Private Money Lenders in Arizona

Private Money Lenders in Arizona differ from conventional lenders in a number of ways. Understand the key differences so that you can determine which lender is right for your project.

To start, you need to understand that Private Money Lenders in Arizona differ from conventional lenders. These lenders loan to individuals and companies seeking to rehab a property. The Private Money Lenders in Arizona are also known as Arizona Hard Money Lenders. Utilizing this type of lender will allow you to compete for a property that you may have located, and a cash buyer is also competing for the same property. Additionally, private lenders will lower your costs of funds and allow you to leverage your capital so you can take your business to the next level.

Conventional lenders offer long-term loans so you can purchase a home to live in. These consumer mortgages have strict rules and requirements for underwriting. This is due in part to the financial crisis of 2008 when the government stepped in and changed the rules for securing a consumer mortgage.

Private Money Lenders in Arizona work with businesses and investors. Since they do not work with consumers for typical 30-year fixed mortgages, these types of lenders do not have to comply with consumer regulations. The loan, from private lenders, can be structured to the needs of the rehabber for flexible and fast financing. The loan will be priced to compensate the lender for the risk that they will be taking.

Short Term Loans

Conventional (consumer) mortgages will be offered in 15-year to 30-year terms. The private money loans (rehab loans) will run 6 to 18 months with most maturities within a year. Private rehab loans are not the vehicle to use if you are planning on rehabbing the investment property and keeping it. If you are seeking to purchase and rehab a dilapidated property, then this is the loan you want to utilize. This is the type of loan which is easy to purchase, rehab and sell the property. Underwriting rules are developed by the underwriter who is, in this case, a hard money lender. The lenders will evaluate each project on its own merits and determine the interest rates that will compensate the lender for the risk that they will take. The lenders have underwriting guide lines which differ from lender to lender. The hard money lender looks at such things as where the property is located and how fast it can be sold in case of a default. Most of these lenders will look at the borrower’s business plan, people involved, and the likelihood that the project can be completed profitably.

Unlike conventional lenders, borrowers often work closely with the hard money lender.

Once a conventional lender underwrites a mortgage, there is little communication with the borrower. With a Private lender (hard money lender) you will be establishing a relationship for the current project and future projects. Your success as a rehabber depends on how quickly the lender can act and get to closing, the interest rate which is charged, and working with you to get the draws as the project moves forward. At Level 4 Funding, we work with hundreds of private lenders. Call us for a no-obligation quote.

What you Need to Know About Arizona Hard Money Loans

Real estate investors turn to Arizona Hard Money Loans for a variety of projects. For your best chance of approval, understand what these types of lenders are looking for before seeking your real estate loan.

Real Estate investors are always on the hunt for the best investments in real estate. Once you have located the property, financing the property is the next challenge faced by both professional and beginners. Rarely does the buyer have the money set aside to purchase the property. To cover the costs associated with the rental property, the buyer looks at loans to cover the costs. When making the decision to use a hard money lender, due diligence and investigation into lending options would be prudent.

So, just what are hard money loans? Arizona Hard Money Loans are secured by the real estate and are short term in nature. Rather than the creditworthiness of the borrower, the loan is backed by the value of the real estate. Expect higher interest rates than conventional loans with terms that are one to five years. Private investors fund hard money loans.

Just when do real estate investors turn to hard money loans? There are a few situations that you, as an investor, will look to use these types of loans, such as a turnaround situation, short term financing, and if you have poor credit and, at the same time, enough equity in your property that will make up for your credit challenges.

Arizona Hard Money Lenders

Arizona Hard Money Lenders differ from each other in several aspects. For instance, there are specific concepts as well as real estate segments that they focus on. First, the borrower is looked at in such areas as the underlying asset and risk of loss, the strength of the borrower, the business plan the borrower presents, and repayment of the loan by the borrower. The lenders will examine the property, looking at aspects such as the current value of the property, does the property need to be improved, and the value of the property after the improvement occurs. In case the borrower defaults, just how easy will foreclosing on the property be? This includes the liquidity of the market that the property is located in as well as the demographics and potential growth opportunities.

Arizona Hard Money Lenders turn you down for a variety of reasons. It’s good to stack the cards in your favor by understanding just what your particular lender specializes in and what they consider a good investment.

Going to a hard money lender is not a guarantee of approval. Some of the reasons a hard money lender would not be interested in the loan include the property falling outside of the lender’s parameters, the borrower falling outside the qualifications for the loan, or a lender that does not have sufficient capital to meet the loan amount the borrower needs. Tenaciousness is what is needed when searching for the financing for an investment property. If you get turned down, pick yourself up and keep searching. Real Estate investing is considered a tough game. If you choose the hard money loan avenue, they are considered riskier than conventional loans. You will need to a risk taker; if you are not a risk taker, then you may want to consider another investment avenue. You also will need to consider different ways to finance a rental property.

Five Types of Arizona Fix and Flip Loans

There are several different types of Arizona Fix and Flip Loans that you can obtain when looking to get into this lucrative real estate investment. Know the pros and cons before deciding which is best suited for your particular situation.

If you’re wondering on how to finance a house flip, you’re not alone. The endeavor of buying a home and then renovating it can be highly lucrative, and the first step is financing your flip. Getting Hard Money Loans in Arizona is unlike getting a mortgage for the house you plan on living in. There are various Arizona Fix and Flip Loans that buyers can utilize to buy distressed properties and then sell them. The qualification process has its pros and cons.

Hard Money Loans in Arizona are short-term loans. These loans are intended for real estate. The issuer is often a private lender and can be an individual, group of investors, or a licensed mortgage broker. The terms of these loans are much shorter than conventional loans. Most are six months to one year, though some can go up to five years. Interest rates can be considerably higher at 12% to 21% with 3 to 6 points upfront. These loans fund 60% to 70% of the value of the property. There is much less paperwork than conventional lenders, and the lenders will accommodate people with lower credit scores, as low as 550.

Cash out refinance: If your property has increased in value, then you have an option to refinance and get a new mortgage for more than you owe. This gives you cash in your pocket for new ventures. Closing costs in the range of 3% to 6% of the total loan will need to be paid.

Home equity loan or line of credit: If you’ve been able to build equity up in your primary residence, then you could apply for a home equity loan or line of credit and use your home as collateral. With a home equity loan, you have the full amount of the loan up front. With the line of credit, you draw on the line as you need it. You may be able to borrow up to 80% of your home’s equity.

Investment line of credit

This line is used for buying investment properties. This is drawn upon as needed. This type of Arizona Fix and Flip Loan lasts anywhere from 18 to 24 months. If you have a track record of flipping houses, this type of Arizona Fix and Flip Loan is best suited for that. The time frame for establishing this type of loan is usually about three weeks. The loan amounts range from $1 million to $50 million. The interest rates generally run 5% to 8%.

There is also peer to peer lending which is also known as crowd funding. This brings together a large amount of people who contribute funds to the project. This is usually raised through the internet.

High net individuals invest in these projects with a minimum of $5,000. There is not a lot of data about crowd funding for real estate projects. One firm funds up to 70% of the properties after repaired value. This type of funding can fund in as little as 10 days and the interest rates run 8% to 11% with the average loan term being 12 months. There is also an option for investors to take partnership interest in the property which allows the investor to benefit from interest and upside potential of the project.

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

Setabay Private Hard Money Lender

Wednesday, January 23, 2019

Arizona Hard Money Loans Explained

Many real estate investors turn to Arizona Hard Money Loans in order to fund their projects. It’s important to understand the difference between these types of loans and conventional mortgages before signing on the dotted line.

Paying Back the Loan

Make sure you have reviewed all documents in their totality before signing. It’s important to fully understand just what you are getting into.

How Arizona Hard Money Lenders Work

What are Arizona Hard Money Lenders?

Private Money Lenders in Arizona

Private Money Lenders in Arizona differ from conventional lenders in a number of ways. Understand the key differences so that you can determine which lender is right for your project.

Short Term Loans

Unlike conventional lenders, borrowers often work closely with the hard money lender.

What you Need to Know About Arizona Hard Money Loans

Real estate investors turn to Arizona Hard Money Loans for a variety of projects. For your best chance of approval, understand what these types of lenders are looking for before seeking your real estate loan.

Arizona Hard Money Lenders

Five Types of Arizona Fix and Flip Loans

Investment line of credit

About Me

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