Setabay Private Hard Money Lender

Thursday, January 24, 2019

How Hard is it to Qualify for a Hard Money Loan in Arizona?

It's a question we get all the time — how hard is it to get approved for a Hard Money Loan in Arizona? Let's answer that right here and right now.

There's a lot of mystery surrounding Hard Money Loans in Arizona, and for good reason — they admittedly have a spotty history after some unscrupulous lenders took advantage of borrowers in the past. Add to that the housing loan debacle and the passing of the Dodd-Frank Act, and you've got a lending industry that's harder to figure out than ever before.

Before we delve into getting approved for a Hard Money Loan in Arizona, let's look at the approval process for a typical bank loan.

● Banks will dive deep into your financial history. Any issues — like a foreclosure, short sale, or bankruptcy — will most likely be a deal breaker.

● Banks require a good credit score. Most big banks want you to have a credit score of 740 and some will go down to 700, but the interest rate will increase the closer you get to that minimum number.

● Banks want a sizeable down payment. If you want to get approved for a bank loan, you'll be asked to have at least 20% of the value of the property on hand to use as a down payment.

Getting Approved for a Hard Money Loan in Arizona

The application and approval process for a Hard Money Loan in Arizona is completely different. First of all, there's no complicated underwriting process. This means the entire thing can be completed in as little as a week or two. Secondly, and most importantly, this type of loan is secured by collateral. So, instead of condemning you for blemishes in your past or looking at arbitrary numbers, a Hard Money Lender will listen to your plans and check out the collateral you have. Finally, lenders in this field get money from private sources, so it makes it a quite simple equation — if your investment is sound and your collateral works, you can get approved.

Find a Reliable Hard Money Lender in Arizona

If your real estate investment is in Arizona and you don't qualify for a bank loan, here's the good news: you're already in the right place. Level4Funding offers hard money to real estate investors, and we've been doing it successfully for decades. Give us a call today to see how we can help get you financing.

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.

Risks of Arizona Hard Money Lenders

Private Lending companies and investors seem like great options when your credit history won’t allow you to receive an unconventional loan. However, there are a few caveats you should be aware of so you know if you are making the choice that’s best for you.

Arizona Hard Money Lenders are untraditional financing options. Usually people are referred to these types of investors after a rejection from the bank. They can usually offer these three things: a flexible relationship, proposal acceptance, and speed.

A flexible relationship and proposal is almost guaranteed. Because they can accept people based on value of the property, they are less concerned with your personal financial history. Banks typically have high standards regarding credit score and income, and they like someone experienced with a strong portfolio if they money is for something like a fixer upper. If you can’t get approved for a loan by the bank, you will likely be approved by an alternative lender. In addition to flexibility, alternative lenders can also provide transparency within the relationship.

Speed is something else Arizona Hard Money Lenders can offer that banks do not. While banks may take as long as a month or more to begin the process, private investors can usually begin the process within the week—if not the same day. This is an attractive advantage for people who are competing for property or need to prevent a foreclosure fast. Sometimes, the difference between success can boil down to the timeline.

Things to Consider about Arizona Hard Money Loans

Arizona Hard Money Loans are unlike other loans because of their high interest rates and quick repayment period. These types of loans usually do not work well for somebody who will need more time to repay the loan. Fixer uppers typically find Arizona Hard Money Loans affordable, and are able to utilize the money from the sale to repay the loan fast. If you need the loan for a long-term rental property, Arizona Hard Money Loans are probably not ideal for you. The short repayment period owed to the lender is immediately contrasted with the money you would be collecting from rent, long-term. Considering where you are relying on the money for repayment is really important, especially if there’s a process involved with the purchase of your land—something as small as even finding a renter can factor into this decision.

Evaluating Personal Circumstances

On first glance, Arizona Hard Money Lenders seem like great options. With individualization and flexibility, they offer what a lot of banks can’t and more. However, when pursuing a hard money loan, it is important to put in the research. What kind of plans are you making and how does repayment fit into it? What are your goals for the property and what kind of timeframe does it operate on? With Arizona Hard Money Loans, it’s also important to consider the legitimacy of the source—are they reputable? What kind of terms and fees are within their list of agreements? If you need help analyzing your personal financial situation, real estate attorneys can provide a helping hand to determine if this is the right choice 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

How to Secure Spec Home Financing

Are you considering building your first spec home? Securing spec home financing may be easier than you assumed.

Are you considering venturing into speculative building, also known in the industry as a “spec home?” This is a home that you build before the home is sold. What makes this speculative is the fact that the home is not sold before construction, making the loan speculative. Spec loans are only a small portion of the loans in the Arizona construction loan industry. If your project has clear potential and you are willing to do more work than a conventional loan, your chances of approval stand an excellent chance.

1. Find a lot that you can improve on: A spec loan is much more speculative and risky than other Arizona construction loans because you have no committed buyer. Your chances of getting approved increase if you locate land that needs to be improved. Raw land which does not have roads, curbs, sewer lines or water (known as infrastructure) is not as valuable as improved land and more likely be far away from urban centers and you will be less likely to find a buyer.

2. Be able to complete your project quickly: Spec home financing is short term in nature. The loan will last only as long as the construction takes. The loan is paid out in stages of completion, also known as draws. To minimize the lenders risk, and if you are new to spec building, pick projects that can be completed quickly. The interest charged is based on the amount of money that has been disbursed. At the end of the project, the borrower ether gets another loan or pays off the balance.

3. Equity is in the land: Giving a lender equity in the land will maximize your chances of getting a loan. Some lenders will require you to do this. This also could be used as the down payment or a portion or combination of the two. The loan is considered secured and the lender’s position is secured in case of default and the lender will be able to recover the monies. A lender will most likely only credit 80% of the value of your land for the down payment on your loan.

Partners in the Deal

To improve your chances of getting approved for spec home financing, you can bring partners into the deal. A partner with better credit will improve your chances of getting approved. The partner could also help with the down payment. A partner can also improve the assets when applying for the loan. You’ll also

Tell a compelling story. The spec loan is a loan on a dream since there is no buyer lined up. The lender is buying into your dream.

The spec loan is highly risky. You will need to sell the idea to the loan officer or the lender. The project location is very vital in securing the loan. “Sell” your idea to the lender, explain the infrastructure, why you chose the location, and the development patterns. If there is a strong presence of rental units in the area, this is a good selling point. At Setabay, we work with hundreds of private Arizona Hard Money Lenders. Call us to see if we are the brokers that can fulfill your dream and find the right investor for your spec home financing.

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 Find a Reputable Hard Money Lender

Considering using hard money to finance your real estate investment? The process is much different than going through the bank, so we're here to help you get approved for one.

Hard Money Loans in Arizona are loans that are backed by collateral. That is, they aren't based primarily on credit scores and down payments like a traditional bank or credit union loan. Often, they're used as a bridge between a construction loan and long-term financing, or as a way to finish a fix and flip to turn a profit quickly. Hard Money Lenders in Arizona aren't regulated by the Office of Thrift Supervision or the Federal Reserve, so finding a reputable one can be a challenge.

Here are some questions to ask yourself when looking for a trustworthy lender:

What projects has the lender financed previously? If you're looking for a Hard Money Loan in Arizona for a fix and flip, look for a lender who has completed financing for fix and flip properties. If it's for spec construction, do your research and find one who has experience in that niche field.
How does the website look? Some lenders are fly-by-night; others just collect your information and pass it on to third parties. A legitimate Hard Money Lender in Arizona will have a professional website with a wealth of relevant information about what they do.
Are they easy to get ahold of? Their website should have a phone number, an email address, or a live chat where you can speak with a contact one-on-one. A reputable lender will want to talk with a potential borrower to hear about their project personally.

Make Sure to Do Your Research

Unfortunately, it's true — some lenders in the hard money game are essentially loan sharks looking to take advantage of people who've been turned down by the banks. Thankfully, there are many lenders out there who are genuinely interested in your real estate dreams and want to help them come true. By using our questions above and speaking with a lender, you'll typically be able to weed out the fakes from the real deals.

Hard Money Lenders in Arizona

Finding a reputable Hard Money Lender in Arizona is actually quite easy. Level4Funding has decades of experience with fix and flip, rentals, buy holds, and real estate sales in Arizona. We're a phone call, email, or live chat away — if you've been told "no" by the banks and credit unions, contact us to see how we can help fund your real estate goals today!

Arizona fix and flip loans offer a short-term vehicle for real estate investors to purchase properties, renovate, and sell the house for a profit, otherwise known as the fix and flip model. Arizona Hard Money Loans offer financing for investors to purchase houses and quick closing on properties in any condition.

Hard money Arizona fix and flip loans are for experienced flippers as well as novices. This loan can be closed in as little as 15 days and is perfect for experienced flippers that have at least three rehabs completed. Inexperienced investors can use a licensed contractor to help them through their first fix and flip model. It’s important to remember that this type of loan allows investors to compete with cash buyers. Terms for hard money Arizona fix and flip loans range from 1 to 3 years with funding is as little at 7 days. Rates range from 7% to 12%, lending fees 1.5% to 12%, and closing costs are 2% to 5%.

Fix and flip cash out refinancing is another option. If you have an existing property, you can refinance to purchase a new investment property by getting the equity out of your existing investment property. This type of financing is best for the following investor: rehabbers with existing owner-occupied primary residence, rehabber with non-owner-occupied investment property, and rehabbers with 30% to 40% equity in an existing property. Cash out qualifications are: 640+ credit score, debt to income 45% or less, cash reserve 0-6 months, debt service 1.25, and personal tax return 2 years.

Home equity line of credit for rehabbers works more like a credit card than a conventional loan. You draw on this line as you need it and is paid back on a monthly basis. This is best for rehabbers with owner-occupied primary residence, rehabbers with more than 15 percent home equity, and rehabbers with a targeted project in mind. Rates and terms of home equity line: term is 20 to 30 years, approval time is 45 days, rates 4% to 5.5%, loan origination fee 2% with interest only payments for 5 to 10 years and principle 15 to 20 years.

Investment Property Line of Credit

This is a line of credit (LOC) on investment properties. It works like a credit card, you make withdrawals as you need them. Investment line of credit is right for: 30% to 40% equity on non-owner-occupied existing property, and a rehabber who has a portfolio of investment properties who wants to purchase a new property. The terms of the investment property Arizona fix and flip loan: 18 -24 months, approval up to 30 days, rates 5.2% - 8%, Fees 1% - 2%, and closing costs 1% - 5%.

Bridge loans for rehabbers are short term loans that provide funds for the gap between real estate projects. Loan qualifications include proving the ability to pay two mortgages, 20% equity in existing property, and an exit strategy.

Online mortgage & permanent bank loans offer the following rates and terms: term 15 - 30 years, funding 30 - 45 days, rates 4.5% - 6.6%, fees 0% - 1%, closing costs 2% - 5% and a monthly repayment schedule. These are used by owner-occupied and non-owner-occupied primary residences and investment properties. Qualifications include a credit score of 640+ and debt to income at 45% or less. At Level 4 Funding, we have provided hundreds of fix and flip investors the capital they need at the best rates possible. Call us for a no-obligation quote.

Wednesday, January 23, 2019

What you Need to Know About Arizona Airbnb Loans

Airbnb has become very popular for both travelers and Airbnb hosts. Find out how to obtain your first Arizona Airbnb Loan so that you can get into this growing segment of real estate investing.

Airbnb has become very popular. Since 2017, all leisure travelers have booked 25% of their stays at an Airbnb rental property. There are over 4 million listings in more than 191 countries. These numerous travelers who are eager to stay at an Airbnb represent a good opportunity for people to generate extra income by renting out a house, condo or other space. On average, hosts make $924 a month. Some hosts have made enough to even quit their jobs. You need to remember that there are costs associated with Airbnb such as increased insurance, paying commission to Airbnb, cleaning costs and restocking costs associated to get the property ready for the next guest.

If you desire to become an Airbnb host, you will need an Arizona Airbnb Loan. One of the obvious costs required when becoming an Airbnb host is the property itself. A decision you will have to make is whether you will buy or rent a property to list on Airbnb. You will need to talk with your CPA to review your tax situation. If you are renting out your personal home, after 14 days you will need to report this income. If the property is not your primary residence, then you will need to report this as rental income.

Commission charged by Airbnb to process payments is an additional cost. This reduces your profit margin. Lastly the supplies, cleaning, and insurance of the rental property before the next guests arrive are additional costs that will lower your profit margin.

Financing Challenges for Airbnb

All these costs add up quickly and will require that you shell out thousands of dollars before the first guest is booked. Financing for people operating an Airbnb is difficult. One reason is that banks are reviewing the financing of Airbnb properties and not sure how to classify them if they are to be used as a rental property. Mortgages for rental properties have been viewed by banks as a highly risky loan. As far as a home equity line of credit, banks will not lend on a property that is used for Airbnb.

Local laws and ordinances also can be challenging. Some cities outlaw the use of homes as an Airbnb rental, so banks will not lend on them.

While Arizona Airbnb Loans through conventional lenders may be difficult, there still are possible financing options. In recent years, companies offering small business loans have popped up. An example of one is Payfully. While they do not finance property purchases, they do purchase Airbnb reservation receivables. Payfully will deduct a fee for this service and this will need to be calculated in you forecasted profit. This is an expensive additional expense. Airbnb also offers an early payout with a one percent fee. There are also companies that will advance on credit card payments which is, again, a very expensive option. If you are seeking to get your foot in the door as an Airbnb host, obtaining an Airbnb loan may be challenging, but there are options to assist you. At Level 4 Funding, we have provided capital to an extensive list of Airbnb hosts. Call us for a no-obligation quote.