Setabay Private Hard Money Lender

Monday, February 4, 2019

Why Fix and Flip Loans in Arizona are Awesome for REOs

REO properties make great investments, but financing the purchase can be a challenge. Fix and Flip Loans in Arizona work especially well for REO purchases because they eliminate barriers.

As you search through property listings, chances are you’ll see the term “REO” quite a bit. It appears on listings for both investment properties and consumer properties, and references that the home is “real estate owned.” In short, the bank owns it, not a person.

Properties become known as REOs when the homeowner defaults on the mortgage and a foreclosure occurs. People wind up in foreclosure for many reasons, and the banks don’t like to take homes away from people, so the homeowner gets a chance to make things right during a pre-foreclosure process. During this phase, the homeowner can either get his mortgage caught back up or sell the property. Banks will even sometimes allow the homeowner to sell the property for less than they owe on their mortgage just to be done with the whole thing. If the homeowner does nothing, then the property will go to auction. Many investors use Fix and Flip Loans in Arizona at auctions as well, purely because they’re usually cash-only, meaning the buyer can’t try to apply for a mortgage after. He has to be able to pay for the purchase right away. If a property doesn’t sell at auction, then the bank takes ownership of it and it becomes known as a REO.

Naturally, banks aren’t in the home-selling business, so it’s their goal to unload the property as quickly as possible. Additionally, REO properties tend to be in disrepair, simply because the initial mortgage-holder is often unable to handle maintenance on the property for some time prior to defaulting on the mortgage. The foreclosure process takes months to complete too, increasing the timeline proper care hasn’t been given to the home. Because of these things, REOs can often be purchased fairly inexpensively.

One of the Pitfalls of REO Properties is that Banks Financing May Be Out

Regardless of whether you’re an investor or an average person looking for a new home, the banks may turn up their noses at your REO property. This usually happens when it’s in ill repair, but things like your credit and whether or not you plan to live in the home matter too. That doesn’t mean you can’t or shouldn’t purchase the REO, particularly if you’re getting a screaming deal on it, only that Fix and Flip Loans in Arizona may be better-suited to the job than a conventional mortgage.

Hard money can get you into a REO when the banks won’t.

Hard money Fix and Flip Loans in Arizona work differently than mortgages. You’ll typically take the money out for a short period of time; such as a few months or a couple of years. During that time, you’ll make interest-only payments and then pay off the balance at the end of your term. Things like the condition of the property and your credit are less of a concern, but you’ll need to have detailed plans for how you’ll repair the REO and know when/ how you’ll pay off the balance. If you plan to live in the home and the initial condition of it prevented you from getting a traditional mortgage, you should be able to qualify once the repairs are complete. If you’re a rehabber who likes to repair and sell, you’d pay off the balance as soon as the property is sold. In other words, don’t let the term “REO” scare you away from a property. Instead, research it well and explore alternative lending with a broker. You just might find you’re getting the deal of your dreams.

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

HOW TO DETERMINE IF HARD MONEY WILL WORK FOR YOU

Hard money loans are typically used by investors who need funding for an investment property quickly without the strict requirements of traditional mortgage lender financing. However, Hard Money Loans in Arizona can be used efficiently in other scenarios.

Essentially, hard money loans are short-term loans that provide financing to a borrower—these loans are secured by the borrower’s property. Texas Hard Money Lenders are private lenders. Because of this the hard money lender can be more flexible with their terms. Usually, these loans are right around a 12 month loan term. Typically, borrowers pursue Hard Money Loans in Arizona to finance their deal quickly or they want approval for a loan that wouldn’t be approved by a traditional lending institution.

Investors regularly use Hard Money Loans in Arizona for fix and flips. Banks will not approve fix and flip investments due to the risk they pose for repayment. A hard money lender will use the property as collateral and, in the case of default, they will repossess the property and sell it. A hard money loan can include not only the financing for the property, but can include the materials that will be required to refurbish the property. These loans are interest only loans throughout the life of the loan—the last payment is a balloon payment. Usually, within the 12 month period the borrower has renovated and sold the property—this allows the repayment of the loan and a profit for themselves. Texas Hard Money Lenders will work with a borrower when it comes to the term of the loan. A borrower may need more than 12 months— these loans are known to be extended out to three years and occasionally five years.

PROS AND CONS OF HARD MONEY LOANS

With a hard money loan the interest rate will be higher than a traditional mortgage. Many borrowers, when weighing the pros and cons of Hard Money Loans in Arizona, agree that the high interest rate is worth all the pros these loans give. Borrowers can be approved and receive funding in as little as a week to 10 days. This lightening fast process can secure property for investors that may easily lose properties due to the incredibly slow approval process of traditional banks. Texas Hard Money Lenders will also approve loans that traditional lending institutions will not. An example of this is a cannabis marijuana dispensary loan.

Many borrowers are not approved because of poor credit. Lenders want to know they will be paid back. Banks use a borrower’s credit score and income to asses risk of default. If a borrower has a clean credit report and makes enough income to meet the debt-to-income ratio they have a better chance of approval. However, Texas Hard Money Lenders look at assets— they base their decision on the value of the property. Usually, a borrower can receive a loan for 70% of the purchase price—however, many times 90%-100% of the purchase price can be financed.

Hard Money Loans in Arizona are often referred to as bridge loans. These loans bridge the borrower from an unconventional loan to a conventional loan. These loans can give the borrower time to clean up their credit, time to sell their property, time to handle whatever they need to handle in order to have convert to a traditional mortgage.

Yes, Hard Money Loans in Arizona have higher interest rates than conventional loans. Researching this subject thoroughly has shown that the high interest rate is truly the only negative that can be found.

And the truth of the matter is—a hard money lender is taking a large risk with these types of investments. Whether it is a single home property being fix and flipped or a construction loan being taken out for a house that hasn’t even been built yet. A hard money lender believes risk pays off. They believe and are involved in the investments they approve.

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.

Why Banks Don't Like to Give Loans to Flip Houses in Arizona (And What You Can Do About It)

Going to banks for Loans to Flip Houses in Arizona usually results in a big fat “DENIED” letter. The good news is, there are other ways to increase your eligibility for funding.

Working on fix-and-flips can increase your wealth dramatically, especially if you’re already handy or have some experience in real estate or finance. However, getting your hands on financing, particularly for your first few properties, is a real challenge because traditional financing doesn’t work. Banks will typically tell you “no” for one of three reasons;

1. You’re not living in the home. Banks like owner-occupied homes because the person making the payments obviously needs a place to live. In other words, you’d move mountains to keep your home, no matter what else happens in your life. If you’re not living there, the bank will likely consider offering any kind of cash too risky.

2. The property is not in good repair. Some of the best fix-and-flip deals have serious issues, like roof or structural damage. They can’t be lived in because of this. If the bank were to give you Loans to Flip Houses in Arizona and you didn’t make good on payments or fix it, they’d be stuck with an unlivable house that they’d have to fix before unloading. It’s an expensive and undesirable situation for them.

3. Your credit isn’t spectacular and you don’t have business credit yet. It takes small businesses quite some time to establish credit, especially if you’re asking for tens of thousands or hundreds of thousands of dollars. In most industries, the business owner uses his or her personal credit until the business is established, but most people don’t have strong enough credit to cover the large amounts of cash needed for purchasing a property. If you already have a mortgage for your own home, that’s a double ding. They’ll be looking at it from the standpoint of making two mortgage payments; something most people cannot do.

Increase Your Eligibility by Choosing Alternative Funding

Banks aren’t the only ones you can go to when you need Loans to Flip Houses in Arizona. Oftentimes, people in the industry go with hard money instead. This refers to financing based on the value of an asset, rather than the criteria banks usually use. It’s easier to get and it doesn’t matter if the house is a wreck or if your credit is rotten. You’ll also hear it referred to as private money, simply because the people financing your project are regular people versus institutions or banks.

A seasoned broker can help make your dreams come true.

It probably goes without saying, but private individuals with cash to invest don’t hang around street corners asking people if they need cash. To get Loans to Flip Houses in Arizona with great terms, you’ll need to work with a broker who is familiar with multiple investors and can match you with someone who’s a good fit for your project. A seasoned broker will also help you shore up your plan if need be, so the deal looks good to investors and you have more success with your rehab projects. Whether you’re just looking for info or already have a property picked out, speak with a broker who works with hard money and you’ll increase your chances of getting approved dramatically.

HELPING UNDERSTAND COMMERCIAL REAL ESATE LOANS

Commercial real estate loans are typically used to purchase or renovate an owner-occupied commercial property.

Income-producing property is called commercial real estate and is used for business versus residential. Malls, retail shops, hotels and office buildings are some examples of commercial real estate. The commercial real estate loan includes the financing of not only the property, but the development and construction of said property.

Commercial real estate loans can be financed through banks and private lending institutions. There are no FHA or VA programs when it comes to commercial lending—and there is also no private mortgage insurance. What this means to lenders is they have no insurance to cover default of the borrower.

Interest rates on Commercial Real Estate Loans in Arizona are higher than residential loans. And there are fees involved, such as loan origination, loan application and appraisal fees. Depending on the lender there can also be other fees involved—such as prepayment penalties and exit fees.

HARD MONEY COMMERCIAL REAL ESATE LOANS

A hard money loan is a non-traditional bank loan. Texas Hard Money Lenders are private investors that do not have to follow the strict requirements of conventional mortgages. A hard money loan is an asset-based loan and is secured completely by the property’s equity.

Waiting on approval from a bank can be painful and time consuming—and much of the time can take months to receive funding. Here steps in the hard money lender. A borrower can be approved and funded in less than 10 days on a hard money commercial real estate loan. These are short-term loans and are usually only set up to last between 6 months and one year. However, because of the flexibility of Hard Money Loans in Arizona, they can be extended up to five years.

A borrower’s credit is of great importance to a traditional lender. But, because hard money loans are based on the equity of your property they can look past dents in your credit. While closing time is insanely long with a traditional lender—due to documentation, inspections and waiting on the loan committee, a hard money loan can close quickly because typically there are only a few individuals involved in the loan terms and it is their money they are lending.

The bottom line is that hard money loans are set up to be bridge loans. Bridge loans are “bridging” you from a temporary situation into a permanent situation.

These loans are interest only loans until the end of the loan term, in which the balance is repaid. The goal is to give the borrower time to get their ducks in a row and bridge themselves into a conventional mortgage. Texas Hard Money Lenders are there when the bank says, “no.” They are there when you need money quick. They are there when your credit has some issues. Texas Hard Money Lenders are there when you need them.

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.

Sunday, February 3, 2019

Why Few 100 LTV Arizona Hard Money Lenders Exist (And What You Can Do About It)

If you’re looking for 100 LTV hard money lenders, you’re likely to find few, if any, options. The good news is, there are still ways to fully-fund your real estate investments if you’re savvy.

Before the big market crash, people could find 100 LTV Arizona Hard Money Lenders with relative ease. Obviously, not everyone offered loans worth the full value of a property, but home values were increasing at such rapid paces in most markets that a successfully-funded deal, even at 100% of what it was worth at the time of closing, could climb 5-10% or more in value before the project was even finished. That was one of the big draws to getting into the fix-and-flip market. It was incredibly difficult to lose money doing it.

That being said, the market crash changed a lot. Nowadays, fix-and-flips are still a lucrative field to get into, but you have to be smarter with your numbers because you can’t count on increasing market values to bring you profit; you’ve got to buy low, repair fast, and sell high. Moreover, getting 100% of the value at the time of the sale is unlikely, purely because the market isn’t climbing as fast. Most areas are still climbing, but at nowhere near the rates that they once were. Because of this, it’s more likely that you’ll get a deal funded at 60% of the value, with a few outliers climbing as high as 90%.

If that 90% isn’t going to get you where you need to go, you still have options. First, going with alternative lending means you can make an offer with cash-in-hand. Motivated sellers like that because it means they’re free of their problematic or junk house fast. They don’t have to worry about their buyer qualifying for, and possibly being denied, a traditional mortgage. That means you can often negotiate a better deal for the property, meaning your cost to purchase it would be lower and you’ll have more wiggle room for financing. As a second option, you can also consider cross-collateralization. Instead of relying solely on the value of the property you’re repairing, you could use another investment property or even your own home as collateral too.

An Experienced Broker Can Lend a Helping Hand

If you can’t find 100 LTV Arizona Hard Money Lenders and you’re still struggling for ways to fund your project, an experienced broker can help. Regardless of who funds your deal, they want you to be successful, and so if you’ve got a great property and have the knowhow, a broker can help locate a lender who understands your position or identify other ways to make sure that your deal goes through.

A successful project is a win-win for everyone.

Ultimately, you may not be able to find 100 LTV Arizona Hard Money Lenders or someone to fund a project, but that’s a lesson in and of itself. Savvy investors know when a project isn’t going to be a win, and they’re able to move away from it without emotion and onto something that is going to generate real returns. Find a good project, work with a seasoned broker who can find you the best terms possible, and build up from there.

ALL ABOUT TEXAS HARD MONEY LENDERS

You have probably heard about Texas Hard Money Lenders—but what exactly is hard money lending all about?

Texas Hard Money Lenders are private lenders who lend money using assets to back the loan. When a borrower needs funding quickly or when traditional lenders won’t approve a loan, a hard money loan is typically the best alternative.

When you apply for a loan, lenders require proof that you can repay them. Traditional lending institutions, such as credit unions and banks, are interested in your income and your credit score— this shows the capability to repay the loan and a solid history of responsibility. Banks use a debt-to-income ratio to be confident in a borrower’s chances of repayment. However, the approval time with a bank is typically a painfully slow process that can take months to complete—even with a fantastic FICO score and a great income. So, when you add poor credit to the mix the process becomes even longer and more agonizing—usually resulting in denial of the loan.

Texas Hard Money Lenders approach is quite different. They determine the loan approval by basing the borrower’s collateral to secure the loan. The borrower’s collateral puts the lender’s mind at ease because in the case of loan default, the lender can get their money returned by repossessing the collateral and selling it. To Texas Hard Money Lenders the value of the borrower’s assets are more important than their financial situation. Therefore, borrower’s with poor credit can still receive a loan.

ARE ALL TEXAS HARD MONEY LENDERS THE SAME?

Nope. Texas Hard Money Lenders differ just as widely as borrowers differ. Some lenders work nationwide—others stick with one geographic area. There are lenders that strictly lend to borrowers looking for a commercial loan and others that only work with residential properties—and there are some lenders that work with both.

Texas Hard Money Lenders also vary when it comes to their interest rates and fees. Certain lenders charge for preparing documents, while others include that in their services. Lenders work on a loan-to-value ratio, as traditional banks work on a debt-to-income-ratio. Lenders vary on the loan-to-ratio—some work with higher value numbers and others work with lower value numbers.

Along with those differences come even more. Some lenders charge prepayment penalties. That means if the borrower repays early, they will receive a penalty and will be assessed a fee. There is such a wide spectrum of differences when it comes to Texas Hard Money Lenders.

Because of the differences in lenders, it is critical that a borrower finds a lender that works for their unique situation.

Not only can geographic areas, fees, interest rates and penalties vary between lenders—so can the life of the loan. These are short-term loans and are usually between 6 months and one year. However, there are lenders that will authorize up to five-year loan terms. If you are looking for a hard money lender, please contact us at level4funding.com.

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.