Setabay Private Hard Money Lender

Thursday, February 21, 2019

Arizona Hard Money Loans: A Win-Win for Your Cannabis Business?

Arizona cannabis business loans are hard to come by. So what if you run into a crippling business expense? The bank isn't an option, equity is expensive, and crowdfunding offers no guarantees. So how do you find the help that's right for you?

A hypothetical grower already has a dispensary lined up to buy his first crop, but then, the utility company raises his electricity bill, doubling his cost of electricity per kilowatt hour. Since it's his first crop, he's strapped for cash.

It is a catch 22; until his first crop comes in he won't be able to pay his electricity bill, but if he doesn't have electricity, he can't grow his first crop. He’s stuck between a rock and a hard place. He needs a quick injection of cash, a small loan which he can pay off in 70 days after his plants mature.

Let's assume he only needs $50,000 to cover the cost of electricity. Given his excellent credit score, he considers getting a personal loan from a bank first. All is well, but he hears a vague alert chime on the loan officer’s computer.

Without any explanation security officers escort him out of the building.

What are some other sources of Arizona cannabis business loans

Our poor grower isn't interested in selling ownership to an equity partner. Selling 10 percent of his business just to pay his electricity bill is not a reasonable proposition for him.

So, he eagerly makes his plea on Kickstarter. It's crickets from the peanut gallery, as his loan sits unfunded on the site. He can't wait much longer as his little seedlings will wither and die if he doesn't get money fast.

He hears from a friend about another type of alternative financing, one that might solve all his troubles.

Arizona hard money loans can help fuel short-term costs in your cannabis business.

He approaches a hard money provider. They offer him a loan on the condition that he pays it back in 120 days. He will also have to pledge his grow facility as collateral. The loan is a little expensive for his taste, but its either hard money or bust, so he goes ahead and closes the deal. The funding comes through in short order, and within 70 days his crop is in full bloom ready to be harvested and sold to a nearby dispensary.

With these funds, he's able to pay back his loan quickly, and he earns enough money to cover his utility costs until his next harvest.

Because he already had a buyer lined up and he knew exactly when his crop would come in, he didn't put much at risk by pledging his grow house as collateral. Hard money got him the funds he needed without having to sell ownership in his business or wait on the much over-hyped kick starter. If you are looking to "grow your business," and run into an unexpected expense, hard money can help.

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.

Arizona Hard Money Loans: Tactics to Pay Less

Arizona Hard money lenders invest in risky deals that banks won't touch, like house flips. In browsing the terms offered by various hard money providers, the double-digit interest rates might shock you. Take a deep breath, as there are some tactics you can use to lower the cost of your loan.

You ask why the cost of hard money is so high.

• It is short-term: No wants to pay 14% interest on a $250,000 loan for five years. This high rate incentivizes you to pay your loan back as quickly as possible. But why do these lenders want their money back so quickly?

• High risk: Because of the risk involved with flips, there's no guarantee for you or your lender that you are going to make money. The high rate ensures the lender their going to make some return on their investment.

Because of the risk involved, hard money is expensive, but what if you could avoid paying such a high rate in the first place?

Tactics to pay lower interest when it comes to Arizona hard money loans

You can employ the following tactics to help you negotiate a lower interest rate.

• Find a lucrative, low-risk deal: The rule here is to find a house which you can secure at a low price and then assure your lender about its potential using comparable sales. For example, say you found a foreclosed house which you can get at a steep discount. The house might be selling for $150,000 while similar homes in the area are going for $300,000. A quick walkthrough reveals that it doesn't need much work. You estimate the cost of repairs will be about $15,000. The house needs a few repairs, and its resale value is backed up by hard data. These are some talking points you can use to negotiate a lower interest rate with your lender.

• If you have experience, talk about it: Given all the risk that comes with flips, lenders prefer those who have a proven track record of successful projects. Talking up your expertise or even offering your lender business in the future might help you get a lower initial rate.

But even if your hard money provider doesn't offer you a lower rate, here is a little rhyme that can help you

• Pay it back ASAP: Finish work in a few months and you can minimize the cost of your loan. Remember, you pay interest on a monthly basis, so if you finish work in a couple of months you reduce the cost of your loan, regardless of how high the initial rate is.

Don't let the high interest charged on Arizona hard money loans scare you out of the flipping business.

Hard money is really your only option if you want to flip houses. Almost every flip is funded by hard money, and on average every flip earns a tidy $30K in profits, even though these lenders charge double-digit interest rates. You can make hard money less expensive by negotiating a lower rate with the strategies above in addition to paying it back ASAP.

Wednesday, February 20, 2019

Is an Arizona Bridge Loan a Win-Win for Your Business?

Before taking out Arizona commercial real estate loans, you need to ask yourself a few questions. "Will income from the property pay my mortgage on a monthly basis?" and "how do I intend to generate a return? With quick profits from resale or do I want to earn a steady income over the long haul?"

Let’s consider the first question, "Will income from the property pay my mortgage on a monthly basis?" Hopefully, the answer is yes, but you aren't buying a property to make mortgage payments. In the end, you want to make money.

Before taking out Arizona commercial real estate loans on short term investment properties, ask yourself these questions:

• What condition is the property in? When it comes to making a quick turnaround, you want to boost the property’s value as soon as possible while at the same time spending as little money as possible. Scout locations that require minimal work. Better yet, find properties where you can boost cash flow, and therefore raise the resale value without spending any money at all. If a property does need some work, lower your initial offer to account for these costs. For example, if a location needs $10,000 in repairs, you should reduce your initial offer by $20,000. That way, you earn a dollar in profit for every $.50 you spend bringing the property up to code.

• How occupied is the property? Properties with less than 85% occupancy don't sell. A half-occupied apartment complex could take many months to reach that 85% benchmark. Securing new tenants will hinder resale and prevent you from achieving a rapid return on your investment. Save yourself some time and purchase properties that are as close to full occupancy as possible. Otherwise, have a clear plan in place to bring in new tenants before you invest.

Before taking out Arizona commercial real estate loans on long term investment properties ask yourself these questions

• What are the tenants like? If a prospective property is full of deadbeats who don't pay rent on time, it is probably not worth your time. A wave of evictions coupled with the time it takes to find new tenants means you might not be able to keep pace with your monthly loan payments. Ask to look at the rent rolls before investing in a property, which will tell you whether the current tenants are paying rent on time.

• What is the neighborhood like? Earning an income from a property over the long haul requires two things: gradual rent increases and a steady uptick in property values. An area that is on the decline indicates declining rents, occupancy rates and declining property values. Before investing for the long term, get a sense of the neighborhood, or better yet, get some real data to see if property values in the area are on the up and up.

In short, before taking out a loan to invest in commercial property ask yourself a few basic questions:

1. Will income from the property at least initially pay for my loan?

2. How do you intend to earn a return?

3. And consider any factors that could prevent you from earning a return.

Answering these questions for yourself will give you a sense of whether taking out a loan on an investment property is worth your while.

Is an Arizona Bridge Loan a Win-Win for Your Business?

You know the adage, “time is money.” Well, time spent waiting for money from the bank will cost you money. You might have heard the term "bridge loan" in reference to residential real estate, but these loans can help everyday business owners as well.

Bridge financing allows business owners to move quickly on time-sensitive deals. You might find a fantastic opportunity to expand your business or buy some inventory at a discount. You might need financing as fast as possible, but a bank won't share your sense of urgency.

Months might go by before you can secure a business loan. While waiting on the bank, the opportunity might disappear entirely. With bridge financing, this isn't the case, and the process is pretty simple:

1. Get a loan

2. Capture the opportunity

3. Refinance to a long-term loan or use your profits to pay back the initial loan.

Bridge financing gives you as a business owner the freedom to invest without being held hostage by the tedium of the bank application process.

How to use a Arizona bridge loan to benefit your business

• Bridge to refinancing: Say you own a clothing business. A fashionable storefront has opened up in the posh section of town. Lately, your sales have lagged, your margins are thin, and you have little to nothing in savings. You know if you moved to the new location, sales would increase, and the move might save your business.

But, your lagging sales prevent the bank from giving you a second mortgage on the new property, which is already generating a lot of interest from other buyers. What can you do?

You take on bridge financing, which allows you to make a full offer on the competitive property. You secure the luxuriant storefront, and your assumptions prove correct. Increased foot traffic results in a massive uptick in sales. The loan officer at the bank admires your increased profits, and you can now refinance to a long-term conventional loan.

• Bridge to profits: You might be in the furniture business, and your competitor might be liquidating a warehouse full of sleek Italian furniture. They are selling it off at a steep 75 percent discount. Seeing the margins, you decide you want to buy the whole lot, but you don't exactly have the money to do this.

Using bridge financing, you buy up every item in the warehouse. The designer furniture gets a considerable markup, and it sells quickly to your target customers. You pay off the bridge financing with the increased profits and earn tidy sum yourself.

A commercial Arizona bridge loan doesn't just benefit commercial real estate investors.

Looking at the examples above, you can see how bridge financing might benefit you as a business owner.

If you waited on a conventional bank loan in the above situations, you simply would have missed out. You might have gone out of business waiting to get approved for a second mortgage, or you would have never earned a generous return on inventory purchased at a discount.

If you encounter a business prospect that is a sure-fire bet but you need capital right away, opt for bridge financing instead. Time is money, and time spent waiting on a bank loan might cost you the opportunity to make money.

Arizona Commercial Real-Estate Loans: Should You Buy Low, Sell High Or Should You Boost Income?

When it comes to apartment flips, you might think buying low and selling high remains the golden rule. Well, not exactly. Before taking out Arizona commercial real estate loans on apartment buildings, you need to learn to look beyond the initial sales price, and above all, look for ways to boost income.

It's important to note that commercial properties are valued as follows:

• Annual income/market cap rate

Unlike residential flips, buying low and selling high, doesn't always apply in the case of commercial properties. Because if you can raise annual income, by even a smidgen you can achieve a drastic return from your investment upon resale.

Before taking out Arizona commercial real estate loans, don't just look at the sales price

To illustrate this point, let's consider two investors who follow two very different strategies.

• Buy Low, Sell High: Our first investor might see a complex going for $100,000 in a middle-class suburb. Dollar signs flash through his mind because the sales price is too good to be true. Well, it is too good to be true. It is going to take 12 months of work to get all ten units up to a livable standard. The work will require $560,000 in hard money financing, taken at a 14% interest rate.

• Boosting Income: In the same neighborhood, another investor sees a different 10-unit building listed for $800K. Hopefully no one calls the SEC, because our investor has a bit of inside information. She knows that leases are up on all ten units, which will allow her to raise rents by $250 a month on each unit. However, she doesn't want a bunch of disgruntled tenants on her hands, so she decides to add a pool to the complex to help justify her rent increase. She takes out a loan for $640K, again at 14% interest. The loan is expensive, but she's confident her work will be finished in four months.

When using Arizona commercial real estate loans to invest in properties you can make a lot more money by boosting income

Remember that commercial valuations are valued based on annual income/market cap rate. In our scenario, both properties are in the same neighborhood. Let’s say the prevailing cap rate is 7%.

• Buy Low, Sell High: Our first investor brought the property up to a livable standard in 12 months, but because the property is only livable, he can only charge his ten tenants $1,000 a month in rent:

• 100 K/.07= $1,428,871 resale value.

Factoring in the cost of his loan, he earned $515,711 in profit. Not bad, but what about the other investor?

• Boosting Income: Our other investor simply added a pool and raised rent by $250 per unit. This increase added $50,000 to the annual income earned from the property:

• 150 K/.07= $2,142,857 resale value

Accounting for the cost of her loan, she earned almost double the profit of the first investor. She bought high and sold for even higher. By focusing on boosting income instead of making drastic repairs, she made more money in less time.

These examples make it clear: before taking on a loan to invest in commercial property, look beyond the sales price and consider how you can boost cash flow above all else.

Tuesday, February 19, 2019

Can an Arizona Bridge Loan Help You Move?

Ever wondered if it’s possible to buy a new home without selling your old one? Don't let the fact that your home hasn't sold yet stop you from making an offer on the home of your dreams, an Arizona bridge loan might just be the help you need.

What is bridge financing? It is a loan that gets you from one house to another. The process is simple, get bridge financing, buy a new house, sell your old home, and use the proceeds to pay off your initial bridge financing.

But there are a couple of approaches you can take.

With a bridge loan, you need to decide what to borrow against, be it the full value of your home or your current equity.

• Borrow Against your homes full value: Say your home is worth 300, and your mortgage balance stands at 200. With this approach, you would borrow up to 80 percent of your homes outstanding value. In this case, you would get 240 in bridge financing to pay back your current mortgage, and you would use the difference to make a down payment on your next house.

• Pro- you'll only have one mortgage

• Con- The balance of your loan will be higher. The higher your loan balance, the higher your monthly payments will be.

• Borrow against equity: In this case, you'd borrow up to 80 percent of the 100 K in equity you currently have on your house, equating to 80 thousand in bridge financing. You then use this money as a down payment on your new home.

• Pro-You'll have a smaller loan balance

• Con-You'll have two mortgages, the one on your original home and the one on your new home.

Both strategies result in one thing, moving to a new home without first selling your old one. But of course like any loan bridge financing comes with some risks.

With a bridge loan, you need to be sure you can resell your old house in short order

The most significant factor to consider before applying for bridge financing is, "will my house sell in a few months?

Because you might cross the bridge of moving from one house to another, but you need to cross the bridge from one loan to another ASAP, or at least within six months.

Bridge financing entails a balloon payment, which means that during the term of the loan you are just making interest payments. You will be asked to pay back the remaining balance of your loan after a few months. If there are hang-ups with the sale of your first home, you will be on the hook to pay 10's of thousands of dollars, which you likely don't have.

As proverbial balloon payments popped around the nation in 2008, so did the mortgage bubble and we all know how that went. But don't let the term balloon payment scare you away.

First determine which bridge financing strategy is right for you, be confident you can sell your home within six months and then go for it. Don't let the fact that your home is still on the market keep you from pursuing your dreams, or better yet your dream home.

Setabay Private Hard Money Lender

Thursday, February 21, 2019

Arizona Hard Money Loans: A Win-Win for Your Cannabis Business?

What are some other sources of Arizona cannabis business loans

Arizona hard money loans can help fuel short-term costs in your cannabis business.

Arizona Hard Money Loans: Tactics to Pay Less

Tactics to pay lower interest when it comes to Arizona hard money loans

Don't let the high interest charged on Arizona hard money loans scare you out of the flipping business.

Wednesday, February 20, 2019

Is an Arizona Bridge Loan a Win-Win for Your Business?

Before taking out Arizona commercial real estate loans on short term investment properties, ask yourself these questions:

Before taking out Arizona commercial real estate loans on long term investment properties ask yourself these questions

Is an Arizona Bridge Loan a Win-Win for Your Business?

How to use a Arizona bridge loan to benefit your business

A commercial Arizona bridge loan doesn't just benefit commercial real estate investors.

Arizona Commercial Real-Estate Loans: Should You Buy Low, Sell High Or Should You Boost Income?

Before taking out Arizona commercial real estate loans, don't just look at the sales price

When using Arizona commercial real estate loans to invest in properties you can make a lot more money by boosting income

Tuesday, February 19, 2019

Can an Arizona Bridge Loan Help You Move?

With a bridge loan, you need to decide what to borrow against, be it the full value of your home or your current equity.

With a bridge loan, you need to be sure you can resell your old house in short order

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