Setabay Private Hard Money Lender

Monday, April 1, 2019

Risk Taking with Texas Hard Money Lenders

When seeking out loan options, you’ll have to make some tough decisions based on your financial circumstances and the potential of the properties you wish to acquire. A lot of times, these decisions will center on whether or not you’re a risk taker.

If you get turned down by a public lender, like a bank or credit union, the end is not nigh. Oftentimes, when someone is turned down by a traditional lender, they are referred to private lenders who offer hard money.

Texas hard money lenders are able to approve a greater number of people for loans because they focus on the property’s investment value when approving loans. They are still known to deny borrowers, however, with strong plans and a property with potential, they can be great resources to help you with your dream property.

The Risks You Need to Know About Private Money

Texas hard money lenders are unlike public lenders because of the flexibility they offer. With the ability to approve borrowers and begin the process as soon as the day of, private lenders are very attractive. However, it is important to consider the costs of Texas private money lenders. Their interest rates are higher than public lenders and they require a short repayment period. A short repayment period is something that works well with something like a fixer upper, but it is not ideal in all situations.

Not all Texas private money lenders are reliable, either. Doing research is important, because the last thing you want is to be moving forward with your plans, only to have your lender pull the rug out from under you at the last minute. You also want to ensure that the terms to the loan agreement are agreeable. It sounds obvious, but unreliable and predatory lenders have a habit of hiding fees within the loan agreement. This is where a real estate attorney could come in. Having a pair of experienced eyes evaluate the loan and its value to you in your situation would be beneficial so that you can go into the loan agreement with confidence.

Finding Success and Making the Decision That’s Right for You

Choosing to work with a Texas hard money lender is a great option if you don’t qualify for a loan by a traditional lender. Working with untraditional lenders doesn’t always mean the process will be easy—and if it comes easy, it doesn’t mean it comes without risk. Choosing to move forward with hard money is just one option. If you aren’t willing to take a risk, and it’s not something that is necessary, you will have to consider other options.

Another thing to consider is that just because it doesn’t work out with one private lender, doesn’t mean it won’t work out with another. Staying focused and determined will be essential in your quest for a loan lender, and it’s something you probably had to utilize when you first began your property search. Moving forward despite some wrong turns will be essential if you want to obtain your dream property.

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 PRIVATE MONEY LOANS ARE STRUCTURED

There is structure to how private money loans are broken down. This concerns your money and it is wise to understand exactly how the private money loan is broken down.

Sometimes when a borrower doesn’t have the money that is required for upfront fees the money can be wrapped into the total loan amount. The easiest way to understand this is to break it down. Let’s look at an example.

EXAMPLE OF A PRIVATE MONEY LOAN

John has decided to get into the real estate game. He has been researching fix and flips and watching a lot of HGTV. John has even found the perfect property to rehab. But, John has no money. He turns to a private money lender.

John found a house with a purchase price of $50,000—this includes the closing costs. The closing costs include transfer tax, title insurance and closing fees. However, then there are some fees that John has to pay upfront—these are fees that can’t be paid at the end of the deal.

Along with the purchase price, John also has a $600 bird dog fee. A bird dog is an investing term that refers to someone who spends their time locating properties with substantial investment potential. Usually, investors use bird dogs to increase the area in where they are looking for property. John has a $500 insurance bill that was required to be paid upfront, as well. He also has Self Directed IRA fees (SDIRA). These are fees that an investor can potentially get charged. It is not the lender’s responsibility to pay money while they are lending. Therefore, it becomes the borrower’s responsibility. John has a $400 SDIRA fee that he needed to reimburse the investor for. He also has to pay $650 in loan points.

All in all John now has $2,150 in fees that need to be paid upfront before he can get his $50,000 loan for his property. What can he do? John simply borrows the fees, as well. Instead of $50,000, he is now at $52,150. However, John is not finished. He also has rehab costs. Rehab funds are not given all at once. These are called “draws.” An investor doesn’t just give all the rehab costs to the borrower. Instead, they are given bit by bit as projects progress. The investor will need proof that these repairs are needed and completed. So, John has $20,000 in rehab draws. In total John will borrow $72,150. The ARV on this property was $100,000. John’s lender financed 100%, so John had no out of money expenses. After interest rates and so on, John profited close to $25,000 with no money down.

It is important to understand where your money goes when dealing with private money loans.

Make sure you are dealing with a lender that explains everything to you. Have them sit down and show you where every penny will go. Not knowing the structure of your private money loan is you walking blindly into a real estate deal.

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.

Working with Texas Fix and Flip loans Like an HGTV Star

The stars of HGTV and the dazzling production quality of their shows may make it seem like any one can fix and flip a home and make a profit—but what kind of steps would an ordinary person take without the razzle dazzle of the cameras and production crew?

Chip and Joanna Gaines. The Property Brothers. Christina and Tarek El Moussa. All of these partners have worked their way to success flipping and fixing homes. Not all homes reap profit, but if the vast majority didn’t, there wouldn’t be a show.

So what do you do if you don’t have a mass amount of wealth from your successful show that would otherwise allow you to purchase and bid on competitive properties?

How Hard Money Literally “Lends” Itself to Fixer Uppers

When an ordinary person doesn’t qualify for a loan from a traditional lender, like a bank or a credit union, they are usually referred to an untraditional, alternative money lender. What most people don’t know is that untraditional lenders that offer hard money are often the best options for those who need Texas fix and flip loans. Texas hard money lenders offer cash fast, so it is ideal for someone looking to grab a property off a competitive market. Additionally, they have a short repayment period, which works well for someone who wants to make a quick profit off a fixer upper, rather than a profit off a long term rental property.

How to Know What Texas Fix and Flip Loans Are Right for You

While hard money is a great option for someone looking to fix and flip, there are some important things to consider. The short repayment period does lend itself to the fix and flip process, however, coupled with the high interest rates of private lenders, it may not be the most realistic option for everyone. Still, reliable private lenders offer something else: a transparent relationship. Because they offer flexibility and therefore a more individualized relationship with their buyers, there is the possibility of adding a short extension to the repayment period. If hard money isn’t the right option for you, other loan options are available.

Depending on the needs of the property, you may be able to obtain a loan from a bank or utilize crowdfunding sources. Personal loans can be combined with other loan types, and may be used in combination with the loan from a friend or family who wish to invest in you and your property.

Whatever you choose to do, obtaining Texas fix and flip loans is not impossible. It may not be as glamourous or as easy as the TV suggests, but there are a variety of resources that can often be used in tandem with one another—and if you’re feeling unsure, it’s always possible to invest in a real estate attorney to help analyze your options or loan agreements, so you feel confident that you are making the decision that is best for you.

WHERE CAN YOU FIND PRIVATE MONEY LENDERS

You’ve found the property you want to rehab. Now, where do you find the investors to give you the money?

You’ve got your ducks in a row, but the final and most important part of the deal is finding an investor to loan you the money to fix and flip this property. There are three key areas where you can find private money lenders.

THE THREE PLACES TO FIND PRIVATE MONEY

The first place you can look for money is your own personal network. To most this is a pretty obvious place to begin your search for financial backing—at the same time people are uncomfortable with this scenario. Usually, this feeling comes from embarrassment. You have just decided to enter the real estate game and you may not feel too confident—that’s where the embarrassment comes in. It’s no different than if you were an attorney and out of nowhere you decide to quit the world of law and become a poet. Yes, people would probably feel a little shocked in the decision you made—they will wonder why you chose to quit a career you excelled at to become a poet. Usually when you are honest and vulnerable people will react in a positive manner. Use your contacts and speak with your friends and family to see if they are interested in being a part of your new career. They might—and they might not.

Another place you can find private money lenders is at local real estate functions. How do you find one of these meetings? The easiest way is to go to meetup.com and search real estate investing meetings. Every city has these meetings—all across the county. This is where you will find others who are doing the same thing as you. You will meet real estate agents, fix and flippers and private money lenders.

The last place—and probably the most effective way to find private money lenders— is finding a local hard money lender. Arizona Hard Money Lenders are private money lenders— the difference is, that is all they do. These investors work like banks without all the red tape and waiting. Arizona Hard Money Lenders can be found through a simple Google search. Another great way to find Arizona Hard Money Lenders is through LinkedIn. Find some lenders, meet with them and get to know them. These lenders all have a specific niche. If you are a fix and flipper—make sure the lender you find works with fix and flips. Check out their website. Do they look professional? Find out about their history. Do your research.

There are three main ways to find private money and all of them can work.

Reach out to your family. Maybe some of them want to be a part of your real estate journey. Mix and mingle at local real estate functions—find others that work in the real estate profession. You never know who you will meet. And, finally there is always the rock solid choice—research local Arizona Hard Money Lenders.

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, March 31, 2019

TIRED OF BEING DENIED A BANK LOAN?

If you have tried to be approved by a bank, but keep getting denied—what can you do?

Are you ready to get out there and crush it in the real estate game? The first thing you must do is be approved for the financing of your project. Your creditworthiness may be enough for financing, but it may not be—and even if it is, will you be approved for as much as you need? Regardless, there are ways you can get financing no matter your situation.

First thing you need to know is not every bank is created equal. Banks have various lending programs. They will take your information and basically see what program they have that you may qualify for. The unfortunate part of this process is that it’s common to go through the pre approval process and then guess what? They will put a big, fat denial stamp on you. You may spend a lot of time bank hopping with hope in your heart only to get stamped with the big D once again.

The next logical step is to visit a broker. A lending broker will look at your situation and match you with a variety of banks and their programs. The problem is this will not be your primary residence. Banks aren’t comfortable lending on properties that will be rehabbed and sold—fix and flips. They also are hesitant when it comes to Arizona Construction Loans. So, where does that leave you now?

ARIZONA HARD MONEY LENDERS WANT TO LOAN YOU MONEY

A hard money lender is literally a lender that is also an investor. That means they have money to loan you and on that money they expect a nice return. These are higher interest rate, short-term loans — usually between 6 months to 3 years.

These loans are asset based. That means the property you are purchasing is used as collateral. Unlike banks who focus on your credit score and your income, Arizona Hard Money Lenders are not overly concerned with your financial situation. They will look into your financial history. However, hard money underwriting is a much simpler process than that of a bank.

In fact, because of the simplistic process of underwriting borrowers can receive approvals much faster than when using a bank—typically between 24 and 48 hours. Funds are generally released in less than 2 weeks. Again, much faster than a bank. A conventional mortgage can take up to 90 days to close. This speedy process allows borrowers to capitalize on prime property without the worry of losing it to a cash buyer.

Conventional financing works for many situations—however, when an investor wants to be a game changer in the real estate business they need to have access to fast cash.

Using a hard money lender versus traditional financing has many benefits: quick access to cash, less concern of your financial state of affairs and building a personal relationship with you lender— one that can lead to lower interest rates on future endeavors.

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.

Colorado Private Money Lenders Aren't Private, Here's Why!

Colorado Private Money Lenders are an open book, answering questions and explaining the Colorado Hard Money Loan process so you can feel comfortable with your loan terms.

Gone are the days of dodgy hard money lending. Today’s Colorado Private Money Lenders are up front with what they have to offer, the fees associated with using a Colorado Hard Money Loan, and why or why not it would be the right option for you.

Colorado Private Money Lenders can fund investment opportunities based on different criteria than big banks can and because of that are a great way for people to get the money they need quickly. Here’s what you can expect, and should learn, from your Colorado private money lender prior to getting a loan.

Interest in Your Investment Project

Just as Colorado Private Money Lenders are going to be up front with you, you need to be up front with us. We have expectations in regards to your plans for your investment project and will ask questions in order to know if it’s the right investment for our money. Be ready to present facts and figures!

Flexible Credit Requirements

We won’t badger you about a low credit score or a previous foreclosure. We want to know what you’re doing now with your finances and if that enables you to be a good borrower who can repay your loan.

Up Front Lending Terms

Our lending terms won’t be run of the mill like traditional lenders. We have wiggle room to tailor the loan to your specific project. Flexibility is the name of the game and we are able to create a loan that will work for both you and us. We will also be very transparent with our lending terms so you can make a well-informed decision.

Clear Repayment Plans

We know the best way for a loan to be successful is for the repayment plan to be clear. That’s why we work to ensure our borrowers understand their loan fully and are comfortable with the plan put into place.

As a Colorado private money lender, Level 4 Funding is dedicated to meeting borrower’s needs. We want to make honest, transparent agreements with people who have a vision for their project and make sound investment decisions. To learn more about our funding opportunities, give us a call today!