Setabay Private Hard Money Lender

Wednesday, April 3, 2019

Getting a Arizona Hard Money Loan: Advice for First-Time Borrowers

If it's your first time looking into a Arizona Hard Money Loan, you might be feeling confused or nervous about the process. Don't worry, it's a lot simpler than it seems. Let's look at some things you'll need to know for your first loan.

For our purposes, let's say you're going to do a real-estate flip. So, how would you go about getting a Arizona Hard Money Loan?

When you make your initial contact, you'll want to have some key bits of information at your fingertips. You'll need to know the location of the property, have a purchase price in mind, put together a budget for the rehab and come equipped with some idea of how much the property may appreciate. And, many hard money lenders will want to know your exit strategy.

Once you've gone over this info, the lender may want to get a feel for you as the borrower, especially if you've never partnered on a project. A lender may ask if you've done fix and flips before and inquire about your financial history. Thankfully, none of these things will disqualify you — private lenders have more flexibility when it comes to loaning money.

The Next Steps After the Initial Meeting

The application process can vary significantly from lender to lender but will typically involve a loan application and showing paperwork for some of the above-mentioned factors including the purchase contract and the budget for the repairs and renovation. The underwriter will usually do an appraisal on the property and ensure that the after repair value is in the same ballpark as the borrower's estimate. In addition, they may want to check the property insurance and title history. If everything looks good, a closing will be scheduled.

At the closing, the buyer will purchase the property and sign paperwork related to the loan. Among the documents you might be asked to review, and sign include, but aren't limited to, a personal guarantee, a security agreement, a note and an investment affidavit.

The great thing about using private money for a fix-and-flip transaction? All of this process can be completed in a matter of a week or two. By comparison, a bank loan can take up to a month or two to come through.

Finding a Arizona Hard Money Loan in Arizona

For first-timers, all of this can seem daunting, but compared to big financial institutions, the process is pretty straightforward. And, any hard money lender worth his or her salt will help walk you through every step and make sure you understand what's happening. Here at Level4Funding, we have decades of experience dealing with Arizona Hard Money Loans. Give us a call today to discuss how we can work together to make your real estate dreams come true!

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.

Can You Really Be Approved for Texas Hard Money Loans if you have Rotten Credit?

Obtaining a loan can be a difficult process if you don’t understand all of your options. If you haven’t explored the potential of private lenders, read more below to see what kind of things that offer that public money lenders don’t.

Joe and Sue were looking to fix and flip a home, but they had limited experience and an imperfect credit score. However, Joe’s experience in business school and Sue’s experience as a designer made them great candidates for successfully flipping a home. Still, their local banks wouldn’t approve their plans.

Joe and Sue began to look elsewhere, and soon found that private lenders could offer loans to people with rotten credit, and they could offer the money fast.

What are the Benefits of Working with a Private Loan Lender?

Joe and Sue research local Texas hard money lenders, and soon found a reliable private investor to meet with. They brought their plans for the home, which included blueprints, timelines, budgets and references of the small team they would be working with on the renovations.

Their private lender, Dan, loved it, noting that the risks for failure were low. Because Dan focused on the property’s potential, instead of Joe and Sue’s financial history, he was able to approve them for their Texas hard money loans. Needless to say, Joe and Sue were ecstatic and Dan was able to get that process going the very day.

Joe and Sue were shocked they hadn’t considered Texas hard money lenders sooner because of the flexibility, transparency and speed they offered. Fortunately for Joe and Sue, they put in the research to find a reliable Texas hard money lender.

What are the Possible Consequences of Working with Private Investors?

When seeking out private Texas hard money lenders, it is essential to find a reliable one. Sometimes it’s good to have a real estate attorney look over the terms of the loan agreement so that you don’t overlook any hidden and predatory fees. Other times, it just takes a little extra research to see the history of clients your lender has had. Knowing what kinds of projects and clients your lender has had success with in the past is also a good indication if they are a good candidate for your project.

Joe and Sue didn’t hire a real estate attorney to help them in their process, but because they took their time looking over the terms of the loan and asking questions, they were able to find solid ground with their lender. In some unfortunate cases with Texas hard money loans, investors have pulled out last minute. A lot of the time, the first thing people think of when borrowing money is their reliability as a borrower—but it is essential to consider your lender’s reliability. You never know what fees or stipulations they may be trying to hide in their agreements, or what they may do at the last minute—like suddenly pull out of the contract.

If you are seeking Texas hard money loans, take your time and don’t give up. There are lenders out there who may be invested in you and your project; you just have to find them.

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.

FIX AND FLIP LOAN WITH NO MONEY DOWN

When you ask a person interested in real estate investing why they haven’t done it yet— the most common reply is they don’t have enough money.

People see that real estate can give them a comfortable life and that there are many successful real estate agents, but so many people are held back due to money issues.

Well, myth busted! It is very possible for an investor to have multiple deals going on simultaneously and never have any of their own money in the deal. There are a multitude of lenders out there that want to lend you their money for this exact purpose, as long as they know it is a safe investment.

These lenders are called Arizona Hard Money Lenders. These lenders aren’t worried about how much money you have or your employment history. They are interested in you finding a distressed property that you are willing to rehab and sell for a profit. They receive their profit from the interest they charge.

HOW CAN I GET AN ARIZONA FIX AND FLIP LOAN WITH NO MONEY DOWN

Arizona Hard Money Lenders lend use an After Repair Value (ARV). ARV is what the house will value at following renovation. Arizona Hard Money Lenders will typically finance at least 70% ARV.

Let’s say you find a property for $50,000 purchase price. Once it’s been inspected you find out it has about $20,000 worth of repairs. You need a loan for $70,000, right? Ok, but how much will it sell for if you borrow $70,000. Once it is appraised for its’ ARV you discover you will be able to sell it for $110,000.

The hard money lender will lend you 70% of the $110,000. You will be approved for $77,000. That’s $7,000 more than you need, right? Well, maybe or maybe not. That $7,000 could go toward more materials. Or maybe you could hire a contractor to help you with the repairs. Whatever it is, take the “extra” money. More than likely you will need it. What you just received was an Arizona Fix and Flip Loan with no money down.

What if you need more money for repairs? Arizona Hard Money Lenders will finance those extra repairs, as well. These are called “draws.” A draw is money financed for a certain repair. Once the hard money lender has received the proof they deem necessary concerning the repair the borrower will receive a check.

The general public doesn’t realize that you can go into real estate investing using someone else’s money.

Fix and flips are growing as the fastest way to make a profit. Don’t miss this train. If you have considered jumping into the real estate game, this is the time to do it. Please contact us at level4funding.com. We would love help you get started

How to Use Hard Money for Texas Fix and Flip Loans

Jumping into the real estate business can be difficult—high risks can accompany seemingly easy decisions, and consequences can easily put you in the red instead of a rising line of profit. Read more below to see how hard money can help with the costs of your fixer upper.

The first thing most people will tell you when you’re about to renovate a home is to be smart. Doing your research and investing in a reliable team will be important so that you don’t end up in a hole of debt. Any money lender will want to know that you have solid plans and a property with potential. The last thing you want is for the home to cost you more than you can afford in finances, and accumulating interest and debt from your loan lenders.

Most of the time, people turn to their bank when seeking out loans. What a lot of people don’t know is that reliable Texas private money lenders literally “lend” themselves to cases of fixer uppers in their natural loan lending process.

What Texas private money lenders Offer that Public Lenders Don’t

In doing your research, you may find that private investors focus on the property’s value when approving borrowers. While your financial history is important, it isn’t held as highly as what they think the possible consequences of the property’s value are. If you approach a public lender, like your local bank or credit union, they will focus on your financial history. This includes things like your credit score and debt to income ratio.

If you are denied by a bank it is still possible to be approved by a local private investor for your Texas fix and flip loans. As long as your private Texas hard money lenders believe in you and your plans, it is likely they will give you the stamp of approval. Being approved by a private lender will allow you to begin the loan lending process almost immediately—as soon as the day of, in some cases. This is really attractive to borrowers who are bidding on a competitive market and want to begin fixing and flipping right away.

Costs of Using Texas private money lenders for your Texas fix and flip loans

Texas hard money lenders are great options if you need transparency, flexibility, and speed. However, it is important to know the very literal costs of borrowing hard money. First are the high interest rates, which can be as high as five percent more than traditional lenders. Second are the short repayment periods. Now, the short repayment period is actually something that lends itself well to fixed and flipped homes. Quick renovations and a successful sale are key to being able to repay your loans without stress. But, if you encounter a lot of unforeseen problems with the already high interest rates, Texas hard money lenders may not be for you. Though, they generally do work well with those looking to make a profit renovating homes, they are very pricey compared to other options.

Hard money is a great option for people looking to fund their Texas fix and flip loans that overall offer transparency, flexibility and speed, but may not be right for everyone. If you are still unsure if borrowing from a private lender is right for you, consider working with a real estate attorney to go over the terms of the loan agreement so that you can feel confident in your decision to proceed or look down another route.

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.

HARD MONEY LENDING ON OWNER OCCUPIED PROPERTIES

Unfortunately, due to recent consumer protection legislation, lending on Arizona owner occupied properties has becoming a frowned upon phrase in the private lending world.

However, there are ways to get an owner occupied private money loan where the borrower and lender can make a profit. Dodd-Frank is a bill—and out of this bill came how mortgages are to be handled by lenders. During time this bill was enacted the market was crazy and something needed to be done. But, many impacts of this legislation have been difficult for Arizona Hard Money Lenders and borrowers needing private money. Because of this legislation it has been a little tricky to get owner occupied loans done.

CAN ARIZONA HARD MONEY LENDERS LOAN ON OWNER OCCUPIED PROPERTIES?

Let’s start with what exactly is an owner occupied property and why is this such an obstacle? An owner occupied property is exactly what is says it is—a piece of property that the owner resides in. The government passed many consumer protection laws which were meant to protect the homeowner. That is good for the homeowner, but the result of this legislation created difficulties for lenders. No mortgage lenders are happy with this legislation.

The laws have to do with waiting periods and how the borrower must prove they can repay the loan based on their debt service ratio and so on. Arizona Hard Money Lenders are simple—they look at the property and base the loan amount on the value of the property. Easy peasy. However, all these new regulations make some Arizona Hard Money Lenders nervous. Arizona Hard Money Lenders aren’t lenders that care how much a borrower makes.

Thank goodness there is a caveat to this ordeal! There is an exception to the rule where Arizona Hard Money Lenders are still able to lend on owner occupied properties if 51% or more of the property is for business purposes. There are ways the lender and borrower can validate and prove that, as the laws require. As long as the numbers work, the loan can work. But, what does business purpose mean? It means that the money being pulled out of the property is for the use of the business. In general, if the borrower has a business and is filing business tax returns—and the borrower can prove that the money being pulled from the property is for the business, then that will be a loan considered for a business. The borrower will have to sign a business purpose affidavit. This affidavit states that this loan is for business purposes.

How does the math work on these loans? Let’s say you have a house that is worth $300,000. You want a loan for business purposes and the house is free and clear— the lender can lend 60%—you will receive a loan for $180,000 for business purposes.

Getting an owner occupied loan is trickier than in years past, but can still happen. This article was just a sneak peak into what Arizona Hard Money Lenders can do to get you an owner occupied loan. For more information, please contact us at level4funding.com.

Tuesday, April 2, 2019

DIFFERENCES BETWEEN CONVENTIONAL MORTGAGES AND HARD MONEY LOANS

If you are seeking to invest in real estate and require funding, you have probably figured out you have two options—Texas Hard Money Loans or conventional mortgages.

The majority of people understand what a conventional mortgage is, but fewer understand what a hard money loan looks like. And, even though you may be familiar with a conventional mortgage, you may not truly understand everything that goes into financing from your bank. In this article we will break down the common differences between the two types of financing.

THE INS AND OUTS OF FINANCING

A difference that seems to stand out more than others is the time frame between the two types of financing and how long each of them take to close. With a conventional mortgage it typically takes around 45 days. The fastest you can close with a conventional mortgage is 30 days—and occasionally up to 90 days. There are many strict rules in place when it comes to the underwriting of a conventional mortgage along with a lot of red tape. With a hard money loan you can close within a week or two. The underwriting of Texas Hard Money Loans are less stringent and more flexible.

The funding sources of conventional mortgages and Texas Hard Money Loans differ, as well. Conventional mortgages are funded by lenders who sell their loans to larger banks and other investors. The money for Texas Hard Money Loans comes from private investors, investment funds and lines of credit. Texas Hard Money Loans are not sold to anyone else as conventional mortgages commonly are. These loans remain with the original lender.

Now, the money-interest rates. Yes, generally Texas Hard Money Loans have a higher interest rate than conventional mortgages. There is a reason behind the madness, though. Arizona Hard Money Lenders are loaning money for much shorter periods of time unlike banks who collect large amounts of smaller interest payments over time. Yes! That is the only difference when it comes to interest rates. You may have a hard money loan at an interest rate of 9%, but it’s only for six months—while your conventional mortgage sits at 4% and the bank collects that interest for 30 years.

Bank lenders offering conventional mortgages are lending them on residential properties that will be used as the borrower's home. The banks are looking at the borrower's credit and condition of the property. If a property needs rehabbed in any shape or form they will generally not be approved for a conventional mortgage. Arizona Hard Money Lenders, on the other hand, lend to both residential and commercial properties, but usually don’t lend on primary residences. Texas Hard Money Loans are set up for investors looking to fix and flip properties.

If you are looking for a hard money lender we are here to answer your questions.

Lenders are as unique as borrowers are. We would love to share our knowledge with you and find out if we can work together. Please contact us at level4funding.com.