Setabay Private Hard Money Lender

Tuesday, April 9, 2019

Are You Eligible for Arizona Hard Money Loans?

Not qualifying for a traditional loan from your local bank or credit union may send you to untraditional lenders. But, if you qualify, are they what’s best for you?

It’s a well-known fact that traditional lenders like banks have high expectations of their borrowers. They need to be reliable and have a solid financial history. This includes a great credit score and debt to income ratio. Not only that, but having thorough plans and research supporting your project is going to be of utmost importance. A history of successful fixer uppers is never a bad thing.

Still, the first step in success in the housing market is never easy. You will have to build good credit and, if seeking profits as a home renovator, gaining experience will only help build your portfolio and guide you through more successful fixer uppers. So, when is it time to turn to private lenders for your hard money loans? Is it ever a good time?

When Should You Turn to Hard Money Lenders?

The most common reasons people turn to Arizona Hard Money Lenders is speed and flexibility. Arizona Hard Money Lenders can begin the loan approval process sometimes as soon as the day of. If not, it can take as long as a week. That is short compared to banks and credit unions who can need as long as a month to get things going. In addition to speed, flexibility is another great offer. This refers to a few things, the first being approval. Private lenders who offer Texas Hard Money Loans focus on collateral. This means the project, the property’s potential, the plans and research. Private lenders want to invest in a project they believe in. While your financial history will come into account, it will not be the end all be all. Flexibility also refers to their individualism and transparency. For example, they generally will be direct with you if they do not believe in your project, and they will likely have no issue offering you an extension. Typically Texas Hard Money Loans are paid back within a year, but if your investor believes in your plans and projects, the extension can be made or an additional two to five years. If you turn to a hard money lender, it is because you need speed and flexibility. Cases like this are usually for fixer uppers and foreclosures, where the ability to obtain a property is the making or breaking point.

Should You Turn to Hard Money?

The question of whether or not you should turn to hard money depends solely on your situation. How fast do you need the money? Does your situation lend itself to hard money lenders? There are risks associated with hard money lenders. They require high interest rates, fees, and a short repayment period. Fixer uppers lend themselves to hard money because the goal is to renovate and sell quickly. Achieving this goal would help to ensure the loan is paid back timely. The costs of hard money may outweigh the costs depending on the stakes of your personal situation. If you have any questions about your private hard money lender, you can meet with a real estate attorney to go over the terms of your loan agreement so you feel confident in your decision, should you go forward with private hard money lenders.

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.

How Houston Texas Private Money Lenders Can Help Borrowers with Rotten Credit

Being turned away from a loan by a traditional lender, may lead you feeling confused about what other options are available to you. If this is you, read more below on how untraditional lenders may provide the options you need.

Rotten credit score can be the bane of anyone, but especially those seeking out loans. A bad credit score and debt to income ratio can stop anyone from investing in new projects. Fortunately, there are other options available.

Untraditional lenders can be great options for people unapproved of by traditional lenders like banks and credit unions. They consist of private companies and investors who offer hard money. While they may seem like your saving grace, you should know a few things about them before you sign any loan agreement.

Risks of Untraditional Private Hard Money Lenders

The first thing you should know is that they have high interest rates. Sometimes they can be as five percent more than other rates on the market. Additionally, they can come with some hefty and, sometimes hidden, fees. Determining the legitimacy of your Houston Texas private money lender is a must. The last thing you want is a “lender” who doesn’t follow through on the loan in the middle of your plans. When you begin searching for a loan, you may begin to think of yourself as an imperfect borrower if your credit score or some aspect of your financial history is not perfect. However, it’s important to challenge your lenders. There needs to be mutual confidence and respect on both ends of borrower and lender. Another thing you should consider is the short repayment period of hard money. In combination with the high fees, hard money may be a bit of a risk. Before jumping in head first just because you were able to be approved, you need to evaluate if all the terms to the loan fit you and your situation.

Can Houston Texas Private Money Lenders Really Make Your Dreams Come True?

Depending on your situation, Houston Texas Private Money Lenders may be for you. For example, one universal need for them is when it comes to fixer uppers. The short term repayment period is ideal when it comes to renovating the home and putting it on the market for what is hopefully a quick sale. Additionally, Arizona Hard Money Lenders are generally transparent with you. They are focused on the property and the plans you have for it. If they don’t believe in an aspect of the plans, they will likely be very direct with you. This extends to other things, like extending the repayment period itself. Usually Texas Hard Money Loans are paid off within a year, but if a lender believes in your plans and understands a reasonable extension fee, they are likely to work with you and lengthen the repayment period. This can be anywhere between an additional 12 months or 60. If you have rotten credit and are seeking out a loan, Arizona Hard Money Lenders may be for you. The important thing is to feel confident in yourself, your plans and your lender. If you doubt persists, you can always hire a real estate attorney to look over your lender’s loan agreements and help advise you on whether or not your lender is right for you.

How to use Texas Hard Money Loans to Finance Rental Properties

When it comes to Texas hard money loans, one of the big factors banks will look at is your debt to income ratio or DTI. But what if you want to buy into rental properties to improve your income situation? If that is your case your pretty much SOL if you rely on the bank. But there is another way.

There is another way to finance rental properties called hard money. With hard money, if a deal is good enough, you can qualify even if you don't earn a "steady," paycheck.

Of course, hard money doesn't come cheap. These loans come with double-digit interest rates, so you need to pay them back quickly.

Given hard money's short term nature you might think hard money, and long term rental investments don't mix. But if you plan ahead and aim to refinance, hard money can be an excellent way to finance the purchase of a long term rental investment.

How to use Texas Hard Money Loans and the BRRR strategy to buy long term investments

There's a simple, profitable method to secure long term rental properties with hard money.

• Buy: buy a discounted property. Look for decrepit properties that need some work, and take on short term hard money financing which covers both the cost of purchasing the rental and most of the cost of,

• Rehab: Schedule any rehab work on the property within the term of your initial loan. Your goal here isn't a quick resale, as if you were flipping a house, but you want the property to appeal to potential long term tenants because the next step in this process is to,

• Rent: After the property is in decent condition seek out high-quality long term tenants. You should try to get them to agree to a long term lease because having a long term tenant is essential so that you can,

• Refinance: Having a renter on board and having a steady income from your rental property, will finally allow you to qualify you for a long term conventional loan.

Refinancing is the most critical step of this strategy. After you buy the rental, rehab it and get a renter on board you need to refinance before your initial hard money deal comes due.

So this strategy isn’t exactly risk free.

But, that bit of rehab you did should have boosted the properties appraised value enough so that refinancing covers your outstanding loan balance and any interest payments. After you refinance and pay back your initial loan, if you play the numbers right you can basically secure properties for free using this method.

With the above method you can use Texas Hard Money Loans to secure a steady source of income

In short, using hard money to finance rentals is as simple as BRRR. If the banks giving you the run around because of your income situation consider using hard money to:

• Buy a cheap property

• Repair it to boost its value

• Rent it out so that you can

• Refinance to pay off the initial hard money financing.

If done right you could pay nothing for your next rental property.

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.

Rental Property Loans: Advice for the Self-Employed

Banks don't like to give Texas rental property loans to people with irregular incomes. So if your self-employed, you might think there is no way to buy into rental properties, but you'd be mistaken.

Because you can always use hard money, but if you do a google search for this term you might end up thinking to yourself, "so they don't care about how much money I make, and they charge over ten percent in interest, it sounds like a scam."

But hard money is a legitimate way to finance short term real-estate purchases. The high-interest incentives you to pay these loans back quickly, so hard money is often used to flip houses.

But what if you want to hold onto a property for a long time?

Using hard money as a source of rental property loans benefits the self-employed and those in unique income situations.

Say there is a freelance graphic designer. Every three months or so he earns a significant commission on his long term projects. Every month paying his bills remains a careful balancing act, but he manages.

Renting out a house seems like the perfect way for him to earn a steady income. He scouts out a cozy little two-story house in a comfortable suburban development.

Given his excellent credit score, getting a mortgage shouldn't be a problem right? Well, bank after bank denies his application, because on a monthly basis, he's not making enough to pay his bills. Nevertheless, he can pay his bills, so what gives?

It's just that on a month to month basis, his debt to income ratio doesn't meet the banks' standards.

He looks on real-estate investment forums about situations like his, and he hears about hard money. The initial terms scare him, to say the least, 10 percent interest, over 12 months with a balloon payment due at the end. Yikes, but just before he closes the tab he reads:

"You can use hard money to refinance to a conventional loan." Knowing there's a way out, he bites the bullet. Hard money financing allows him to buy the house, and he even has a little money left over to bring his rental into the 21st century.

The attractive interior attracts a long term tenant who is just so pleased with the condition of the home that they agree to sign a 24-month lease.

Once he's got a long term tenant under contract, he goes back to the bank and applies for refinancing. The contractually obligated monthly rental payments will cover the cost of the new mortgage, on a monthly basis, and so, at last, the bank is happy.

In fact, that little bit of rehab work he did boosted the property’s value. So refinancing allowed him to pay off his initial loan and covered those steep interest payments, which he was so afraid of in the beginning.

Don't overlook the benefits of hard money when it comes to rental property loans. It may be expensive at first, but you can always refinance later.

Hard money remains an excellent option if you'd like to earn a steady income from rental properties. No matter what your current income situation is, don't let the bank stand in your way and keep you from getting into the rental business.

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.

Expectations of Texas Private Money Lenders

Sometimes in order to be approved of a loan, you need to turn to untraditional lenders. But who are they, and what expectations do they have of their borrowers?

Ken and Hannah were looking to fix and flip a home. Ken was experienced in interior design, but neither of them had ever flipped a home. Needless to say, when they turned to their local bank, they didn’t qualify based on the hours of HGTV they had binged.

Ken and Hannah continued to put in research. Their credit score and debt to income ratio did not qualify them with their local bank, so they were interested in pursuing private, untraditional lenders. Before they dove in head first, however, they needed to complete their research to determine if untraditional lenders were right for them.

Who Are Texas Private Money Lenders?

Texas Private Money Lenders are untraditional lenders. They consist of private companies or investors who offer hard money. Untraditional lenders can be great options when you don’t qualify for a loan because they are able to approve more people by focusing on the property’s collateral. Banks solely focus on your financial history. Sometimes even a successful portfolio isn’t enough to sway them. For that reason, many people will turn to private Arizona Hard Money Lenders who focus on the property, the potential and the plans, all before considering your financial history. Your financial history is still important—they want to know you will be a reliable borrower—but it won’t make or break you in the long run.

Are Arizona Hard Money Lenders Right For You?

When Ken and Hannah met with their hard money lender, they quickly learned that there was more to them than meets the eye. They were excited to see that their property was one of potential, and because of it, they were anxious to grab it from what could be a very competitive market. However, a few things were holding them back. Arizona Hard Money Lenders have high interest rates and fees that they needed to consider. Because Ken and Hannah had limited experienced fixing and flipping, they wanted to be sure they could afford the high finances associated with private lenders. Additionally, they found there was a short repayment period. In some cases, this may not be a good thing, but because Ken and Hannah were looking to renovate a home and hopefully sell quickly with a profit, it fit the natural timeline of their fixer upper. Ken and Hannah realized that working with their private hard money lender may be a little bit of a risk with the extra finances, but they decided to go for it. Though, for some extra confidence, they did decide to have a real estate attorney look over the terms of their loan agreement. Sharon agreed with them and confirmed that their lender had a reliable history and that many professional home renovators work with Texas Private Money Lenders for the same reasons. Ken and Hannah were able to successfully renovate their home, and found the expectations of their private hard money lender to be reasonable for their situation, even if they may not be for everyone.

The Benefit of Purchasing Rentals with Texas Hard Money Loans

Most in the real-estate investment game consider Texas Hard Money Loans to be best suited for house flips, but what about long term rentals? Why would you want to use hard money to buy a rental property? Since hard money is supposed to be paid off in a handful of months, it’s easy to assume this type of financing isn't meant for long term investments.

But hard money allows you to finance distressed properties based on their worth after their repaired. With hard money you can pay nothing for your next rental using a simple strategy: buy a distressed property, raise its value, rent it out and then refinance the property at the new higher value.

How you can use Texas Hard Money Loans to pay nothing for your next rental property

Using hard money if you can raise a property’s value enough through repairs, then refinancing will allow you to pay off your initial loan and maybe even earn a profit.

It might be helpful to illustrate how such a strategy would work with some specific numbers:

Say there is a disused house going for $70,000. Getting the property up to a livable standard will cost about $15,000. The first step is to take out a hard money mortgage for $85,000. After a few months of repair work, and after finding a long term renter, you are ready to refinance.

If your rehab raised the value of the rental property enough, refinancing should pay off your initial loan.

Here’s how the numbers work in this case:

Cost of the Property = $70,000 Purchase + $15,000 in rehab

Say you refinance at 80 percent of your rentals new appraised value of 125 K=

100 in refinancing - 85 K + interest payments= You secured a long term rental without spending any of your own money.

Here’s a simple formula:

• Hard Money= Purchase price + Rehab

followed by

• amount in refinancing - hard money= a free property

With Texas Hard Money Loans, if you can refinance for a large enough amount you could pay nothing for your next rental property.

You might wonder if you can use another less expensive type of loan to execute the above strategy. The key to this method lies in buying a distressed property at a steep discount, then refinancing the property at a higher value.

Other lenders and banks in particular don't offer financing for distressed properties and even if they did in the above case you’d likely only get 80 percent toward the initial purchase of that 70 thousand dollar shack, so in the end you would have to pay 29 thousand dollars out of pocket.

With hard money you can buy dilapidated rentals, boost their value and then refinance so that in the end you pay nothing out of pocket. Not spending any money, getting a steady source of income, now that’s the dream isn’t it?

So consider using hard money to buy your next rental investment.

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.