Setabay Private Hard Money Lender

Wednesday, April 10, 2019

Should You Be Using a Hard Money Lender for Arizona Rental Property Loans?

In what situations do Arizona Hard Money Lenders work well with rental property owners? And should they be used at all? Read more below to find out!

Most people are referred to Arizona Hard Money Lenders when they do not qualify for traditional loans from banks or credit unions. Arizona Hard Money Lenders are private, untraditional lenders who do not use the same approval process when determining what borrowers qualify for hard money. They focus on the property as an investment. Collateral comes before the borrower’s financial history. In this way, they are able to approve a wide variety of borrowers that traditional lenders cannot approve. However, just because they offer an easy approval, it doesn’t mean they are right for you. When it comes to using a hard money lender for funding for rental property loans, you really need to consider your timeline and budet because, generally, they are only used for short term projects.

Timeline and Budget

Arizona Hard Money Lenders have short repayment periods. This usually means they are great in cases of fixer uppers. They can get you money fast and, if you are able to fix, flip, and sell your property successfully, you are able to start repayment right away. So, when it comes to rental property loans, Arizona Hard Money Lenders are usually not a good idea. The profit you are making off your rental is coming in month by month—this usually is not enough to satisfy their financial requirements. Not only that, but they have high interest rates and fees. This is not a good combination if you are just getting started on a profit from your property. If, however, you need to fix something in the property fast, it may seem a good idea to turn to your local hard money lender. They can get you money usually within the week, if not sooner. That is fast compared to traditional lenders who usually take at least a month, if not more. Speed can be key in determining the outcome of some situations. If you’re between tenants on a property and need funds to fix an issue quick, Arizona Hard Money Lenders could be an option. They are known to offer loan extensions and, depending on the size of the loan and when your next tenant is coming in, the risk could be worth it.

Is Hard Money Right for You?

Generally, the answer, for long term options, is no. A better bet would be to go to your local bank for a traditional option for your rental property loans. Timeline and budget need to align and, with hard money lenders, they are not as flexible. High rates and short repayment periods don’t align themselves well with a long term project where a profit is coming in slowly. Despite a profit that is accumulating, it won’t fare well with the interest rates of your private hard money lender—extension or not. So, before deep dive into the housing maket, make sure you have all the info you need to be successful with your property and loan decisions.

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.

Texas Hard Money Loans and How to Use Them

If you want to get into investing in real estate, bank after bank might deny your application and Texas Hard Money Loans might be your only option, but what's the best way to use these loans?

Hard money is asset-based rather than credit based so it is easier to qualify for, especially for first-time investors who might be in tricky financial situations.

That doesn't mean hard money is cheap. Usually, these loans entail a double-digit interest rate, so you should pay them back quickly. Now think, what type of real-estate investment involves a quick turnaround?

You guessed it, house flips.

Advantages and disadvantages of using Texas Hard Money Loans for house flips

If you've binged watched HGTV, you probably know how flipping works in a fundamental sense.

1. You buy undervalued home

2. You rehab it and raise its value

3. Then you re-sell it for a profit.

Using hard money to flip houses offers many benefits, the main one being the potential for huge profits.

A single solid flip can pay off a boatload of personal debt. The average profit of a flip stands at about 30 K, so imagine how many credit cards you could pay off from just one successful hard money deal.

But there's another side if you chose to "flip," the coin.

Unless you’re Bernie Madoff, earning 30,000 dollars from any investment is going to take a lot of time and effort. Rehabbing a house is time-consuming, to say the least. If you have a full-time job, you might end up showing up to work the next morning covered in paint from the night before, or you might even have to quit your job.

But there is a less involved way to use hard money to invest in real estate.

Wholesaling offers the advantage of being a hands-off way to use Texas Hard Money Loans.

There's another approach to flipping called wholesaling. Here’s how wholesaling works:

1.Finance and close on an undervalued property

2. After you have the property under contract

3. You sell it to a flipper who has the time and money to turn it around

Think of wholesaling as flipping without all the blood, sweat and tears of a full-blown rehab project. A single wholesale can close in a matter of a weeks, and you probably won't have to quit your job.

Wholesaling takes less time and money up-front, so it is not as risky as a flip, but you'll also make less money in the end. The average profit on a wholesale deal is around 10 K which is nothing to sneeze at, but it is far less than you can earn from a flip.

So if you’re a first-time real estate investor wondering what the best way to use hard money is, know that:

• A single flip can earn you a lot of money but, it will also take a lot of time, and effort on your part.

• Wholesaling will earn you a decent profit, and will take you far less time but you'll also make less money in the end.

There are no right or wrong answers here, the best way to use hard money will depend on your financial goals and your specific situation.

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.

Soft vs. Texas Hard Money Loans: Finding The Help That's Right For You

How should you go about financing real estate? Money is money after all, but there are different types of money. Whether you are a first-time real-estate investor or a long time player, what is the right source of money, and what’s the difference between soft money loans and Texas Hard Money Loans?

Hard money is secured, by hard assets that you can touch and feel, like real-estate. Your credit and income are a non-factor, which might sound too good to be true. Well, hard money is a bit more expensive, interest rates are usually above 10 percent, and loan terms usually entail a balloon payment after a few months.

Compared to hard money, everyone has experience with "soft money.” Soft money loan qualifications depend on "softer," more mutable aspects pertaining to a borrower’s financial situation. Aspects such your credit score, DTI or whatever vague metric the bank might want to impose. These loans offer low-interest rates and usually don't involve balloon payments.

Because soft money loans are less expensive, and don’t come with balloon payments, they might seem like the best option to finance real estate deals.

But things aren't always as they appear.

Texas Hard Money Loans can benefit first real-estate investors with unique financial situations, as well as veteran investors looking to close on the best deals.

If you want to get into real-estate to improve your financial situation, you might as well forget about going to the bank. If you have poor credit or a unique income situation, soft money is basically out of the question. Banks aren't willing to secure their loans if a borrower's finances are in the least bit unsteady.

Hard money is different because these loans are secured based on property values. If your finances are a bit off, but your deal is sound, a hard money provider will still hear you out.

Because it is easier to qualify for, hard money financing can be an ideal way for borrowers in the less than ideal financial situations to invest in real estate.

But hard money can also help veteran real-estate investors as well. Reams of paperwork are usually required to get an application though and bank bureaucracy can hold up loans for months on end.

For this reason, those who are serious about real-estate investment don't turn to banks to regularly finance their deals. A serious real-estate investor can't afford to miss out on an investment opportunity because the bank asks them for tax returns, circa 1987.

In contrast, hard money deals can close in days, as the approval process usually entails a quick appraisal. With hard money, the rapid approval process allows veteran real estate investors quickly to make competitive offers on the most lucrative investment properties.

Texas Hard Money Loans offer benefits to both first time and seasoned real estate investors.

So don't be overwhelmed by hard money's seemingly overwhelming initial expense.

If you have a less than an ideal financial situation, hard money can help you secure the purchase of your first property. If you’re a seasoned real estate pro and are looking for a way to make full cash offers on competitive properties, hard money remains your best bet.

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.

Which Arizona Rental Property Loans Are Best For You

Rental properties can be a great way to make extra cash, but how should you go about it? And what options are right for you? Read more below to find out!

You may begin by seeking out a loan from a traditional lender. Going to your local bank or credit union may seem like a great option. However, they have strict requirements when it comes to being approved for a loan. They are looking for great credit scores and debt to income ratios. Depending on your financial history, this may disqualify you. If it does, you may be turned to hard money lenders.

Arizona Hard Money Lenders are untraditional lenders. They consist of private companies and investors who focus on the collateral of your project. In doing this, they do not weigh your financial history as heavily. If you have rotten credit and need a loan fast, you may be tempted to turn to your local hard money lender for your rental property loans.

Choosing to work with a hard money lender on your rental property would be a mistake. While they can be great solutions when you need money fast, they work on short terms. Their repayment periods are meant to be paid back fast. They literally lend themselves to people looking to renovate fixer uppers because their goal is to flip the property and sell it as soon as possible. The money made from that sale can then go into repayment and the high interest rates of hard money lenders. Rental properties, however, gain profit over time. You want to work with a lender and obtain a loan agreement that literally agrees to the time period of your rental project.

Loans for Renting Property

So, what type of Arizona Rental Property Loans should you seek? Long term loans. These will generally come from traditional lenders that require down payments, cash reserves and mortgages. In order to qualify you would need to be able to afford a 20 percent down payment, a cash reserve of 6 months, and no more than 4 mortgages. There are other options if this doesn’t suit your individual situation. Federal Housing Administration FHA , Veteran’s Administration VA and equity line of credit are all other options to consider. Additionally, this day and age has made it extremely common to see funding via the internet. Not only that, but you could always consider personal connections you have, like family, friends and acquaintances who would like to invest in you project.

Moving Forward with Arizona Rental Property Loans

With the rising popularity of HGTV, inspiration comes daily—and sometimes the urge to create and find new sources of funding is all we need to evaluate our finances and see what it takes to invest in the housing market. No matter how excited you are, always be prepared to take a step back and thoroughly analyze what options are right for you. What is right for you may not work for someone else, and every situation has different needs that need to be considered.

The Benefits of 90% Texas Hard Money Loans

Online articles about Texas Hard Money Loans often cite that this type of financing entails a steep down payment, so is hard money is reserved only for cash-rich investors?

The first thing to discuss when it comes to hard money and down payments is LTV. LTV is the amount you can borrow, as a percentage of a property’s value. Most hard money mortgages have an LTV of 70, so if you wanted to finance the purchase of a property listed at a million, you'd need to have 300 thousand on hand for a down payment.

This steep down payment is one of the main gripes people have about hard money. As few but the richest among us have 300 thousand just lying around. But not every hard money provider is the same and some can even front up to 90 percent of the purchase price of your next property.

90% Texas Hard Money Loans can be the help you need if you’re a cash-strapped real estate investor.

Say there is a down and out apartment investor, who lost big on his last deal. He scouts out an apartment block up for grabs, and he learns that leases are up for renegotiation. If he can raise rents even slightly, he can resell the property at a profit without spending much of his own money.

But he doesn't 300 K to make the needed down payment. A quick internet search puts him in touch with another hard money dealer, who is willing to offer him 90 percent of the apartments purchase price.

Coupled with his limited savings this hard money deal lets him make a full cash offer on the apartments. He then boosts rents by a small amount, resells the property, pays back his loan, and earns a quick profit. His earnings allow him to get back into full swing when it comes to his real estate activities.

Now reading such a story might make you think, ‘hard money sounds like something only for real-estate investors,' but you’d be mistaken.

90% Texas Hard Money Loans can help homeowners as well

Say someone is selling their home and while looking for their next residence, they stumble upon a property that's 5 minutes away from their current job.

The open house was abuzz with offers from other buyers. If he wants to move into this new house, time is of the essence, and he can't wait for his current home to sell.

He needs the bank to approve him for a second mortgage. But because his current home remains unsold, his application gets denied.

He's heard about hard money, but all the lender's he gets in touch with ask for a lot in the way of a down payment. It seems he's out of luck, but then he finds a 90 LTV hard money provider online.

Coupled with his newfound hard money financing, and some money from his savings, he's able to make a full cash offer on his new home. After he moves, his old house sells, which pays off the balance of his 90 LTV loan, and allows him to refinance to a long term, low-cost mortgage.

Now it takes him only 5 minutes to get to work so he can sleep in, and he might even get to live an extra decade without all the stress of a long commute.

So hard money isn't just for cash-rich real-estate investors. If you are a real-estate investor and you got burned on your last deal or a cash strapped homeowner who wants to move quickly, a 90 LTV hard money deal could be just the help you need to make your dreams come true.

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 Make the Most of Arizona Fix and Flip Loans

Making money off of fixer uppers may seem easy based on the endless stream of shows on HGTV. From Property Brothers to Flip or Flop, profit seems possible—and the inspiring renovations can be exciting! So, how could you make the most of a fix and flip without the glam of a film crew on your side?

Planning will be the first step. You will need to do research into your property and its needs. What renovations are required? What design decisions will contribute to its overall aesthetic? What kinds of things should you prepare for, and what teams are necessary to ensure everything goes according to plan? A lot goes into fixer uppers, and you need to be prepared to answer all the questions. After all, your loan lender will consider your financial history and your renovation abilities.

Building a portfolio is not easy—everyone starts somewhere, even if it is with an empty binder. Once you have your team assembled and the beginning of plans for a specific property, you may begin to seek out a loan lender.

Obtaining a Hard Money Loan in Arizona

When people think of loans, they may think of going to a traditional lender, like a local bank or credit union. However, traditional lenders have high expectations of their borrowers. From a great credit score and debt to income ratio, the last thing they are likely thinking of is your flipping abilities—excellent portfolio or not. If you are having trouble obtaining a fix and flip loan, you may be referred to Houston Texas Private Money Lenders who offer hard money. Private lenders are untraditional options, but they can approve more people than traditional lenders. Instead of focusing on your ability in regard to finances, they focus on collateral. What is your property? What are you plans? What team have you assembled to achieve success? They will be more focused on you as an investment. This doesn’t mean that they won’t consider you as a candidate based on your financial reliability—they will. However, it will not be the only factor. This means you have a higher chance of being approved.

Pros of Using a Hard Money Lender for Your Arizona Fix and Flip Loans

Arizona Hard Money Lenders are great options for fixer uppers. Not only can they qualify more people for their loans, but they can offer money fast—sometimes as soon as the day of. If not, they usually do it within the week which is several weeks sooner than traditional lenders. This is a great trait especially if you are working with a fixer upper and need to obtain a competitive property off of the market fast. Additionally, private Arizona Hard Money Lenders require short repayment periods. Depending on what you need your loan for this may not be a good thing. However, this is a great trait for fixer uppers because of the goal to have a smooth renovation and a quick sale with a profit. They do, however, have high interest rates and fees. For that reason they may not be for everyone, but, when working with fixer uppers, they may be the perfect solution as you are seeking out Arizona Fix and Flip Loans.