Setabay Private Hard Money Lender

Thursday, April 11, 2019

Who are Residential Hard Money Lenders?

Fred wanted to renovate a home and put in the market for profit, but he didn’t know where to go. He was experienced in home renovations and knowledgeable about the housing market, but he had poor credit. Read more below to find out how he was able to get approved by a residential hard money lender to get funding for his project.

Fred did what most people do first: seek out a local bank or credit union. Banks are traditional lenders, but they have high standards when it comes to loans. You have to have a great credit score and debt to income ratio, and really prove yourself as a reliable borrower. Fred, however, could not. So, he began to seek out untraditional options and came across residential hard money lenders.

Fred found that, while technically considered alternative and private options, these lenders were able to offer money fast and approve a wide variety of borrowers. He began to research local lenders near him to find out more.

The Benefits of residential hard money lenders

When Fred met with his local lender, he learned that the collateral of the property he wanted to obtain was considered before his financial history. The plans for the property and the overall investment potential posed greater risks to his lender than his finances. His lender was able to overlook an imperfect finance history for the investment value of Fred’s plans. Fred was relieved to learn he qualified for a loan with his residential hard money lender. Before he sealed the deal, however, he had to consider the risks—even if the possibility of receiving a loan with a 75 percent LTV loan to value ratio seemed like a dream come true.

The Risks residential hard money lenders

Before diving into a deal with your lender, you need to consider their reliability. Lenders and borrowers work on two way streets, and your reliability is just as important as your lenders. Additionally, it is essential to consider the high interest rates. When Fred first saw his lender’s rates, he couldn’t believe they were as high as 5 percent more than others on the market. However, Fred saw potential in his lender. Because he was working on a fixer upper, the short repayment period didn’t scare him. He was experienced in renovations and believed the property would sell when it was on the market, making the short repayment period easy to deal with. Not only that, but Fred found it key to work with his lender to obtain the funds—and therefore his property—fast. Even banks couldn’t offer the speed of his lender. Banks could take more than a month, but Fred’s lender only needed a week to get going. While there were risks associated with private hard money lenders, sometimes the pros outweigh the cons. Fred found it essential to work with his lender on his fixer upper, though he noted they wouldn’t be ideal in every situation. Fortunately, the speed of his lender was able to help him obtain his property, as well as renovate and sell successfully.

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 Fix and Flip Loans: How Much Should You Spend On Rehab?

With Texas Fix and Flip Loans, you might wonder just how much you need to spend on rehab. Should you spend a lot or a little? What’s the right balance?

Let us consider the following story, of 3 flippers in one neighborhood, to answer that question.

When it comes to Texas Fix and Flip Loans and rehab budgets, should you go overboard, or should you skimp out to make more money?

Our first flipper in this story has plenty of savings on hand to spend a boatload on repairs. She knows there's a bunch of cash-rich yuppies moving into the area, and given the market she decides to go all out.

She adds marble countertops imported from the Florentine hillside, custom plumbing fixtures from a French sculptor whose name no one can pronounce. She sources old Victorian paneling in mint condition and wood floors made from near-endangered Brazilian trees.

She assumes all these posh amenities are what is needed to meet the expectations of buyers in the area. The open house is abuzz with camera flash as photos are taken of the Instagram worthy interior. But no one puts in an earnest offer. Buyers complain that there is a far more reasonably priced house just around the corner.

Which bring us to our next flipper who is just down the corner. This flipper took out a small loan and thus spent very little on repairs.

After a quick walkthrough of their home, they notice the post-apocalyptic carpet and decide to spend their limited funds replacing it. However, they don't have the funds to replace the avocado green countertops and mustard yellow cabinetry, but in the end, the house is livable right?

They list the house at the median sales price in the area, but potential buyers complain, "well there's a house up the block going for a little more, and its uh, more modern."

When it comes to Texas Fix and Flip Loans and rehab budgets; plan your project so that your flip matches houses nearby.

The last flipper in this tale is listing that other house. Before they started work they did some walkthroughs of homes for sale nearby, all the while recording the features and amenities common to homes in the area. When they repaired their house, they kept their vision in line with what they've seen in other nearby houses.

They bring the countertops into the 21st century, color the walls in a neutral shade, and put down sturdy laminate flooring. In the end, buyers are impressed both by the houses' modern amenities and its reasonable price.

This investor wisely repaired the house so that it was similar to homes nearby and applied for just enough financing to bring the house up to a marketable standard. By making reasonable repairs, they were in turn able to list the house at a reasonable price.

So in this tale of three flippers whose house sold first? The last one.

Unlike the first flipper mentioned, they didn't make assumptions about the market. They also had a sense of the features that were standard in the neighborhood, so unlike the second flipper, they didn't skimp out.

When it comes to flipping, don't waste money bringing a house up to "magazine standard," because no one in the neighborhood will be able to afford it. Don't skimp out and just bring a house up to a "livable," standard, buyers won't be impressed.

The standard you should achieve with every flip is the "market standard."

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.

Considering Owner Occupied Hard Money Loans

If you have rotten credit, you may have been referred to a hard money lender—but what is hard money, and what situations work best for it? Read more below to find out!

Arizona Hard Money Lenders are private lender. They are alternative options to traditional lenders like banks and credit unions. Traditional lenders have high standards when it comes to the loan approving process. A great credit score and debt to income ratio can make or break you when it comes to qualifying. Arizona Hard Money Lenders are there for you when you cannot meet these high standards or have an imperfect financial history.

The value of the property comes first when it comes to the approval process of hard money. Private investors want to know the plans and potential. Then they will consider your financial history. It’s not as important here, but it will still be considered. When people aren’t turning to Arizona Hard Money Lenders for their ability to approve them, it’s for their ability to be speedy when it comes to starting the loan process.

Borrowing Hard Money

If you are considering owner occupied hard money loans, it is likely because you need to fund some basic home renovations, like repairing the roof. Owner occupied Texas Hard Money Loans refer to the fact that the borrower is funding a lived-in property and working on something that needs an immediate fix. Renovations are the most common reason to use hard money, whether it’s owner occupied or for another reason like a fixer upper. Fixer uppers are actually the most common reason people borrow hard money. The speedy loan process and the short repayment period compliment the timeline of obtaining a competitive property off of the market fast and selling quickly with a hopeful profit. While the short timeline works well for fixer uppers, you really want to consider your options before diving into hard money for your current home.

Risks of Hard Money

Arizona Hard Money Lenders are great solutions to bad credit and short timelines. However, before seeking them out as your alternative lender, there are a few things you should consider. First, most Arizona Hard Money Lenders have high interest rates—much higher than the average lender on the market—and some are known for hiding fees within the terms to their loan agreement. You need to know the lender you are working with is reliable, and you don’t want someone whose only goal is to rack up as many fees as possible. If you want reassurance, you can always go to a real estate attorney who can help you look over the terms of the loan agreement if you have doubt. The other thing you want to consider is the short timeline. Coupled with the interest rates, Arizona Hard Money Lenders may not be a great idea. Extensions can be given to these loans, but owner occupied Texas Hard Money Loans may not be the best if you don’t know how you will begin to approach the repayment period. Some extensions can be given, as Arizona Hard Money Lenders are generally transparent with their borrowers, but you really need to consider what’s best for you in the long run.

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.

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.