Setabay Private Hard Money Lender

Thursday, April 18, 2019

4 Unexpected Ways to Make Your Arizona Fix and Flip Loans Go Further

Maximizing profit earned on real estate investments is always important, but when you borrow the funds to do rehabs, it becomes that much more important. Make your Arizona Fix and Flip Loans go further by using the tricks seasoned pros do.

1. Learn which improvements make the most sense. When you’re just starting out and haven’t worked on many rehab projects, you’ll want to work with an appraiser who can point you in the right direction if your plans don’t add up. It’s possible to under-improve a home and fail to attract buyers, but it’s arguably more common for rehabbers to over-improve, meaning the property becomes too expensive compared to other homes in the area or the renovations simply don’t add value.

2. Adapt your buying strategy. Low-priced properties either encourage bidding wars or fly off the market. If you’re waiting for properties to list, you’re going to have serious competition. Find ways to catch properties before they list. Work neighborhoods and put the word out that you’re looking for rehab projects. If you need to come in with a low bid due to limitations of Arizona Fix and Flip Loans, consider bargaining with the seller or offering the seller a portion of your profits to help seal the deal.

3. Avoid properties with damaged systems. Save the homes with fire or flood damage for people who have loads of experience. If you’re using contractors to do the work, you’ll probably want to avoid properties with damaged foundations or roofs too. Old or improperly-done electrical systems can eat away at your profits as well. While you can rehab properties with damage to major systems, the best bet is to focus on homes with cosmetic damage or that are simply outdated. In rehabbing these, you can get in and out quickly with minimal risk.

4. Understand your buyers. Knowing the demographics of the neighborhoods you work is essential. Some rehabbers look to up-and-coming neighborhoods for projects. This is a good strategy, but it also means you’ll need to be very mindful about the renovations you make, so you’re not creating something that people who would otherwise move into the neighborhood cannot afford. Other rehabbers focus on the best neighborhoods they can find and choose the ugliest properties in them. This strategy will enable you to focus more on high-end upgrades and may increase your profit margins, but you’ll also be working with more intensive renovations and you’ll really need to know the buyers, so you’re adding features they’re excited to pay more for.

Find Arizona Hard Money Lenders Who are the Real Deal

Banks don’t readily provide Arizona Fix and Flip Loans because you, as a borrower, won’t be living in the house. That makes it too risky for them unless you happen to be one of the few with incredibly good credit and you’re choosing a property that’s move-in ready. Ergo, you’ll be looking to the hard money scene for funding with rehab projects. Each lender is different, so you’ll need to know how yours operates.

If you plan your rehab projects well, you’ll naturally increase profits.

Spend time getting to know all the numbers of your rehab projects before you start applying for Arizona Fix and Flip Loans. When you add up all the expenses associated with a project, from renovations to fees and the purchase price, the amount should not exceed 70% of what the home should net you at sale.

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.

Why Smart Texas Private Money Lenders Insist on Title Insurance (And You Should Too)

Most Texas Private Money Lenders require title insurance in order to fund a deal. Although there’s some debate on the merit of this practice, it’s essential because it protects both you and the lender.

Although land and property transactions began occurring in the United States for almost all recorded history, the concept of title insurance is relatively new. Initial transactions were simple for obvious reasons. There was virtually no chance anyone else could lay claim to a property because so little of the country had been settled.

Because of this, the conveyancer system was used. Conveyancers worked similarly to title insurance companies in the sense that they carried out diligence, but they offered no guarantee that a property was free and clear. They weren’t lawyers, but rather, were local experts who could carry out research on any given property. They’d craft reports and sign off on them, which would give buyers/ borrowers and those financing purchases more confidence, but the transactions were still risky.

Watson v. Muirhead in 1868 changed this. Muirhead was a conveyancer hired by Watson to check into a Pennsylvania property. After finding a lien on the title, Muirhead consulted an attorney. The attorney told him the lien was invalid and Muirhead decided to certify the property was clear. Watson purchased the property, but it was later put up for a Sherriff’s sale to pay off the lien. The sale was legal. Watson lost his property and his money. He attempted to sue Muirhead (thus the groundbreaking case of Watson v. Muirhead), but he lost. At the time, Muirhead could have only been held liable if he had been negligent, and because he consulted an attorney and acted upon the attorney’s advice, Muirhead was not in the wrong from a legal standpoint.

The following year, the first title insurance company was formed. Today, Texas Private Money Lenders and virtually any entity handling the financing of a property requires that a title insurance company be involved in the transaction.

Title Insurance is a Win-Win Solution

While many people think title insurance is purely in place to protect the Texas Private Money Lenders, this early case highlights how important it is from a buyer or borrower standpoint too. The insurance company not only carries out the research, but pays out if, for some reason, a mistake on their part results in financial losses. Ergo, it will address things like unpaid taxes or liens that could become a problem later, existing loans, active or pending foreclosure, active bankruptcy by the current owner, undisclosed or missing heirs to the property, errors, fraud, and more.

You’ll risk less by having title insurance and can protect your own assets.

As a borrower working with Texas Private Money Lenders, you’ll have some skin in the game too. Although title insurance is not a 100% guarantee there won’t be an issue with the property later, purely because the title insurance company is using public records to certify, their willingness to pay out in the event there’s an issue protects your investment and the money that your financers are putting in as well. Simply put, getting title insurance is one of the smartest things you can do when you purchase a property.

Why, When & How to Work with Residential Hard Money Lenders in Arizona

Residential Hard Money Lenders in Arizona offer financing for homes when banks won’t. They’re geared toward helping real estate investors when they want to purchase a single-family home, multi-family property, or are managing a portfolio with multiple residences.

Starting with the basics, Residential Hard Money Lenders in Arizona focus on financing homes, versus businesses, warehouses, and similar. The loan is backed by the borrower’s hard assets, which is where the term “hard money” comes from. Hard assets can be virtually any type of property, but in this case, it’s typically the house that’s being purchased or other properties in the borrower’s investment portfolio that are used as collateral. The lenders, themselves, are typically individual people who have built enough wealth that they can support the ventures of others. They provide the funds, often because they really enjoy helping others become successful, and also because the fees you pay to borrow help them grow too. In other words, it’s a win-win solution that doesn’t pad the pockets of banks, but of people just like you. Perhaps with a few savvy investments of your own, you’ll also be in a position to support others and lend funds too.

Because the money is coming from private individuals, the loans are not subject to the same regulations as banks. This, paired with the fact that most work with real estate investors, gives the financers a whole lot more room to create custom solutions that banks can’t.

Loans are typically short in duration, with some lasting just a few months and others having several-year terms. The payments made are typically interest-only for the duration of the loan. At the end of the term, the full principal balance is due.

How to Evaluate Which Loan Type is Right for You

Residential Hard Money Lenders in Arizona operate differently than banks do on a number of levels. Banks work under a multitude of situations, but they’re geared more toward owner-occupied options. That means the borrower has to live in the home more than 50% of the time. They will also usually limit the total number of properties they’ll finance. Conversely, private money is usually for non-owner-occupied homes and is geared toward investors. It can be used for full portfolios. The requirements are totally different too. Banks will look at your FICO score, income, tax returns, and more to decide if you’re worthy. Going the private route, it’s more about the value of the asset and whether you’ve got a solid plan or not. You can also usually get your funds in a matter of days, whereas banks take months. In knowing these differences, the right choice for your needs is likely very clear.

A broker can lend a helping and get you set up.

Residential Hard Money Lenders in Arizona rarely advertise their services directly and, because of the diversity of the field, it can be difficult to find one who lends for your specific project type, works in your area, and is offering good terms. This is where brokers come in. A good broker will connect you with the right financing team for your needs and will find you the best deal too. Brokers are also geared toward cultivating long-term relationships—it’s not just about getting you funded for this one project and being done, but rather, about making sure you’re successful this time and come back to him or her for your next one too. If bank funding isn’t going to fit your needs, start by finding a broker to build a relationship with.

Wednesday, April 17, 2019

Can You Use Owner Occupied Arizona Hard Money Loans on Your Own Home?

When it comes to residential owner occupied Arizona Hard Money Loans, you’re expected to use the space as your primary dwelling. The catch-22 is that there are few lenders who will provide funds under these circumstances, so you may have to explore other options.

There are financial products for virtually every circumstance, which is a good thing because that means you can usually find some type of financing regardless of your situation. However, identifying which product is right isn’t always easy, and if you’re a home owner exploring your financing options, getting to the core of how owner occupied Arizona Hard Money Loans work is essential.

This type of financing is provided by private lenders; individuals and sometimes institutions rather than big banks or credit unions. In most cases, it’s packaged as a commercial or business solution. In other words, the property cannot be your primary residence. Lots of people who work in real estate investing, such as home flippers or landlords use it, but in this case, it’s a “non-owner occupied” solution.

When you, as the homeowner, plans to live in house more than half the time, you must seek out the “owner occupied” variety. Few lenders provide this option because government regulations change the way the financing is handled. Furthermore, the market already has many options for this. There are traditional mortgages and alternative financing options to suit this type of need, and they’re generally more cost-effective.

Why Do People Look to Private Lenders to Finance Their Personal Homes?

The reality is, banks are totally geared toward homeownership and there are even federal programs designed to get people into houses they can share with their families. For banks, there’s little risk involved in extending this kind of financing, especially when the borrower has good credit and reliable income. Yet, there’s obviously a gap here. Sometimes, people don’t qualify for a traditional mortgage. It’s situations like these where people start looking toward owner occupied Arizona Hard Money Loans, but opportunities to secure them are few and far between.

Other times, all a person’s money is tied up in equity in their current home. If you want to move, but don’t have the funds for your next down payment and moving expenses, it makes sense to tap into your equity before your current home is sold. Moreover, if you already have one home as a primary residence, you aren’t going to qualify for programs that require the new home to be your primary residence. That makes banks wary. They become concerned that you’ll default on your non-primary residence, and so your funding options evaporate. It’s situations like these that short-term financing from a private lender can be a huge help. That said, these solutions are technically not “owner occupied,” as you don’t actually plan to live in the residence. That’s actually a good thing because it means you’ve got more options in the private lending space than you otherwise might have.

Seek advice from a broker in the private lending space to find the right solution for your needs.

Whether you’re looking for owner occupied Arizona Hard Money Loans, a loan for a property that will not be your primary residence, or funding to help you bridge a gap between the sale of an old home and the purchase of a new one, there are options. The best way to uncover which financial product is right for your situation and needs is to chat with a seasoned broker who knows the space well and can help you find the best one.

Top 4 Tips to Get Your Texas Hard Money Loans to Close Faster

One of the biggest benefits to using Texas Hard Money Loans is that they can get cash in your hands quickly. To keep the process moving smoothly, come to the table prepared.

1. Establish a main point of contact. Most lenders will pair you up with someone, be it an account manager, broker, or assistant. It’s important to develop a relationship with this person and ensure the lines of communication are open, so they can follow up with you as needed and keep you informed of the progress. If you aren’t given a main point of contact, find out who you should be keeping in touch with.

2. Find out what documents you’ll need in advance and have them ready to go. Each lender will have a different set of requirements for approving Texas Hard Money Loans, but you’ll typically need to supply details on the property, an appraisal, an outline of your plans, a budget, a timeline, and documents related to your business and financials. Oftentimes, the team cannot even begin processing an application until after everything is submitted, so delays in getting the paperwork to the finance team will naturally slow the approval process.

3. Don’t overwhelm your finance team with unnecessary paperwork. It can be tempting to send in everything you have related to your project, but your lending team will have its own processing methods and if extra things are sent in, that simply makes it harder for them to find what they need in your stack of papers.

4. Be prepared to supply additional details. If something is missing or is unclear, the team will need a prompt response from you in order to continue moving forward. Ergo, if you had a stack of papers you held back from the initial submittal, keep them close at hand just in case they’re needed.

Demonstrate Eligibility Early and Have Cash in Hand in Days

Traditional bank loans have regulatory red tape that slows the approval process, dragging the funding out for a month or more. This isn’t true with Texas Hard Money Loans. If your initial application is comprehensive and you supply all requested documents promptly, you can literally close on your financing in a matter of days.

When you work with a good team, they’re there when you need them.

The process will be different depending on where you’re sourcing your Texas Hard Money Loans from, but an experienced funding team works like a well-oiled machine. That’s part of the reason they’re able to stay in business. By taking care of you promptly, they’re not only creating a happy customer who will return for later deals, they’re freeing themselves up to complete other deals. They do this day in and day out, so it’s a smooth and straightforward process. Follow their lead, stay connected with them, and you’ll close faster than you ever thought possible.

Can You Really Use Texas Hard Money Loans to Flip Hoarder Houses?

Hoarder houses can be such a disaster that it’s difficult to assess what needs to be done before it’s cleared, but that doesn’t mean they’re not good investment properties. You can use Texas Hard Money Loans to fund the deals as long as you’ve prepared a solid plan.

Under ordinary circumstances, you’ll have a good idea of the amount of work necessary to complete any fix-and-flip. While you should budget for unforeseen expenses because just about every house has an oddity, chances are your whole project won’t be derailed by a surprise finding. Hoarder houses are different. They can be packed solid with debris from floor to ceiling, totally obscuring the condition of the property.

The medical community is still trying to establish what happens in the minds or hoarders. Initially, hoarding was believed to be an offshoot of obsessive-compulsive disorder, but scans show these individuals have abnormally high brain activity when they’re faced with a decision to throw something away, even when they know it’s junk. This stimulates them to the point where they’re paralyzed from making a decision, and so their clutter grows. Their isolation and depression tends to as well.

Adding to the challenges, there are often infestations and animals kept in the homes. The hoarder, genuinely unable to make the decision to so much as toss a piece of junk mail, cannot manage these issues either. Ergo, the homes are not only packed with debris, but are also unsanitary and unhealthy. It’s no wonder that when TV shows depict the big clean-out, the crews going in wear hazmat suits.

Risk Less by Planning for a Complete Teardown

Part of getting Texas Hard Money Loans involves demonstrating your plan for the property, but if you can’t even see the walls, it’s impossible to determine the condition they’re in. They could have holes, mold, damage from infestation, and more. In other words, the only way you can be sure you’re going to have success with the project is to plan for a worst-case scenario; tearing everything inside the home down. Other costs worth factoring in are pest control and professional junk removal. The latter is beneficial because these people do removals every day. They have the equipment, materials, and expertise to get it done quickly and cost-effectively, as opposed to your regular contractor who may or may not have ever worked on a hoarder home before. It’s worthwhile to get estimates from more than one company for this.

Set Your Expectations Based on Real Numbers to Be Successful

Anytime you apply for Texas Hard Money Loans, you have to demonstrate that your plans make fiscal sense. That’s a given. When it comes to hoarder houses, you need to work backwards, starting with what the finished property will be worth, then subtract all your expenses (remember, you’re going down to the studs and there will be additional costs too), remove a portion for yourself, and then determine what price the property is worth. This is one situation where it may be incredibly difficult not to make an emotional decision, particularly if you’re negotiating a price with the hoarder, but it’s important to focus on the numbers. Only then can you put Texas Hard Money Loans good work by giving this person the chance to walk away and start over, help the neighborhood, and invest in your future too.