Setabay Private Hard Money Lender

Friday, April 19, 2019

3 Exit Strategies Residential Texas Hard Money Lenders Will Approve

When you approach residential Hard Money Lenders in Texas for funding, you’ll need to explain your exit strategy. Develop a plan around one of the three common exit strategies to keep your application moving forward.

There are quite a few contrasts between working with residential Hard Money Lenders in Texas and taking out a conventional loan. One key difference is that the principal is typically due in one lump sum at the end of the term. Although you’ll still make monthly payments, they’ll be smaller and will be interest only. Because of this, you’ll need to map out in advance how you plan out your exit strategy, or how you’ll pay off the balance, before you get funded. There are three main ways to do this, and the right choice will vary based upon your circumstances and investment strategy.

1. Sell the property. If you’re doing a fix-and-flip, selling the property is a natural end. You’ll handle all the repairs, put the home on the market, sell it for a tidy profit, and then pay off the loan.

2. Refinance. More often than not, refinancing is done with the fix-and-hold strategy. The loan is taken out either because the property is in poor condition and won’t qualify for a conventional option or the borrower needs to move faster than a bank loan can get funded. In these cases, the borrower can approach a bank at a later date and get a conventional loan. Sometimes borrowers refi down the line for other reasons too. For example, their credit score may not be good enough for a bank or they might have too much personal debt.

3. Payoff. Occasionally, a borrower has cash tied up in other projects and can’t get it out in time to fund a deal. This happens more often with a seasoned investor who has a larger portfolio and wants to keep growing it. He or she may have another property ready to hit the market a month or two down the line and will pay off the balance using the earnings from the other sale. The funds can come from virtually any source, such as an inheritance or other major payout, but the lending team will want to verify that the payoff plan is a sure bet.

Successful Investors Always Have a Backup Plan

Unexpected delays in a fix-and-flip project or a delay in incoming funds earmarked for a payoff could require you to refinance the loan at some point. Because of this, it’s a good idea to establish refi options at the onset of a project and be prepared to leverage them in the event your final payment to your residential Hard Money Lenders in Texas becomes due before you’re able to cover it.

Continue to evaluate your exit strategy throughout your project.

Even after you get approval from residential Hard Money Lenders in Texas, you’ll need to keep tabs on your exit strategy to ensure it’s still within reach. Monitor your timeline and funding as you move forward and be prepared to pivot when needed, so you can avoid complications and make the most of your venture.

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.

Top 4 Pitfalls of Owner Occupied Texas Hard Money Loans

True owner occupied Hard Money Loans in Texas are relatively unheard of in the industry. If you’re looking for one of your own, it’s important to become familiar with some of the drawbacks before you commit.

1. You, personally, must live on the property. Many people seek out owner occupied Hard Money Loans in Texas in the hopes of getting a better deal on financing, simply because most “owner occupied” lending options do have better terms. The logic behind this is simple: people will fight tooth and nail to keep their home. There’s less risk for a lender, so the lender will usually offer more favorable terms. The problem is, the borrower is the one who has to live in the home; not a family member and not a renter. Furthermore, it has to be the borrower’s primary residence.

2. Your income must be scrutinized. The Truth in Lending Act changed things in this respect. Because the government now sees the property as your primary residence, it sticks its hands into it too. The aim is to protect you to ensure you don’t wind up borrowing what you can’t repay, so the requirement then becomes that a third party has to look into you and your income.

3. Property taxes and hazard insurance have to be impounded if it qualifies as a “high-cost loan.” That means your lender has to collect extra payments from you for at least the first year you borrow. Furthermore, it’s up to you to be mindful and cancel it when it’s no longer required. Your lender isn’t allowed to do it for you.

4. You’ll get funded slower. Whereas a traditional private loan can close in a matter of days, you’ll need to add weeks or a month or more to this timeline if you’re borrowing as a primary residence. This, too, comes down to the added government regulations.

You Can Avoid Excess Regulations with Commercial Lending

While the above impacts you, directly, there are further regulations which cause headaches for the lenders too, which is why most will not provide owner occupied Hard Money Loans in Texas Instead, commercial or non-owner options are offered. With these, you are not expected the home. The requirements to qualify are different too. Instead of you being scrutinized, it’s mostly the property that’s of concern. Naturally, that’s a slam-dunk when it comes to things like fix-and-flips or fix-and-holds, but it can be extended to other circumstances. For example, if you’re adding a home office to your own property, technically the funds are for a business use. The key is that the funds cannot be used for you, your family, or your household.

Seek advice from an experienced broker to find the solution that’s right for you.

Chances are, you will not find owner occupied Hard Money Loans in Texas because of the red tape involved, but you probably wouldn’t want to anyway because it causes headaches for you too. A broker can walk you through funding options that are ideal for your particular situation, so you can get funded quickly and move on with your project.

Can You Get Arizona Rental Property Loans with Rotten Credit?

When you’re a landlord, you may have the opportunity to work at home or schedule most of your workday around your personal needs, but getting started in the field can be a challenge for those with rotten credit. The good news is, you can still get Arizona Rental Property Loans even if the banks won’t touch you.

Banks have very strict criteria for their borrowers, even when the individual is trying to get a loan for business purposes. They’re looking for things like a strong credit score, a good history of payments, stable income, and a whole lot more. The fact is, you’re under immense scrutiny when you approach a bank, and most people don’t make the cut.

Thankfully, banks aren’t the only ones who offer Arizona Rental Property Loans. Alternative lenders will work with you even if you have rotten credit or haven’t had enough time to establish credit yet. This realm of lending is typically known as hard money. Your potential to get a loan is based on the value of a hard asset. In the case of running rentals, it’s that property or multiple properties which serve as collateral.

The process for approval is also different. You’ll still have to go through some of the same processes you might have gone through with a bank, such as supplying documentation and having your credit checked, but eligibility is confirmed quickly and you can get funded within days.

Know the Differences Between Lenders

Not all Arizona Hard Money Lenders specialize in Arizona Rental Property Loans. Some like to work with other types of real estate investments, such as fix-and-flips, construction, or commercial buildings. Because of this, you’ll want to specifically seek out the help of someone who helps budding landlords. The best way to do this is to connect with a broker who works within this industry or across several, as he or she will likely know dozens, if not hundreds, of potential lenders and can match you with the right one. Moreover, your broker will also help ensure you get the best terms possible. His or her goal is to make sure you’re totally set and have everything you need to be successful, so that when you’re ready to expand your portfolio, you return for his or her help again.

If you can develop a solid business plan, you can get funded quickly.

To get Arizona Rental Property Loans, you need to be a details person. First and foremost, you’ll need to know all your numbers, such as the cost to make the initial purchase and what expenses you’ll have prior to beginning operations and what costs you’ll pay out to maintain the properties. You’ll also need to know what rate your rentals will command, which is typically done via comparative analysis. Following this, you’ll need a detailed plan outlining how you intend to get the home ready for your renters, what you’ll be doing to maintain it, and other important information. Having an exit plan is also crucial with hard money. During the duration of the loan, you’ll likely be making interest-only payments, but at the end, you’ll need to pay it off in full. It doesn’t necessarily matter how you do it, just that you’ve thought through the process and have a plan of action that will enable you to pay off the loan when you’re required to do so. In other words, you can get approved and start living your dreams, regardless of your credit, but you’ll need to do your homework and know your numbers first.

Thursday, April 18, 2019

3 Ways to Find Homes that Maximize Your Texas Fix and Flip Loans

One of the best ways to maximize your Texas Fix and Flip Loans is to select cheap homes. If you want to pay rock-bottom prices, learn how to pick up properties before they hit the market.

1. Neighborhood farming. Real estate agents who switch to rehabbing are probably already familiar with neighborhood farming. This is the technique used when an agent seeds a neighborhood over a period of time in order to become the authority for its residents. If you’re going this route, spend time researching which neighborhoods are best and suit your personal preferences. Then, craft a long-term strategy which involves repeat contact with the residents.

2. Advertising. We’ve all seen those “I buy ugly houses” signs. They’re arguably a bit overdone, so you may want to find your own wording or test different phrasing to see what works for you. This is one method cheap advertising that can get you leads, but there are others, from print ads to mailers. You can also work in the digital marketing realm, offering to be a guest poster or guest on a podcast for a related company, such as a moving or loan company.

3. Networking groups. Many rehabbers who leverage Texas Fix and Flip Loans utilize various networking sites or social groups. While it may seem odd that referrals occur in this realm, they happen all the time because rehabbers have distinct preferences. One may like working on million-dollar properties, while another may lean toward small inner-city dwellings. One might like working on historic homes, while another prefers hoarder homes or those with fire/ flood damage. The more you connect with other rehabbers, lenders, real estate agents, brokers, appraisers, and others in the industry, the more referrals you get. Just remember to reciprocate! Drop a note to someone when you think a project is something they’ll want to sink their teeth into.

If You Can Go Off-Market or Pre-Market, You Can Save Some Serious Cash

Sellers don’t always want their homes to be listed. These properties are often referred to as “off-market,” “pre-market,” or “pocket listings.” There are many reasons why people go this route. Perhaps the person is trying to sell on his or her own to avoid losing a chunk to a real estate agent. Sometimes, the seller simply doesn’t like the idea of having all sorts of tours and open houses at inconvenient times, which is quite common with people who have families or pets. Others may be simply dipping their toes in the water to see what their home will sell for. In any case, this is a great place to apply your Texas Fix and Flip Loans because competition is minimized and will typically let you pick up a home for much less than one that’s traditionally listed.

You should brace yourself for the pitfalls of pocket listings too.

Even though you can score a real deal with pocket listings, which will make your go Texas Fix and Flip Loans further, you could face unique challenges. For example, the seller is not typically receiving any expert advice, which means he or she could have unrealistic expectations about the value of the property or what the process entails. However, if you bring your leadership and management skills to the table, you and the seller can still have a great experience even under the most challenging circumstances.

How to Use a Cash-Out Texas Bridge Loan to Grow Your Portfolio

A strong real estate investment portfolio can pave the way to a comfortable lifestyle, but sometimes plans stall out due to lack of capital for the next purchase. A cash-out Texas Bridge Loan can be the tool that gets your plans back on track.

Developing a real estate portfolio, as opposed to focusing purely on fix-and-flips, can give you a steady stream of reliable income. The difference is, with fix-and-flips, you get a sizable amount of cash at the end of the deal, which you can then turn around and apply to your next property. When your funds are tied up in a property you plan to hold, it’s not always easy to move onto the next project. This is where a cash-out Texas Bridge Loan works wonders.

If your existing property is paid for or you have a considerable amount of equity in it, you can tap into that equity to fund the next project, but chances are you’ve never heard about this because the banks don’t like to do it. They will, at times, offer a similar option, but they expect you to spend the money on the property you’re borrowing against, which isn’t particularly helpful if that one’s already up and running and generating revenue.

So, without the banks helping you, where do you get the cash? From a Texas Hard Money Lender, of course. While a Texas Hard Money Lender will still want to know how you plan to spend the cash and will want to be assured you’ve got a solid exit plan mapped out, you aren’t tied down to using the money on the property that’s being leveraged.

Cash Out Can Help You Buy and Hold or Buy and Flip

Most Texas Hard Money Lenders will do a cash-out Texas Bridge Loan for up to 65% LTV (loan-to-value), meaning you can pull out as much as 65% of the value of one of your existing properties and use that cash toward the next project. However, if you know where to look, you can sometimes get as much as 90% LTV. People use cash-out options for different applications. In some cases, they take the full lump sum and apply it to the purchase and repair of a property. When the repairs are complete, they may sell it and pay off the balance or they may hold it and refinance. There’s also the option of using it to help cover what another loan won’t. If, for example, an investor gets funding for the purchase of a new property, but doesn’t get enough to cover the repair, the cash-out option will work there too.

If you’re eager to build a portfolio, you don’t have to wait any longer.

Naturally, it’s important to be mindful of how much you’re tapping into your portfolio to ensure you’re not overleveraging it. However, if you’ve got at least one revenue-generating property with solid equity, you can continue to grow and increase your earning potential with a cash-out Texas Bridge Loan.

Can You Really Be Mortgage-Free with Texas Private Money Lenders?

The mortgage-free lifestyle is the stuff dreams are made of, but many people believe it’s not within reach. There are actually many ways to accomplish this, and Texas Private Money Lenders can help set you on the path to financial freedom.

Data from Forbes Magazine concludes the average person is now leaving school with close to $40,000 in debt and one-in-ten with student debts is in default. On the other side of things, Value Penguin places the average amount of credit card debt at over $9,000 for balance-carrying households, while CNBC concludes nearly three-quarters are in debt and the majority believe they always will be. Nearly 80% of full-time workers are living paycheck-to-paycheck, and those with six-figure salaries are not immune, with close to 60% saying they were in the red.

It’s statistics like these which cause people to either make dramatic life changes or, at the very least, seek out alternative income streams. The good news is, there are many ways to approach this, depending on one’s personal style, and you don’t even have to have good credit to make it happen. It’s more a matter of identifying which strategy is right for you and pairing up with the right Texas Private Money Lenders to make it happen.

Live the Debt-Free Lifestyle with Savvy Investing Strategies

Generally speaking, property investing falls into two main categories; fix-and-flips and fix-and-hold. With the fix-and-flip variety, investors purchase an inexpensive property, upgrade it, and sell it rapidly for a profit. In most markets, each flip generates $20,000 or more, though some of this depends on the prowess of the flipper. With fix-and-holds, the investor keeps the property after repairs, either holding it until the market increases its value naturally or for the sake of renting it out to gain an income stream. There is a hybrid with this in which the flipper also lives in the home as repairs are being made as well. It’s an option worth exploring for those who don’t mind moving around a bit and can establish loan terms which allow it. Yet, these aren’t the only approaches that are being leveraged. As the housing market has shifted, there have been more people approaching Texas Private Money Lenders to get loans for Airbnb properties and even tiny houses too.

Take the first step and make your dreams come true.

Once you decide which strategy is more in line with your comfort level and goals, you can explore your options with Texas Private Money Lenders. Using this form of lending, also sometimes referred to as hard money, the property you purchase serves as collateral and you’ll usually make interest-only payments until the term is up. That gives a bit of breathing room to work through your project and enables you to qualify even if you wouldn’t normally get approved by a bank. Considering the average mortgage payment in the western United States exceeds $1,200 per Value Penguin data, it’s easy to see how eliminating the expense can totally change your life.