Setabay Private Hard Money Lender

Saturday, May 4, 2019

Mastering Arizona Hard Money Loans

It’s important, as a real estate investor, to develop an understanding of Texas Hard Money Loans and lenders. A basic understanding will lead to an improved return on investment (ROI).

In real estate, mastering the financing of projects is one of the most valuable skills to study. As an asset class, real estate is critical and learning to use leverage correctly is powerful. Real estate financing ranges from a simple $100 thousand fix & flip project to $100 million portfolio in acquisitions. One of the avenues investors take toward their monetary goals is acquiring and developing a relationship with a hard money lender.

Texas Hard Money Loans are also known as real estate interment loans. Banks do not issue the loans, but they are issued by private lenders. In most cases, these types of loans are not issued for non-owner-occupied properties but are issued to business entities that purchase the project. Regulated state-by-state, Texas Hard Money Loans have a very chaotic and confusing market place. The Arizona Hard Money Lenders have national lenders, local lenders and everything in between.

From short term to long term verities, Texas Hard Money Loans may have terms of 12 to 24 months. Bridge loans as well as fix and flip programs are popular investment strategies for those in the hard money lending practice. Some even offer buy-and-hold loans that are like conventional bank financing with terms that may range from 10- to 15- and sometimes even 30-years. From single family rental properties or fix and flip to multifamily (500+ units), Arizona Hard Money Lenders will provide the capital you seek for your next project. In addition, Arizona Hard Money Lenders will make portfolio loans, lend on construction projects, offer refinancing, and help you’re your next commercial project a success.

Arizona Hard Money Lenders vs Private Lenders

There are certain factors that differ Arizona Hard Money Lenders and private lenders. For lack of a better term, we put one group into the amateur private lender. These include family, friends, and fools. Other private investors include those with a high net worth. These types of investors tend to not advertise their services and are often found through networking. Arizona Hard Money Lenders often advertise, work within a specified group, or under a broker. At Level 4 Funding, we have a rolodex that consists of hundreds of lenders that specialize in various segments of the real estate market.

Obtaining your first real estate loan from family and friends may seem like the easy road to certain success, unfortunately, should things go south, your dearest relationships may be at stake.

There are three things to consider when looking at Arizona Hard Money Lenders. The matters that should be considered are rates, terms, and trust. As you proceed on the path to get your project funded, the private lender or hard money lender will let you know if they can help you. If they can, then you need to do your due diligence, check the rates and compare them, check costs and terms. In the end, it is trust and capital and your ability to get deals done that will spur you to success. The number one reason for losing money in a real estate investment is lack of capital, and the number two reason is lack of reserves. Give yourself a fighting chance by developing a relationship with a hard money lender. At Level 4 Funding, we work with countless private lenders, many who are willing to work with first-time real estate investors. Call us today for a no-obligation quote.

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 to Qualify for your First Fix-and-Flip Loan

Obtaining a Arizona fix-and-flip loan for your real estate project can be challenging. Texas Hard Money Lenders are one of the main financers in this segment of real estate investing.

There are several steps required when getting into the fix-and-flip segment of real estate investing. The first step is finding the right property—making sure that it is in a neighborhood and the market is such that you’ll be able to sell it for a profit after considering the cost of renovation and then paying for the property and taxes until its sold. Once you’ve got your property picked out, you’ll begin your search for funding. This is often the most challenging step and one that keeps many “almost” investors from obtaining their first property and breaking into this lucrative business.

Private or Texas Hard Money Lenders lend based on the hard asset or collateral of the property. These individuals or groups usually specialize in various segments of real estate development including single homes, multi-units, and industrial spaces. There are thousands that have turned to Arizona fix-and-flip loans and have chosen to invest in this real estate segment exclusively. Those that understand this segment, often lend on 90 percent of the purchase and repair costs of the properties. Banks, on the other hand, usually do not lend on rehabilitation costs. Unlike traditional lenders, many take on a role as a mentor, providing suggestions and lending their knowledge gained from experience to their borrowers.

Texas Hard Money Lenders become even more appealing if you are looking to eventually obtain multiple properties for rehabbing at one time. Banks will usually limit real estate fix-and-flippers to so many properties while Arizona private lenders do not set these types of limits. These types of loans are generally short-term in nature, no more than a year, with interest-only payments until the property is sold at which time the full amount of the loan is due.

Know Your LTV and ARV

Before applying for your loan, be sure to be ready with a business plan that includes an accurate estimate for renovation costs. This includes the scope of work and your loan-to value (LTV) as well as your after-repair-value (ARV). Let’s say the property your eyeing is going for $100,000. Lenders often offer 90 Percent on the LTV, or $90,000 loan amount. This means that you will need to come up with a down payment of $10,000. Some lenders will loan on the ARV amount. If you think your property will be worth $150,000 after repairs, the offered ARV loan amount will be around 70 percent or $105,000.

Have you heard of the 70 percent rule? This common term among fix-and-flippers means that an investor should pay 70 percent of the ARV (After Repair Value) of a property minus the repairs needed.

At Level 4 Funding, we work with hundreds of Texas Hard Money Lenders, many who specialize in the Arizona fix-and-flip loans and know the rules and recommendations associated with the field and understood by those who have succeeded. It’s always good to have someone in your court with a solid background in your chosen real estate investment model. Call us for a no-obligation quote. We’ve obtained hundreds of Arizona fix-and-flip loans for first-time investors.

When You Should Use Arizona Hard Money Loans

As you most likely have figured out by now, if you’ve been in the real estate investment business for any length of time, Arizona Hard Money Loans are not a fit for all scenarios. However, for a variety of transaction types, real estate deals, loan scenarios, and investment strategies, a private hard money lender is considered the lender of choice.

One of these lending scenarios is the fix-and-flip investment model. You’ll find that banks tend to stand clear of fix-and-flip projects from simple single-family renovations to complex commercial property and apartment building rehabs. Banks generally prefer to fund non-speculative real estate investments, cash flow positive, and up to date properties. These projects have fewer variables, are less risky, and fall within the guide lines of the highly restrictive rules for bankers since the recession of 2008. For projects of 1 to 4 units, FHA insured loans are available. If the property needs major renovations, it is almost impossible to secure a conventional loan in order to have the funds to rehab the property.

Due to the major restrictive nature of the conventional mortgage industry, one of the most popular types of loans for the fix and flips are Arizona Hard Money Loans. Since these loans are more speculative and riskier, they turn out to be one of the most profitable loans for the real estate investor. This type of loan is often the only option for a fix and flip project.

On the other hand, traditional banks will usually be able to fund your rental properties. From 2 to 4 units to 5-plus units and commercial properties, all can be funded through conventional banks. If your project needs major repairs or renovations and if your project is well under market value, damaged or neglected, you will find it very hard to find funding from a conventional bank. If you’re looking to fund the fix up costs of a property that is “as is,” a hard money lender is definitely your best chance at success. Other properties that banks tend to shy away from are multi-unit rental properties that have been mismanaged and neglected. Many Colorado Hard Money Lenders will fund the acquisition as well as renovation of the assets.

If Your Deal Needs to Close Fast

Arizona Hard Money Loans have the reputation of the ability to close fast. On the other hand, banks are associated with red tape and a long list of required documents. There are even some Colorado Hard Money Lenders that offer no doc and low doc loan options. Texas Hard Money Lenders, 9 out of 10 times, will have the ability to close fast, in some cases as little as seven days.

Other reasons to us a Hard Money Lender are, Cash Out Refinancing, Bridge Loans or Provisional Financing, No Doc or Low Doc Loans, Maxed out Conventual Mortgages, Higher Leverage Investment Strategies, and Partnership Buyout or Takeover.

As in all cases, when obtaining a Arizona Hard Money Loan, conduct due diligence, find out the transactional costs, find out the lending limit and if the lender will be able to fund your project in the town that the project is located. Lastly, once you have gotten your loan, keep a good relationship with the hard money lender so you can use them for future projects at lower costs.

Friday, May 3, 2019

Separating the Arizona Hard Money Lenders From the Scam Artists

Arizona Hard Money Lenders are great resources for real estate investors. But first, you need to know the signs of the scam artists to be sure that you don’t get taken.

Texas Hard Money Lenders are often misunderstood by borrowers who are not familiar with the process of hard money lending. The thing that all Texas Hard Money Lenders are shady and just about the same as a loan shark which could not be further from the truth. But borrowers do need to know the signs of the scam artists who masquerade as legitimate lenders in order to protect themselves and their business.

As with most professions, there are rules and regulations that govern hard money. In addition, there are licenses and certifications that lenders need to procure to become a legitimate hard money lender. Borrowers need to verify that any potential lender is licensed and that he or she has a current brokerage license as well. And as with any business, being bonded and insured is just a cost of doing business. If a lender refuses to provide proof of any or all this information, then chances are, that he or she is not a legitimate lender and you should seek a person whose credentials can be verified.

If the terms of a loan appear to be too good to be true, then chances are that is the case. If a lender is offering you a very low-interest rate and no upfront costs, beware. Ask for a written explanation of all of the costs and fees for the life of the loan. In most cases, the lender will stop communicating with you and you will know that the offer was a fraud. In the same vein, if a lender requires a lot of upfront money before signing any loan agreement, beware of a scam. In some cases, fake lenders will offer a loan that sounds great and could have a very reasonable interest rate. The hitch is that you must pay a bunch of fees upfront. In these cases, the would-be lender disappears with your fees and never comes through with a loan.

Get Promises In Writing

If a lender is legitimate and really has nothing to hide, he or she will be very transparent about the entire hard money loan process. It is not uncalled for to ask for a list of all fees, expenses, and interest that will be charged on a loan prior to applying. You will not get exact dollar figures unless the lender has set flat rate fees for some tasks. But you should get a complete list of the fees so that you can roughly calculate the costs. If the lender is not willing to be transparent, then you are possibly dealing with a scam artist or at the very least a lender who will hit you with hidden fees.

Evaluate Your Options

There are many reliable and honest Arizona Hard Money Lenders out there, and you can find them simply by asking questions and verifying the credentials of the lenders that you are considering. Investing the time to choose the right lender will pay off both in peace of mind and in the cost of your loan.

Red Flags To Beware Of With Arizona Commercial Hard Money Lenders

Finding the right lender is the first major task in any commercial real estate investment. But there are some red flags to be aware of when you are interviewing Arizona Commercial Hard Money Lenders.

All borrowers have heard the horror stories of Arizona Commercial Hard Money Lenders who are nothing more than scam artists who are out to make a quick buck at the expense of new real estate investors or even seasoned pros who are not on their toes. But all of that can be easily avoided if you keep on the lookout for a few red flags during your loan and lender search.

One of the first indications that a lender might not be legit is a lack of responsiveness or inconsistent responsiveness. Real Arizona Commercial Hard Money Lenders know that they need to be at the top of their game all the time to keep new clients rolling in and profits coming in from all of the new loans that they are funding. If a lender is not returning calls or emails, then there could be a good reason. In many cases, the less than legit lenders are only going to answer a few select calls knowing that they can rip off those potential borrowers in a short period of time and then get back to the life of leisure. Unless the lender can provide a good explanation for not responding, consider that a major red flag.

If a potential lender refuses to provide you with all the terms of the loan in writing and is evasive when you are asking questions, this is generally a sign of some hidden costs in the very best case and a total scam in the worst case. An honest lender is in business to cultivate relationships with borrowers and continue to provide a loan service for many years to come. These lenders will gladly provide all of the terms and costs in writing so that the borrower is confident and knows what to expect from the first day of the application process until the day that the loan is paid in full. If you can’t get the information that you feel you need to evaluate the loan and the lenders, then move on and find someone else to borrow from.

A Resource For More Than Money

Experienced and professional Arizona Commercial Hard Money Lenders are always willing to answer questions and help new real estate investors. The only way that a lender will get repeat business from a borrower is if the borrower is successful in his or her first few transactions. Any smart and honest lender will be willing to offer information and advice about the process of borrowing hard money as well as any other aspects of real estate investing that he or she is knowledgeable about. If that is not the case, then you should consider a new lender for your next project.

Watch For Red Flags

It is understandable that any lender could have a busy day or other commitments and not be able to return a call or email right away. But if the issue continues or the lender is not forthcoming with information or help when you ask, then heed the red flags and find a lender who will help you to be as successful as possible.

Three Things To Look For In Arizona Hard Money Lenders

Selecting the best financing option is the first step in any successful real estate investment. The following three items are important as you make your choices about Arizona hard money lenders.

You always want to be certain that you have a solid foundation for your business. And one of the critical factors in real estate investing is the lender that you choose. In reality, most borrowers invest the time only once when selecting a lender, and then they continue to grow that relationship for many years to the mutual benefit of everyone involved. But that first evaluation of Arizona Hard Money Lenders can be very challenging. You should be on the lookout for these three important pieces of information.

When you are searching for Texas hard money lenders, you are actually just searching for another service provider for your business. It is no more complex are difficult than that. So, you need to be evaluating and considering what qualities are important to you and what will be your expectation throughout this loan and during the lifetime of future loans. Responsiveness should be at the top of your list. After all, fast funding is one of the main reasons that borrowers use hard money, so a lender who does not respond you your calls or emails quickly is not going to help you grow as a real estate investor.

Transparency is another critical aspect of any strong and successful business relationship. You need to be honest with your lender, but he or she also needs to be totally honest with you. All of the processes and fees need to be explained up front and honestly. The only way that you can forge a long term working relationship is through honesty and complete transparency. But in the end, these two facets of your relationship will allow you to work together long-term which will save you both time and money for years to come.

The Dollars and Cents

Offering competitive rates and terms is also critical to building a long-term working relationship with and lender or service provider. Again, this is a business relationship and the point is to make money. So fair rates and terms are a must. Not all Arizona Hard Money Lenders will offer the same terms or rates, so you need to evaluate what each lender is offering to you and how much those services are costing you. You might be willing to use a lender who funds a little more slowly but charges a lot less, however only you can decide what you are willing to pay and what you are willing to accept for the money that you are paying.

Finding Your Sweet Spot

Selecting a lender is much like selecting any other supplier. This supplier just happens to be supplying your finding. But the most important thing to remember is that the supplier you select must be the one who over all meets your needs. So you are looking for the best balance of all of the criteria and services that you feel are most necessary to your success.