Setabay Private Hard Money Lender

Sunday, May 5, 2019

Why Developers Turn to Arizona Hard Money Lenders

Finding the right lender to support you and your construction business is one of the keys to success. Arizona Hard Money Lenders are a popular go-to for those in this business.

Since the last construction downturn in 2008, lenders have considered construction loans a risky business proposition. Their requirements for borrowers including work history, creditworthiness, and money down are set in standards that are not negotiable. Typically, traditional lenders offer three different types of construction loans. One is a construction-to-permanent loan. In this type of loan, banks pay the builder in different stages as the construction is complete. At the end of the building process, the loan is converted to a mortgage. The second type of bank loan is a construction-only loan. These loans simply cover the costs of construction and are due in full upon completion. The third type of loan is a renovation construction loan—often used by those that are in the fix-and-flip investment model. This type of loan allows you to add the projected cost of the renovations into the mortgage, as well as the purchase price.

All of these loans are based on draws—paid at specified times during various construction phases. Banks will send an inspector to the construction site in order to ensure that the contractor has completed the phase and is on schedule. Besides monthly draws, these loans typically offer interest-only payments during the construction process. At the end of the loan term, usually as construction is complete, the full payment on the loan may be due. These loans are short-term in nature, though there is usually greater flexibility than other types of loans.

One problem contractors find with these types of loans is that they are harder to qualify for and banks will want to see a history of completed projects. Builders usually require a credit score of at least 680 percent and a down payment of at least 20 percent is required. Because of the difficulty in obtaining these loans, and the extended time to funding, contractors often turn to Arizona Hard Money Lenders.

What are the Benefits of Getting a Colorado Hard Money Loan for Construction?

Builders turn to Texas Hard Money Lenders for a variety of reasons. These include a quick approval and funding process that takes a week instead of a month. Another reason is that they are easier to qualify for. Whereas traditional lenders require specific credit scores, Arizona private lenders look at how much equity you have invested in the property with this carrying greater weight for both qualifying and amount. They will also consider additional assets. Because they are not government regulated, Texas Hard Money Lenders have greater flexibility when it comes to terms and repayment schedule.

At Level 4 Funding, we offer construction loans that are easy to qualify for with limited paperwork involved in the process.

Working with a company that has hundreds of Arizona private lenders in their rolodex, guarantees you the best chance of obtaining a construction loan, whether your first project or if you’re a seasoned veteran. There is no minimum credit score required and we offer some of the quickest funding in the industry—sometimes in as little as 24 hours. We offer interest-only payments with terms that range from 3 to 60 months. Call us 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.

Four Types of Real Estate Investment Financing Including Colorado Hard Money Loans

All though there are many other options than these four types of real estate investment financing, if you are able to comprehend and understand these, there’s a good chance you will understand any real estate concepts encompassing any combination of financing options. Let’s take a look at the most common, including Colorado Hard Money Loans.

Equity Investors--Utilizing equity investors for financing of a real estate project means you will form some sort of joint venture or partnership. You will need an LLC or other entity as co-owner with your investor. The investor provides the capital and you do the deals. The drawback is, of course, that you will need to split all profits on each project. The percentages for distribution of the profits will be governed by the deal structure you negotiate at the beginning of the project. On the other hand, if the project loses money, then both you and your investor will feel the impact. If you are successful on your projects, an equity investor is the most expensive form of capital since they take half or more of the profits on the projects. Another option is forming a private investment fund. You sell shares to accredited investors with a fixed rate of return.

Bank Loans—One of the most common types of real estate financing are bank loans. This option is a very affordable one. Due to the federal government, this option also has a lot of restrictions. In the U.S., almost all bank mortgage loans are owner occupied, for single family or apartment buildings with 1 – 4 units. The financing entity is the FHA. For a fix and flip of under-valued properties, it is almost impossible to secure financing. Buy and hold will also have its’ challenges. With FHA bank mortgages, there is a limit on the number of mortgages an individual investor can attain.

Owner Financing—This is an option where the seller will be the bank. You have a down payment and the seller will carry the balance and act as the bank for the remainder of the loan. This is basically an agreement with you (buyer), and the owner of the property(seller). This type of financing can encompass almost anything (legal). If you meet the right owner, you may be able to reach an agreement where the seller forgoes monthly payments for a share of the sale of the property on a fix and flip. The owner financing is only limited by your imagination on how the financing will be structured.

Colorado Hard Money Loans

A Colorado Hard Money Loan is a loan that is issued by non-bank lenders for real estate investment. Single family fix and flip is the most common and popular type of Colorado Hard Money Loan. The target property will increase in value when the investor renovates and refinances or sells the property. Terms on these loans can be 12 months and often carry fees.

One of the most important factors when considering a hard money lender is the cost. If you find yourself bidding for a property against a cash buyer and time is of the essence, then you may want to consider using a hard money lender.

Arizona Hard Money Lenders can close quickly, your personal credit score is not considered, good if you have dings on your credit report, length on employment is not considered, and the loan is focused on the after-renovation value of the property. If you choose this option, spend time researching your options and look for a lender with good past history. And do you due diligence and compare interest rates of costs for originating the loan.

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.

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.