Setabay Private Hard Money Lender

Monday, May 6, 2019

The Three Loan-to-Values of Arizona Hard Money Loans

Arizona Hard Money Loans are one of the more flexible options to consider when financing a real estate investment. There are three loan-to-values to consider when reaching out to a private lender.

Real estate financing looks at the Loan to Value (LTV). In other words, it is the value of the property that the loan will finance. If you have a property that is a $100,000 property and you plan on putting down $25,000 and you will be borrowing $75,000, then your LTV would be 75%. This provides the lender the knowledge that you have skin in the game. The amount of the loan is the amount the lender has financed and the lender’s LTV. While a conventional bank looks at the loan to value as-is, Arizona Hard Money Lenders look at property three different ways. The three ways to look at the LTV can either help or hurt you if you’re looking to close quickly or for the best rates.

The LTV as-is is the easiest LTV to understand and is practically identical to both Arizona Hard Money Lenders and private banks. This is based on the property’s current as-is condition without any improvements or repairs, fair market value. This valuation has no differentiation if the property needs repairs or if it is in tip top condition. The value is what the property is worth as-is right now. The value is usually determined by an appraisal. The total collateral is determined by the as-is value.

Arizona Hard Money Lenders start to excel and show their flexibility with the purchased LTV which is the first specialized Loan-to-Value. Remember the obvious when you are buying property for investment purposes: buy low and sell high. Frequently your purchase price will be lower, in most cases, than the purchase as-is value. Due to bulk sales and motivated sellers, investors can acquire properties as much as 90% as-is value. Some Arizona Hard Money Lenders may grant you a discount on Arizona Hard Money Loan rates basing them on the purchase price LTV.

ARV LTV

The After-Repair Value (ARV) specific to Arizona Hard Money Loans and fix and flippers is one of the most useful tools. This type of loan will allow you to borrow from the hard money lender the after-repair value of the property even if the amount is greater than your purchase price or current as-is property value. For example, you buy a property for $100,000, you anticipate $20,000 in rehab and renovations on the property, so you are looking to finance the $120,000. You are putting down $20,000, and the After-Repair Value is $180,000—a pretty good deal all-in-all.

At Level 4 Funding, we work with Arizona Hard Money Lenders that utilize this lending strategy. If the process sounds confusing, call us—well be happy to steer you in the right direction with the type of Arizona Hard Money Loan that best fits your needs.

You may be looking to put in as little money of your own as possible. So, you are looking for a fix and flip loan which calculates and uses the ARV LTV. At 75% of the $180,000, the ARV would be $135,000 more than the total cost to acquire the property and repairs and rehabs. So, the deal looks great. Remember that Arizona Hard Money Lenders do require that the borrowers have some skin in the game. Hard money ARV LTV can loan up to 90% of purchase price and 100% of the rehab costs.

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.

Sunday, May 5, 2019

Six Reasons to Obtain a Bridge Loan

For those of you who have not heard the term, a Arizona Bridge Loan is a short-term loan that is used to purchase or renovate real estate property. Here are the top six reasons that investors turn to this type of loan.

Reason #1: Down payment for the purchase of a new home. If you’ve found your dream home but need a down payment until your old home sells, a Arizona Bridge Loan is a perfect solution. Reason #2: If you’re looking to make a quick offer on that foreclosed home that just went on the market, a Arizona Bridge Loan can be obtained quickly. Reason #3: A property in the up-and-coming neighborhood that’s in need of renovation has appeared on the market. Again, this type of loan can be obtained in record time.

Reason #4: The market is hot and making an offer on a home with a sales contingency will likely take you out of the running. Reason #5: You’re building a new home and can’t qualify for a traditional mortgage. Keep in mind that there are bridge loans that you can obtain from banks and others that you can obtain through hard money, private lenders. Reason #6: This is your go-to as a real estate investor for quick turn-arounds in a hot market.

Arizona Bridge loans are called such because they provide a bridge from one property to another while waiting for one to sell, refinance, or for a conventional loan to process. They are common in investment circles and are often obtained from Colorado Hard Money Lenders. When acquired though private lenders, the loan will be based on the available collateral. Repayment can be set up as interest only until the renovation or building is complete.

The Down Side of a Arizona Bridge Loan

There are a few items to be aware of when considering this type of loan. Make sure the market is such that the property will sell in the timeframe allowed by the loan’s terms. These loans have terms that range from 3 to 12 months. Because of their short-term nature, quick to fund process, and associated higher risks, these loans tend to have higher interest rates.

Colorado Hard Money Lenders carry more weight on available assets than on your credit score. They are also more apt to work with you in terms of repayment plans.

At Level 4 Funding, we work with hundreds of private investors, many of whom specialize in these types of loans. Think of these loans as one of the tools in your investment belt that can help increase your portfolio. If you’re uncertain if this type of loan is the right one for your current project, call us. We’re happy to discuss the various options that Colorado Hard Money Lenders can provide. These include specialized loans for contractors in which money is obtained in draws and interest-only payments are in place until the property is built and sold. Our lenders also specialize in the very popular fix-and-flip investment strategy.

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.

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.