Setabay Private Hard Money Lender

Tuesday, May 7, 2019

What is a trust deed investment?

Should you use this type of funding? Read further and find out how this may help you.

Positive factors include: when set up correctly, these kinds of investments can produce a well-turned current yield while running only a low risk.

Hugh single-digit returns can be earned, as high as 10%, coming along monthly.

The prospect of loss in this type investment is hedged by a safety margin, that being the difference between the total loan amount and the worth of the property. If the borrower fails to repay the money, the lender involved can take possession, sell the property to recoup funds as well as any interest attached. It is possible for an investment to have an LtV of 65%, making it very advantageous to the borrower in case of foreclosure.

What are the disadvantages of this type investment?

Negative aspects include: A trust deed investment may generate income for you, but it will not appreciate in value like a basic real estate investment of property can do.

Other areas affecting the borrower in a less than positive light include real estate values dropping sharply and quickly, a lawsuit affecting the property title, mistakes made when the property is accessed and the value being less than appraised for. These are just some of the things that could possible go wrong when investing in this type of deal.

Banks are very reluctant to do this type of investment since they want to make money off a loan—a loan that pays off in six months does nothing for them. Banks want loans that can stretch out over time, up to 30 years in a lot of instances.

Seeing that traditional investors are somewhat unwilling to take this on, a hard money loan person might be your best bet—these lenders specialize in working ‘out of the box’, catering to investors who have less than perfect credit, are self-employed, etc. These lenders charge higher interest rates than the traditional ones as well as origination fees. A bridge lender who may make loans on property in too bad a condition for conventional funding might also assist here—their interest and fees are set up to be somewhat lower than a straight out hard money loan’s would be.

Great care and in depth research needs to be done when making a trust deed investment. Make certain that that everything is in order before you make this investment, particularly that the property value assessment is correct and that all the attached legalities have been cleared. There are other points to be checked as well—knowing the overall picture is important. You cannot turn your investment back into liquid cash the next week if you have a change of mind as you could with a blue chip company or municipal bonds.

What should I do since I am really interested in Trust Deeds?

Talk to friends who are in the business; find an attorney or certified public accountant and get their views on trust deed investments. When possessed of all the facts, pro and con, then study them and make up your mind—this type investment may be just the one for you. Go after it, but keep your eyes open to all the details involved.

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 Find Colorado Hard Money Lenders

Finding the right hard money lender can help first-time and even seasoned real estate investors succeed at their chosen field. There are several factors to look for and reasons why this type of financier is good for those entering this challenging field.

A hard money lender is a private investor who lends based on collateral. Usual terms are anywhere from 6 to 12 months, although many will extend these depending on the individual circumstances. One of the benefits of this type of investor is that they are much more prone to develop a personal, though business-based, relationship. It’s a lender that you can often call for advice and, if the relationship proves beneficial for both parties, many years of lending and borrowing on various real estate projects can be expected.

So, just how do you find these private money lenders? There are several ways to track them down. Before the advent of the World Wide Web, most Texas private lenders were found through networking or introduced by friends or family. In the shrinking world that we live in now, lenders can be found in a matter of minutes with just a few minutes of browsing. This, of course, makes it more important than ever that a borrower understands the basics of lending and what to look for in a private hard money lender.

While the basic benefit of a hard money lender is considered their process of lending based on assets instead of credit, there are additional attributes to look for. If the borrower is looking to get into this lucrative business for the long haul, they will want to consider a lender that they feel comfortable with, and one that they can turn to for multiple projects. When looking online, be sure to check for reviews and don’t hesitate to request references. Lenders often specialize in certain fields, so be sure to choose one that has experience in your field whether it be the fix-and-flip model, renovating and renting, or quick turnarounds on ideal properties that require little makeover.

Property Types for Texas Hard Money Loans

Most commercial properties will fit into a private investors lending model. Just be sure, as we mentioned, to obtain a lender that specializes in your type or investment strategy. These may include multi-units, single family homes, commercial properties and even industrial properties such as warehouses or distribution centers. One area of investing that Texas private lenders use to steer clear of was properties with no buildings—just land—and mobile or manufactured homes. Fortunately, times are changing.

At Level 4 Funding, we offer construction loans, bridge loans, loans on multi-family units, as well as manufactured homes, warehouses, and distribution centers.

Because we work with hundreds of private lenders, we undoubtedly have an investor that specializes in your field. It’s not uncommon for a borrower to have several lenders to choose from. At Level 4 Funding, we are here to steer you through the process and help you make choices that are best for your real estate investment business. Call us for a no-obligation quote, or two.

Monday, May 6, 2019

Why New Real Estate Investors Turn to Texas Hard Money Lenders

One of the biggest hurtles a new real estate investor faces is finding that first lender who believes in his project. Texas Hard Money Lenders are one of the top lenders that those just entering the field turn to.

It can be difficult to obtain that first loan without a track record. Lenders want to see your history as a fix-and-flipper, renovator, or builder. They want to know you understand budgets, time constraints, and have the contacts to overcome the obstacles that are bound to arise. Though some Texas Hard Money Lenders have these same stringent requirements, most Texas private lenders are more apt to take on the new kid on the block and help him, much as a mentor would, through that first project.

Credit scores and lack of credit worthiness can halt the lending process. As with most ventures in life, it takes a few attempts before we get it right and a few more before we excel. In the meantime, our credit can take a hit and we can be left with little in the bank to lean on. Fortunately, Texas private lenders look at your assets and the equity you have in your property. They will determine a loan-to-value ratio and lend accordingly. First-time investors have a much better chance at getting a “yes” when the main focus is on the property.

The fix-and-flip investment model has skyrocketed. In fact, house flipping hit a six-year high in 2018. This means that investment properties are quickly snatched up once they hit the market and contingency sales are few and far between. You’ll need cash, quick. Texas Hard Money Loans can be closed in anywhere from one to two weeks, with some Texas Hard Money Lenders closing in as little as a few days. This does mean that the days when vacant properties and foreclosures were easily found has pretty much ceased to exist. In addition, due to supply and demand, housing prices have risen steadily. For those of you newbies out there, keep in mind that real estate auctions are still good places to explore.

Return on Investment

The average gross profit of a flipped house in the first quarter of 2018 was over $66,000 dollars. Not bad for a few month’s work. This led to an average 47.8 percent return on investment. Despite what may well be a very lucrative endeavor, it’s important to know your market. Areas where prices are rising fast can carry more risk. Emerging markets, on the other hand, are a fix-and-flipper's dream. The ultimate goal is to find inexpensive properties in good locations that will lead to high ROI. Many real estate investors are finding their pot-of-gold by turning to the suburbs and renovating in the up-and-coming neighborhoods. Don’t be tempted in going for that cheaper property in a low-income neighborhood where you may have problems reselling.

At Level 4 Funding, our portfolio of Texas Hard Money Lenders contains hundreds of investors that lend to first time flippers and renovators.

While it may seem almost impossible to get into your first property, know that there are opportunities out there. Call us at Level 4 Funding for a no-obligation quote. We may just have the perfect lender to get you started in the very lucrative real estate investment model.

When Working on a Project, use a Arizona Bridge Loan to Complete or Initiate the Project

Bridge loans are short term in nature. These types of loans have several important purposes to those in the real estate investment industry.

The Arizona Bridge Loan is a short-term gap for a borrower before they can secure permanent financing for a project. When the permanent financing is secured, or the property sells, then the bridge loans are expected to be paid back. Utilizing a Arizona Bridge Loan is mostly used for big real estate projects of projects that require huge capital outlays at the initial, middle or completion stage of the project. On smaller projects, the Arizona Bridge Loan could be used to initiate or complete a project.

Repayment of the Arizona Bridge Loans is done when the permanent funding is secured for the project. For example, the Arizona Bridge Loan is repaid on a project when the company received the equity investments from venture capital firms. Alternatively, bridge loans are repaid once an investment has been received from a private investor. There are some institutions that require that the Arizona Bridge Loan be paid irrespective of permanent financing being secured.

Bridge loans, in most cases, do not require a high level of collateral for the funding. Collateral for a loan mostly is restricted to permanent funding. However, some lending institutions may require a lien on the assets of the project. Should the borrower default on the repayment of the loan, then the lending institution can take over the project and sell it to recoup the loan. There may be a wavier for the collateral based on the viability of the project or if the borrower can demonstrate a firm commitment that the loan will be paid from new investors.

The Structure of a Arizona Bridge Loan

The tenure of the loan is short-term in nature, the structure of the loan can be three (3) to twelve (12) months depending on when permanent funding can be expected. The term of the loan will also depend when the funds are expected to be released. For example, if permanent funding is dispersed over three (3) months then the Arizona Bridge Loan term will be structured to accommodate the permanent funding.

The cost of funds for the Arizona Bridge Loan are routinely in the range of four (4) to six (6) percent margin on the Interbank Rate, depending on the risk that lender is taking. Understand that the Arizona Bridge Loan is inherently risky, so higher rates are charged accordingly.

You should secure a Arizona Bridge Loan when you have secured a commitment for permanent funding. This permanent funding should be obtained in the short term then you proceed with securing the Arizona Bridge Loan until the permanent funding will be disbursed. If your timing is off and the permanent loan funds are not disbursed in a timely manner, then you will be forced to pay higher interest on the bridge loan, and this may jeopardize the profitability of the project. Just remember that the Arizona Bridge Loan will be paid off with the funds from the permanent funding expected. The Arizona Bridge Loan should not be secured until you are sure that the permeant funds will be disbursed, or the project may face a critical delay. There is no purpose to obtain a Arizona Bridge Loan if the funds cannot be used right away.

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.

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.