Setabay Private Hard Money Lender

Saturday, May 11, 2019

100 LTV Arizona Hard Money Loans: Tips to improve your eligibility

With 100 LTV Arizona Hard Money Loans, you won’t have to make a down payment on your next investment property. Some articles claim these deals are just too good to be true- but they’re wrong. Getting a 100 LTV deal is all about how you approach the subject with your lender, learn some talking points to follow to improve your chance of qualifying.

It’s hard enough getting a stranger to pay for your morning coffee, and with a 100 LTV loan your basically asking a stranger to buy your next investment property.

How on earth are you going to do that?

It all comes down to how you broach the subject with a potential lender. The first point that unless these it's being offered up front, don’t stumble into a lender’s office, asking for 100 LTV financing.

If you do that you could raise some red flags in your lender's mind.

What Arizona Hard Money Lenders might think if you ask for a 100 LTV loan right off the bat

• You're not committed- Money talks. If you ask a lender to cover the full cost of your next investment property you're basically saying to them:“I don’t really believe in my project enough to spend my own money on it.” So, your lender might ask themselves, “what's to keep this person from skipping town if something goes wrong, leaving me to foreclose on their unfinished building site?”

• You don't have money-By asking for 100 percent financing your lender could easily assume that you don’t have any money of your own. So, your lender might ask them, “If they don’t have any savings, how on earth will they keep up with payments if something goes wrong?”

• You lack experience- 100 LTV financing is so rare, that asking for it up front might make your lender think you’ve never closed a hard money deal before. So, your lender might ask themselves “If they’ve never done a hard money deal before, do they know what they're talking about?"

To close these types of deals, you need to answer these questions before your lender asks them, either to themselves or to you directly.

Follow these talking points to improve your eligibility for 100 LTV Arizona Hard Money Loans

• Prove your commitment- You could start the conversation by saying something like: “On this next deal, rehab’s going to be pretty extensive, so I’d rather use my money on rehab,” or something along these lines. The point is you need to thoughtfully explain the reasons why you’d like your lender to pay for the full cost of purchasing your property and assure them that you do intend to invest some of your own money in your project. Giving them such assurances will prove that you're committed to your project.

• Prove you have money- Then you could take out some documents, things like savings statements, tax returns, anything to prove your financially solvent. Point to these documents and say, “as you can see here I do have resources, so if something goes wrong I can carry the loan.” Prove to your lender that you're not asking for free money, just because you have no money of your own.

• Prove you have experience- Continue the conversation by saying, “I know I'm asking a lot of you, but I’ve done a lot of similar projects in the past. Here's how much money I’ve made on those deals,“ talking up your track record proves to a potential lender that you know what you're talking about and that you can bring your project across the finish line.

The above isn’t a word for word script. But if you carefully bring up the prospect of 100 percent financing, prove your commitment, financial solvency, and experience you'll be well on your way to closing that coveted 100 LTV hard money deal.

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.

Arizona Hard Money Lenders: The Best way to Finance 1031 exchanges

Did you know you could pay nothing in taxes on the profits from your next real estate deal, and that you won’t go to jail? Such a thing is possible thanks to a provision known as 1031. Learn what 1031 is, the rules you need to follow and why Arizona Hard Money Lenders are your best bet when it comes to fueling the costs of 1031 exchanges.

What is a 1031 exchange? In IRS parlance it's also known as a like exchange. You roll the profits from one deal into another and use them to buy your next investment property. With 1031 exchanges you can defer paying capital gains taxes- indefinitely.

But of course there are some rules you need to follow with 1031 exchanges:

1. Your next investment property must be of equal or greater value: So you can’t earn 1 million in profits on one deal, spend 50 K on the next and then jet off to the Bahamas tax-free.

2. You need to hold onto the property for over a year:- Your property needs to be held for an “investment purpose.” No one knows how to define what it means to hold a property for an "investment purpose," but the basic requirement is you need to hold onto the property for 13 months or longer.

3. You need to close on your next investment property within 135 days: So if you need financing to settle a 1031 exchange, you’ll need to get your loan approved within that deadline.

Considering that deadline, going to a conventional bank to finance a 1031 exchange could put you at risk of incurring a massive tax bill.

Why you need to avoid the bank and use Arizona Hard Money Lenders to finance 1031 exchanges

135 days might seem like a long enough time to close a deal, but in the world of bank bureaucracy, 135 days is nothing. Even if you have perfect credit, it's going to take at least 30 days for the bank to approve your loan and that's in the best case scenario.

On average it takes 90 days for a commercial loan to get final approval from a conventional bank. That's 90 days after you’ve spent a few weeks finding your next investment property and gathering up the reams of paperwork that the bank requires. Weeks into this process, the bank could reject your application for some inexplicable reason. Which means you’ll have to start the application process over at another bank.

You don’t have that much time to waste with 1031 exchanges. Say you earned a million dollars on your last deal, then going to a conventional bank could cost you 200 K or more in taxes. However, if you go the hard money route instead, you take all such risk out of the equation.

Hard money deals usually only require an appraisal, meaning they can close within a week. After you get hard money, you secure your next investment property, apply for conventional bank financing, and refinance once the bank approves your loan.

With hard money, if something goes wrong with your application at the bank, you’ll still have your investment property under contract. Meaning you won't have to risk incurring a substantial tax penalty to complete 1031 exchange.

Arizona Hard Money Lenders can give you peace of mind when it comes to 1031 exchanges.

Don’t risk paying hundreds of thousands of dollars in taxes due to the nightmare of bank bureaucracy. If you need financing to close a 1031 exchange go the hard money instead.

Friday, May 10, 2019

How to make more money with Arizona Hard Money Loans: Advice to Lower Your Tax Bill

Two things in life are inevitable, death and taxes. If you use Arizona Hard Money Loans to flip houses more than half of your profits might go to Uncle Sam. Learn some tactics to lower your tax burden so you can earn more money on your next flip.

Because of their short turn around, the profits from house flips are subject to the regular income tax rate, which could go as high as 37 percent. If you’re self-employed, you have an extra burden-FICA, which could add another 15 percent to your effective tax rate. We haven't even mentioned state taxes yet

So, if you’re a successful flipper how high could your tax rate be?

Consider a house flipper located in Taxifornia, say he earns 500 K each year solely from flipping houses. His income puts him in the top federal tax bracket, and because he’s self-employed he’ll also need to pay FICA, so his federal rate is 52.3 percent. We can’t forget state taxes; in California, the state will collect 11.3 percent of his income. So effectively 64 percent of his profits on any flip will go toward taxes.

Say he wants to flip a house, which could earn him 35 K in profits. 22 thousand dollars will end up going to Uncle Sam and the hippies in Sacramento.

Are there ways for our poor flipper to beat the system without risking incarceration?

With Arizona Hard Money Loans; consider using these tactics to lower your tax burden.

• Maximize deductions- Thankfully all of the soft costs involved in your project are deductible. You can deduct the cost of materials, labor and even the interest payments on your loan. To maximize deductions deposit all your hard money financing into a separate business account this will allow you to keep track of all your expenses so that you can deduct every penny you spend on your project come tax time.

But what if you want to pay a lower rate, well there is another method that can effectively cut your tax bill in half-

• Fix and Hold- If you hold onto a property for 13 months you'll end up paying the lower capital gains rate, and you won't need to pay those awful FICA taxes. Let's see what happens if our flipper decides to hold onto his property for 13 months, rents it out for 9 of those months and charges his tenant a rent of a thousand dollars a month:

• He’ll pay 20 percent in capital gains taxes, and 11.3 percent in state taxes, making his effective rate 31.3 percent.

• 35 K-11 K in taxes=24 K in profits+9 K in rental income=33 K in total profits.

By using the fix and hold strategy, he’s more than doubled his profits on this deal, and he's even earned extra rental income.

To use the fix and hold strategy you need to look for long term Arizona Hard Money Loans

One caveat if you're going to employ a fix and hold strategy is you need to be sure that your loan has a 13-month term. Unfortunately, most hard money deals don’t last that long. So, if you plan to employ the fix and hold strategy to lower your tax bill, you need to get long term hard money financing, before you start your project.

Regardless, if you maximize deductions or employ the fix and hold strategy, you can, beat the system and earn and earn a higher return from your next flip.

Is speculative home financing a viable option for you?

Read further to learn how one person researched, evaluated and decided that this route was for her.

Margaret Dioss was comfortable—her children were grown and settled, her house was in top shape, her health was good and the money she her late husband had saved provided her with a decent living. She stuck to her monthly budget. But she was also bored—her mind kept returning to her early twenties when she worked for a realty company in San Francisco. No two days were ever alike and she learned a lot before getting married and moving away.

She kept thinking of a property outside of Whittier that was near the local mall. It sat on two acres containing a house and a couple of outbuildings. The home didn’t look old, but it was in need of a little renovation to make it more attractive.

Deciding to ‘just look’, she drove out, noting that the For Sale sign was not close enough to the street to be read accurately. I think I need a loan, she thought, and decided to contact people she already knew.

After one day’s appointments with the bank where she had accounts and two mortgage companies, one of whom she had done business with some years back, Margaret found herself at home both tired and disgusted. Not only had the first mortgage company said no, it had pointed out that her credit basically was non-existent since her bills were paid. The other one wanted a large amount of paperwork, some she wasn’t sure she could obtain. The bank was worse, saying that she didn’t really match up to other clients, and discouraging her from taking on the venture. “It’s a touchy business. Most of the fellows we know who are in it are always talking about getting out.”

She turned to the newspaper section on real estate and her eyes fell on an ad for speculative home financing through a company she had heard of, but didn’t know much about. She quickly headed for her computer to check out Trenton Finance Corporation’s page.

This type of loan, Margaret discovered, was basically financing done on unsold property. These loans were not a big part of the group normally made for construction, but still classed as a steady factor. She typed in spec loan requirements and found the following basics needed for any such venture.

Location played into getting the money—the house was near the mall and the highway headed downtown. She could have a partner to team up with or go on her own. The collateral that was required could be the equity in her house.

The following morning Margaret called the company that held the property. Following a look over, she called TFC and made an appointment for the next day to further check out speculative home financing.

In a very short time, Margaret had her loan and was actively engaged in what her husband would have called ‘sprucing up’ the property. “Well, Max, I’m not bored anymore,” she told her dog with a smile as she came in from working one afternoon.

What are your chances of doing what Margaret Dioss did? Everyone’s situation is different. Investigate both conventional financing and the non conventional as well, get the documentation showing your financial history and find out all the details on the prospective property. Find out if speculative home financing is the avenue you should take.

A private money lender is the proverbial needle in the haystack

In the real estate field, it would seem. They are difficult to locate, but they are out there and might be the answer to your funding problems, making them worth the search particularly if you are having difficulty in conventional funding areas.

The real estate field has always interested you—in college you took electives from the business department and made high grades. Once out, you tried to get into buying and selling properties. However one really great land purchase turned sour when the buyer had to pull out at the last minute. You had just paid the hospital for what was termed a small surgical procedure, but the bill was anything but small. The end result was your not being able to make the payments when the deal fell through and the bank foreclosed.

That made it difficult to deal not only with banks, but conventional mortgage lenders as well. Being basically self-employed without what was defined as a steady income was another mark against you when it came to traditional funding. Despite your being on your feet again with no large debts to pay off, it seemed that the holes in your financial history were all the conventional lenders wanted to look at.

The answer was always no and after the latest appointment, you were thinking about just giving up the entire dream of owning your own business and handling the large projects that everyone else seemed to be making money off of. On the way out, you nodded politely to the secretary who had been friendly, bringing you a cold drink when you came in and chatting amiably while you waited.

She motioned you to her desk and said quietly, “You should try a private money lender–they focus on other things besides a regular salary and a high credit rating. A lot of very respectable business people use hard funding.”

At that moment all you wanted to do was forget the whole thing, but you thanked her and went home to dinner and hopefully a good night’s sleep. The next morning, with no appointments scheduled, you checked into this funding area. It was a pleasant surprise finding out that hard money often covered a wide range of loans from business-only funding and commercial lending to rehab and bridge loans.

Further research showed that private money lenders arranged their funding using secured loans, concentrating on properties that could be bought, renovated and sold as quickly as possible following the needed work. Called by most a ‘fix and flip’ loan, the collateral involved kept the lender from losing the money invested if the borrower couldn’t pay back the loan due to illness, death or whatever other reason. When done correctly, this aided both borrower and lender. A fee, negotiable in most instances, was normally charged to the client by the financier.

Most of these type lenders, the general info section said, are called relationship-based investors since they can be a friend, relative or someone in the field that you know. Further reading pointed you to corporations whose business it was to set up these type loans. The average time seemed to be a year for repaying with small mostly interest payments and the principal remainder being due at the end of the time allowed.

Is a private money lender what you need?

Do the research and find out both the negative and positive aspects involved. That dream you had could be a reality very soon.

Thursday, May 9, 2019

Have you thought about trying a Arizona Hard Money Lender?

My neighbor Tom Barron asked when I complained about all the problems I was having getting funding for my real estate project.

My credit was decent, a glitch here and there in the early years I had been in the business of buying and selling apartment buildings. No nine-to-five income popped into my bank account every other Friday, but I had no huge debts either, just the usual for renovation on my latest building. It had not sold yet, but was being looked over by two different buyers out of town.

Still the way the mortgage lenders acted, one of whom I had successfully worked with before when I partnered up with someone, you would have thought I had holes in my credit you could jump though, no real income and my house (completely paid for) a month away from foreclosure. The bankers were much more polite, but they weren’t much help either.

Now here was Tom wanting me to get mixed up with people whom I had always heard were a bad taste in the real estate industry’s mouth. “I know of them,” I replied. “But I’ve always been told to steer clear of them, too.”

Tom grinned. “Well, let me tell you what happened with my latest deal.” He then proceeded to describe how no traditional lender would touch him on account of a large project that had gone south when his partner had had legal issues. “I checked around and the Arizona Hard Money Lenders have come a long way since the days when you just went without rather than go through them. How do you think I got my funding for the construction I’m working on right now? McCandliss & McCullough did it—they have an office by Riverside Bank and up from BestView Realty. Not only do they all get along well, but BestView referred me to M&M. The hard money folks aren’t bound by all the rules the everyday lenders have.”

I was hooked, at least as far as finding out more anyway. “What do they want someone to do when they apply for a loan through them?”

Over coffee in Tom’s kitchen, I found that these lenders basically work through private investors or independently-owned businesses and the would-be borrower acquires their funding via security connected to real property value. I would have to provide a very well-defined business plan for my project as well as show plainly how I intended to pay back any money they lent me. My payments, Tom noted, would probably be mostly interest and a bit of principle monthly, with the remaining total due at the end of the pay period. “And this is good, too,” he pointed out with another grin. “That repayment period can be a year–or five years. Do some digging and find out what you could gain using one of these lenders—maybe not M&M, but someone who could help with your type of situation.”

Hard Money Loans: a different approach to funding.

(Everywhere you look there are ads inviting you to borrow funds through traditional lenders—banks, mortgage companies and the like—but is the standard way the best choice? Find out if a non-traditional loan might be better.)

Financing is the biggest problem a would-be investor has when starting unless he/she has a considerable amount of personal funds to invest and most of us don’t fall into that part of the population. Let’s say you have tried to invest before and while it went smoothly for awhile, life changed things and they all requiredmoney. Plenty of it.

The next thing you knew you had declared bankruptcy in your business and downsized it and a block of land you had purchased was foreclosed upon by the bank. This all happened in the last five years and despite your landing pretty much on your feet, the business coming back and most of the bills paid, those two items burnt holes in your credit report and knocked a considerable number of points off your score.

The conventional lenders you have seen about a loan to purchase two apartment buildings were very nice—one was a bank and the other a mortgage company—but neither of them could do anything to help you.

As you went out the door of the mortgage company, the lender you had been talking to motioned you aside and said quietly, “Try the hard money lenders—those people aren’t tied up with all the restrictions we have, although they do cost more.”

What is a hard money loan? And is one right for you?

These loans are set up differently than conventional ones and are designed to aid the potential investor who has credit issues, low cash reserves, is self-employed, etc. The one thing that is needed here is collateral to back your getting the loan—the lender is much more interested in what you have to literally fall back on than your having a perfect credit score and a straight-line job that pays every two weeks. A lien will be placed upon the collateral by the lender to cover their interests in the event you cannot repay your loan.

A second positive point with hard money loans is the time it takes for one to be processed and closed—itcan be done in an average of two weeks’ time as opposed to a bank which can take six months easy. This is an especially good thing when you could end up taking all the time needed and getting required documentation for a bank, only to be told, “We’re sorry—we just can’t approve your application.”

Third, payment times and schedules can often be tweaked to favor your calendar rather than the lenders’. If you need five years to pay the loan back instead of two, a hard money lender can generally work with you on that.

A different loan may be helping hand you need. Get out there and look for the one made just for you.

Do what the mortgage lender advised—research the hard money people in your area, find several that are offering loans which appeal to you and set up times to talk with them. You’ll meet new people, learn things that could help you in the long and perhaps walk out the door with possible funding for your future project.

After a good night’s sleep, I began to do the research Tom suggested and it was just like he told me-- Arizona hard money lenders concentrate on the people whose lives don’t fit the standard 9-5 structured employment lines and have some difficulty obtaining loans through traditional lenders.

I put together a plan and six weeks later, I got my funding. These loans aren’t for everyone, but take a look like I did. Maybe this type loan can work for you, too.