Setabay Private Hard Money Lender

Wednesday, May 15, 2019

CAN I GET A HARD MONEY LOAN FOR COMMERCIAL REAL ESTATE WITH 100% LTV?

Yes, you can. 100% financing is rare in commercial real estate deals, but much more common in residential real estate investing, particularly in fix and flip deals.

There is a chance for 100% financing in almost any real estate deal because nothing is ever impossible. Typically, these deals tend to be approved for seasoned property investors. However, getting approval on a commercial fix and flip with 100% LTV is much more feasible.

Commercial fix and flip loans are simply loans that allow real estate investors purchase a distressed property, fix it up and then sell the property for a profit. These are generally shorter term loans ranging from 6 months to 36 months. Typically, banks will not lend funds to purchase and repair these properties because there is too great of a risk of default. An Arizona Hard Money Lender can finance both the purchase price and the repairs.

LTV is the loan to value ratio. Loan to value ratio is a financial term used to express the ratio of a loan to the value of an asset purchased. When searching for an Arizona Hard Money Lender you will discover that each are unique. Some have higher interest rates. Others require less points. And, others such as Level 4 Funding specialize in servicing fix and flip loans that will include financing the property and any rehab funding. You will receive rehab funding through draws. A draw is money that will be used for specific issues being rehabbed in the property. Typically, a rehab will be assessed and the funds will be directly given to the investor to make said repairs.

WHAT LENDERS WANT TO SEE

Generally, lenders want to see borrowers have some skin in the game. You may see a handful that require no money down and are content with the borrower playing a different role in the project. It is more common to see lenders require at least 10%-20% of the purchase price. Once the purchase transaction is closed, it is more common to see lenders provide 100% of the renovation or construction costs. The more experience an investor has, the more comfortable a lender is working with them and the better loan terms will become.

It is also more common to see a lender loan 70% ARV (after rehab value) than 100% LTV. The ARV is what the property most likely will sell for after the investor has fixed it up. This can still equal 100% financing of the project. For example, a property’s purchase price is $51,000 and it’s ARV is $73,000. Seventy percent of $73,000 is $51,100. The purchase price is $51,000. Done. But, what about repairs? That is simple; the repairs will be paid in draws. Using these calculations the investor would not require any out of pocket money. Of course there may be other rates and fees included.

It is not common to receive 100% financing for an Arizona commercial real estate deal, but it is possible.

Whether it works using LTV or ARV, it can work. When speaking to an Arizona Hard Money Lender it is advised you inquire about different financing options and determine what work best for your unique situation.

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.

Tuesday, May 14, 2019

WHAT IS TRUST DEED INVESTING?

You may be asking yourself what is trust deed investment. Trust-deed investments have been around quite a long time.

Trust deed investing means investing in loans that are secured by real estate. These are typically short-term loans offered to real estate investors. Investors buy properties at low prices and fix them up, reselling them for a profit. These investments are referred to as fix and flip properties. Banks are uncomfortable to lend on fix and flip properties due to the larger risk. Currently, banks are unable to lend unless the property and borrower fit a strict criteria. Because of this real estate investors have to find alternative financing.

A trust deed investment company (TDIC) offers investments in collateral-backed property loans. TDICs lend to borrowers that are unable to obtain financing with a conventional lending institution. TDICs are also referred to as hard money loans. The collateral that backs them is typically real estate. Requirements for TDICs varies from state to state. Unlike banks that have to follow rigid federal guidelines for lending, TDICs only have licensing requirements that vary from state to state.

WHAT IS THE BENEFIT OF TRUST DEED INVESTING?

Trust deed loans can benefit commercial mortgage borrowers in need of a bridge loan. This investing can provide fantastic returns when the investor is clear on the process. Typically, private investment in trust deeds yields returns between and 8% and 15%. Not too shabby.

However, investors need to consider various opportunity costs when making a trust deed investment. The most important considerations are the concepts of control and liquidity. Unlike stocks, trust deeds give investors more control of the investment. Typically, the investor can pick the loan. They are also allowed to set and price their investment.

Trust deed loans seem almost foreign to an investor, but everyone is aware of the concept. People get a house; they get a loan from the bank. The person or entity that hold the mortgage is the trust deed. So, in essence investing in trust deeds is simply the person who holds the mortgage on the house.

There is important paperwork that goes along with the trust deed. One of them is a trust deed. The trust deed paperwork gets recorded. The promissory note is the terms that are basically attached to the trust deed. In the promissory note it will include thing such as interest rate, how long the note is for, the monthly payments and so on. The trust deed also makes it so that the property can never be sold without you being involved. When you are involved in a trust deed there are different roles being played. There is a trustor, a trustee and a beneficiary. The trustor is the person borrowing the money and making the payments. The trustee is the entity or person who has control over the paperwork. The beneficiary is the person lending the money.

When you get involved in a trust deed investment you will likely see a borrower other than an individual.

Generally, business owners are borrowing in this manner. There are benefits of not borrowing money in your name, but as an entity or corporation instead. One reason is if you have multiple properties and you would prefer keeping that private, because that is public information. There are also tax advantages, as well. There are many benefits to trust deed investments.

HOW TO GET STARTED IN REAL ESTATE EVEN IF YOU HAVE BAD CREDIT

So, you want to become a real estate investor, but there is one problem. You have bad credit. Most people have made bad choices when it comes to finances. Those choices can haunt you for a very long time. What can you do about this issue?

To ever be financially free you have to raise your FICO score. Maybe you have had a foreclose or gone through bankruptcy. Maybe you accepted a ton of credit cards while in college and maxed them out, while never paying them back. Regardless of why you have bad credit you can still be a part of the real estate investing world.

An Arizona Hard Money Lender can look past your negative financial past and approve a loan to get started. But, why would an Arizona Hard Money Lender loan you money with bad credit when a bank won’t? The answer is because an Arizona Hard Money Lender is an asset-based lender. This means they are lending on the real estate as collateral. When making a decision a traditional lender looks at the 4 C’s: credit, collateral, character and cash. An Arizona Hard Money Lender focuses more on collateral and character.

When you are looking at hard money lenders and the options you have, make sure you know what the minimum credit score is of that particular hard money lender. There are some hard money lenders that do require a minimum credit score requirement. Make sure you find out the minimum score before investing too much time on the application and process. Because hard money lenders do not have to follow the strict federal guidelines they can establish their own credit requirements.

WHAT DOES AN ARIZONA HARD MONEY LENDER NEED FROM ME?

The step you should take is find a lender that you are comfortable with and that has pre approved you. Then, look at property. Lots of properties. Hard money lenders generally prefer to loan in the geographic area in where they work or reside. Find a property that you can afford to make the interest-only payments.

An Arizona Hard Money Lender will need a Letter of Intent (LOI) signed by you, the borrower. The purpose of a LOI for a hard money loan is to provide a quick means to be sure that both the borrower and lender are on the same page. It is not a legally binding document, but it does help avoid any miscommunications or misunderstandings.

An Arizona Hard Money Lender will require some documentation from the borrower. Typical loan documents required for a hard money loan include: past tax returns, proof of income and a Note and Deed of trust. Some lenders want to see a business plan. Each lender is unique and will require different documentation.

Bad credit can make life difficult. If you have ever considered becoming a real estate investor look into hard money lending.

Once you begin working with a lender and you trust one another you may see a decrease in interest rates. When you have established a working and personal relationship with your lender investing becomes easier. The biggest difference between banks and hard money lenders is the personal relationship you form

ARIZONA HARD MONEY LENDERS

What is an Arizona hard money lender? When would you need to use an Arizona hard money lender?

I’m sure you have heard the term, but what exactly is a hard money lender? What do they do and why do they matter?

There are times that you need cash and you need it quickly. We have all been there. If you are fortunate enough you may have a family member throw you some dinero. But, the majority of us aren’t that lucky. There are also situations in which you may not have the qualifications for a bank loan or any type of loan at all. So, if you need cash yesterday, what do you do today?

Let’s say you want to purchase a house in a short time period. When it comes to real estate speed of execution is key. The faster the deal happens, the more likely you will end up with that property. However, if you are borrowing from any type of lender they will require some sort of security on the loan. For example, the bank will require your credit score and income just to start the process. Trust me, if you get pre-approved there will be a ton more paperwork you will be sending the bank.

ASSET BASED LOANS

Arizona hard money lenders grant asset-based loans. This means they care much more about the actual property that you are using as an asset than they do you and your credit. Hard money lenders can also loan money for operational expenses for your business. You can use a hard money loan for everything from fix and flips to a start up marijuana dispensary.

Using a hard money loan for real estate purposes is the most popular type of hard money loan. These loans are used for improvements. Let’s say you buy a house for $50,000. Once you have put $7,000 in on repairs you are able to sell it for $75,000. These are called fix and flips and this is where a hard money lender becomes ultra-important.

Hard money lenders will base the loan amount on what the value of the property will be after repairs. This is called the after repair value (ARV). For example that $50,000 house will be appraised at $75,000 ARV. Most lenders approve 70% ARV, which is $52,500. Already you will have more than the listing price. Bonus! Private money lenders will also approve repairs. The $7,000 you need to rehab the property can be financed, as well. However, you will not receive these funds all at once. After an appraiser has given a quote the lender will approve what is called a draw. These draws are typically disbursed per project.

Arizona hard money lenders give ordinary people, who may have mismanaged their money and gotten into financial trouble, a chance to increase their wealth.

Arizona hard money lenders make it very feasible to start making money in the real estate game with zero money down. It is not too good to be true. It is the real deal!

Monday, May 13, 2019

Arizona Hard Money Lenders: The help you need to be a successful Real Estate Investor

You might be a real estate investor going to the bank time and time again waiting too long and missing out on the best opportunities, or you might be continually looking for private investors to fund your next deal, but never finding them. If this is you learn how Arizona Hard Money Lenders might be the help you need to grow as a real-estate investor.

If you’re a real estate investor, you might have gotten frustrated with the tedium of the bank application process. Often a competitive property comes on the market, and you miss out because the bank can’t get its act together. Or you might try to finance a rehab project, and the bank denies your application without an explanation. Or you might want to own more than six properties, and the bank says you’ve exceeded your mortgage limit.

Fed up with the bank, you might try to hook up with private investors. You might find a private investor who promises to fund a time-sensitive deal but ends up scrambling trying to get their funds together causing you to miss out. If you want to take on a risky project, you might spend endless months trying to get investors on board. If you wish to acquire more investment properties, you’ll quickly run out of contacts that have money to give you.

Here's how Arizona Hard Money Lenders out-shine banks and private investors

Hard money is simply a loan based on hard assets. Unlike banks hard money providers are flexible, and unlike private investors, they're also reliable. Of course, compared to private investors and bank financing, hard money seems expensive, but consider all the things hard money can offer:

• Making full cash offers on competitive properties- No matter how great your financial situation is, it’s going to take months for the bank to approve your loan application and private investors might not have the funds to close your deal.

• With hard money, you can make full cash offers on competitive properties. Unlike banks, hard money dealers can move quickly, and unlike private investors, they have money to fund your deal.

• Funding risky projects- If your next investment property is in exceptionally poor condition, getting the bank or a private investor on board is going be challenging, to say the least. Hard money lets you take on especially risky projects because these lenders specialize in rehab. You won't face repeated denials at the bank, and you won't have to spend endless months trying to convince a private investor to get on board.

• Funding multiple deals in a short time- Banks have mortgage limits, and with private investors, you can only find so many people who can give you funding. With hard money, you can close on as many deals as you’d like, so long as each deal is sound.

What sets hard money apart is this ability close on as many deals as possible, and quickly reap considerable returns. If you use hard money to pull in 100 K over the course of two months, will even notice the higher interest payments? Probably not.

If you really want to grow as a real-estate investor you need to consider Arizona Hard Money Lenders

Unlike banks, hard money providers have flexibility; unlike individual investors they have the funding. If you want to beat the competition, take on high-risk projects or rapidly acquire new investment properties, hard money remains your best bet.

Why a Trust Deed Investment is a Better Bet than Stocks

Stock prices rise and fall like a balloon drifting on the speculations of Wall Street analysts. Do you want to invest in speculation or something you can touch and feel like real estate? Well thanks to trust deeds, you can build your financial future on a solid foundation instead of the shifting sands of the stock market. Learn the many ways a trust deed investment can outperform stocks.

Now we all know what stocks are, but what exactly are trust deeds? They sound like an inscrutable legal document, typed up in the dusky backroom of some lawyers office. But really, trust deeds are quite simple.

Think of trust deeds as mortgages, where you as an investor act as the bank. A trust deed is a loan that you give to a real-estate developer, and in exchange for your investment, the developer pays you back both interest and principal.

You might think it's wise to invest in the stock market but think again. The value of a stock is founded on speculation and hot air. A single vague news story can send a stock price plummeting.

In contrast, trust deeds are secured by real-estate. Real-estate has an inherent value, and that value rarely declines.

Here are just a few more reasons why you should think twice before you invest in stocks.

Here's how stocks fall short in comparison to a trust deed investment

• No guaranteed yield- The dividend a stock pays can change, or eliminated whenever a company chooses. Also, remember the dividends paid by stocks are usually paltry and rarely stray into the double digits.

• No guaranteed return on your initial investment- Whatever money you put into stocks, you have no assurance that you're going to get your money back. If you buy 100 K in Tesla stock, the value of that stock could plummet to five bucks in the blink of an eye.

• No right to recourse- You can’t foreclose on a company if the price of its stock falls. You won’t be able to force Elon Musk to liquidate his art collection so you can get back the 99,995 dollars you lost by investing in him.

Here's what a trust deed investment can offer you that a stock can’t

• Guaranteed yield- Unlike a board of directors, a trust deed borrower can’t just decide to stop making interest payments. In addition, you might earn a monthly return of 10 percent or more from a trust deed, which is far more than most stocks can offer you.

• Guaranteed return on your initial investment- Remember trust deeds are loans. Once a borrower signs onto a trust deed they’re obligated to pay you back, in full. Can any stock promise you that?

• Right to recourse- A borrower might be under contract to pay you back, and keep up with interest payments, but what if they don’t? Well, the answer is simple; you foreclose and liquidate the borrower's property allowing you to recoup most of your initial investment. If you lose money on a stock market, your loss complete and irreversible.

In short, trust deeds offer guarantees, guaranteed interest payments, guaranteed repayment of your initial investment and guaranteed protections.

Stocks are speculation; trust deeds are investments. So don’t waste money speculating on the stock market, instead invest in trust deeds.