Friday, September 6, 2019

5 Legitimate Exit Strategies For Arizona Hard Money Loans

One of the critical pieces of securing Arizona Hard Money Loans is to have a successful exit strategy in place. Short-term loans require a large final payment and each borrower needs to be prepared when that day comes.

One of the top three reasons for all Arizona Hard Money Loans being denied is the fact that the borrower does not have a realistic exit plan in place. In most cases, the borrower has the down payment money. And he or she can afford to carry the loan and loan payments but has not determined how he or she will be able to pay the large balloon payment that will be due at the end of the short-term loan. These five exit strategies will provide most lenders with several options for making that final large payment when it is time to pay off Arizona Hard Money Loans.

The simplest and maybe best option for making a final large payment is to be ready to sell the property. If the deal was a fix and flip or even a longer renovation project, the term of your hard money loan should have allowed enough time to complete the project and get the property sold. This allows the borrower to pay off the loan and secure the profit that was motivating the project. That money can then be used for the next project, rolled into savings, or used as the borrower sees fit.

The next option is to refinance the hard money loan to a new hard money loan, a subprime loan, or even a traditional loan. The traditional loan would be best it the property is now being used as a rental income, or if the borrower is going to make the property his or her residence. A subprime loan is going to cost more than a traditional mortgage, but it can work if the borrower or the project does not qualify for the more affordable traditional loan. This is also more long term than the final choice, which is to secure a new hard money loan for the short term.

Selling Other Assets

In the case of a real estate investor, many times one projects profits can be used to pay off another projects loan. It is not uncommon to have multiple projects at different stages of completion. Your exit strategy could be to sell another property that is scheduled for completion before your short term loan’s final payment is due. Other sources of funding could be cashing out a retirement or investment account, or the sale of your home or other assets to pay off the hard money loan.

Having A Plan Is What Really Matters

There are many unexpected events or surprises in the real estate business, and you can never be certain what will happen in the course of any project. But it is very important to have at least one option in place to pay off any Arizona Hard Money Loans that you have financed. And the very savvy real estate investors will have at least one backup plan in place in the event of a really challenging project. This shows lenders that you are realistic, responsible, and know that the real estate investment business can be challenging, for even the most seasoned professional.

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

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About:  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.
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