One of the most common hurdles for new investors is finding money to fund their deals. While this can be a struggle, finding the capital you seek is more accessible than ever. Between lines of credit, private lenders, retirement funds, credit cards, and traditional bank loans, numerous options are available to those who know where to look. The key is to find a funding source that works for you. Often, that source will be a hard money lender. The hard money lender in Phoenix has gotten a bad rap over the years but has proven a reliable way to fund deals. If you don't have a hard money lender in Arizona outlet or have yet to use one, now may be the time to find as much information on them as possible.
A hard money lender is an individual or group who lends money on their terms. They put stock in the property and the actual financials of the borrower more than anything else. With traditional lender financing, if your credit score falls below a certain threshold, you may have trouble getting approved regardless of other factors. However, Phoenix hard money lenders have their own set of criteria. For this flexibility, there are more fees and higher interest rates. Some investors will balk at those opting for lower rates that banks offer. This can work on specific properties and deals, but you need to act quickly on those that are time-sensitive, and that's precisely what hard money allows you to do. Here are just a few of the benefits of using a hard money lender:
Speed: In today's real estate landscape, how quickly you can close is often more important than the amount you offer. Too many lenders have been burned in the past waiting for deals to close that never do. Even if they do close, the average length of a financed transaction approaches 45 days. Most sellers would instead take a slight discount, assuming they can close in a week rather than risk closing in 45 days. This speed allows you to make offers with five or seven-day closings. On borderline deals, you can bet that your offer will be the one that is accepted.
Volume: Instead of waiting 45 days to start working on the property, you can reduce the time to just a few weeks. Shaving a few weeks off every rehab project, you start allows you to close more deals over a year. Adding just one or two deals to your portfolio will increase your bottom line exponentially. Often, you may be able to close two or three times the volume you closed the previous year. When the number of deals you complete starts to creep upward, so will the number of contacts you make. The people you meet are just as important as the deals themselves, if not more so. Remember, real estate is a people business. The more deals you do, the more contacts you can make. In turn, those contacts may even lead to more deals.
Quality: Having capital to close is only part of the benefits that coincide with Arizona hard money. With hard money in your corner, you could do whatever needs to be done for the property. Instead of cutting corners to save money, you can do the work you know needs to be done. This will help you maximize your bottom line and improve your reputation in the industry. Realtors and fellow investors who see your finished products may want to work with you. Quality will also help get your property sold to end buyers much faster. Instead of hoping that an offer comes in, you will have your choice of deals.
More significant Projects: Increased capital allows you to build up to more significant projects slowly. Instead of looking solely at single-family properties, you can start to look at multifamily and commercial deals. Furthermore, closing more deals will increase your capital and give you a larger share of bigger deals. There is nothing wrong with sticking to condos and single-family properties, but having hard money behind you allows you to explore other options that come your way.
Aligning yourself with a hard money lender doesn't mean you have to use them on every deal. A property you want to buy and hold may be better served with a long-term interest rate of around four percent. However, most rehab projects need the efficiency that hard money brings. The goal should be to save some capital from every deal until you have enough saved to fund them yourself. Until you reach that point, you may have to make a little less per deal to increase your bottom line.
The biggest knocks on hard money are the high fees and points. These accrue from the time of settlement until you can sell the property. In some cases, it can span several months. However, it is a small price to pay for what you get. The annual interest over just a few months is a relatively minor factor compared to all the other expenses you incur. Additionally, you only pay these on deals you close. If you can't close, you can't earn; hard money helps you close more deals. It is not for everyone in every deal, but it should be a part of your financing options.
Equal Housing Opportunity. This is not a Good Faith Estimate nor a Guarantee to lend and should not be considered as such. Costs, rates, estimates, and terms can only be determined after completing an application. Actual payments will vary based on your situation and current rates. APR for loans ranges from 7.99 - 29.5% and is based on Credit Score, Down Payment, LTV, and Income. Mortgage rates could change daily. For more accurate and personalized results, please call 623 582 4444 to talk to a licensed mortgage expert. Terms and conditions of all loan programs are subject to change without notice. NCO Enterprises LLC Dba Setabay Private Hard Money 26731 N 90th Drive Peoria AZ 85383 Telephone: 623-582-4444 NMLS 2062278 NMLS 1118493 This email is for the exclusive use of the intended recipients and may contain privileged and confidential information. If you are not an intended recipient, please notify the sender, delete the email from your computer, and do not copy or disclose it to anyone else. Your receipt of this message is not intended to waive any applicable privilege. Neither this email nor any attachments establish a client relationship, constitute an electronic signature, or provide consent to contract electronically unless expressed by Matt Prosory RI/CEO, in this email or an attachment. To the extent this message includes any tax or legal advice. This message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice. This email is an advertisement.
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