Beretta Only: california hard money lenders

Showing posts with label california hard money lenders. Show all posts

Sunday, April 15, 2018

HOW TO GET A HARD MONEY LOAN APPROVAL

You have located the property that seems undervalued. Now, how do you get a hard money loan approval to make your first project a reality?

Hard money loans are loans that are generally available from investors as opposed to banks. They are often used to finance real estate transactions, though businesses and those looking for bridge loans also turn to these types of lenders. If your credit score is not strong enough for you to get a loan from a bank, then this is the option for you. These can be used as “bridge” loans between construction and long-term loans. Others turn to hard money loans that they use for rehabbing projects before turning to long-term lenders that want a completed project or a fully leased project.

Some of the questions you should consider are:

1) Does the company you are considering doing business with have a legitimate web site as compared to the web sites that are designed to just gather names and pass it along to a third party.

2) Are there any lawsuits? Any forclosed properties? Are they in good standing with investors?

3) When considering a lender, what is their area of focus? What kind of project have they financed previously?

4) Is there a physical presence for the company, do they have someone you can talk to?

Hard money loans are designed for one to five years. At this time, you will need to refinance the loan or pay it off. Some lenders have the option to extend the loans for a period of time. Interest rates are higher than loans through banks, generally 10% to 20%. Hard money loans fund quickly, usually in as little as one week. This is much shorter when compared to conventional loans which can take up to 30 to 60 days for an approval.

Collateral

The hard money loan is valued at the collateral value of the property not your credit score. Hard money loans are sometimes given to first time home buyers or to home owners that need a bridge loan so that they can buy the house of their dreams without having to wait for their first home to sell. Some hard money lenders fund 60%-70% of the after-repair-value(ARV). This leaves the remaining 30%-40% that you will need to fund. This generally refers to individual properties and not large commercial projects.

The lenders may ask for additional documents such as W-2s and bank statements. Protect yourself legally.

Most hard money lenders are not subject to government regulations. Have an attorney review all documents before you proceed and have an accountant review your projected cash flows. You should have all your documentation in a row such as the schedules and fees for the contractors and when and what they will be doing. Ultimately, you will need to repay the loan which usually occurs in 1 to 5 years. Have an exit strategy and know your lender. Many will consider extending a loan if you are having difficulty coming up with the final balloon payment. At Level 4 Funding, we’ve been in the business of hard money lending for decades and have a solid reputation behind us. Call us if you have any questions or concerns regarding this lending option.

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, April 14, 2018

Alternative Business Loans Arizona Entrepreneurs Best Option

Exploring alternative business loans, Arizona start up and small business owners could be surprised by their options. There are many reasons that an alternative loan could be your best choice.

Traditionally, when a business owner needs money to fund a startup or to grow a fledgling business, the first stop is their local bank. But there can be many hurdles to overcome when seeking a loan from a traditional lender. Alternative lenders provide business loans Arizona small business owners actually have a chance of securing and that is just one of the many benefits that they offer.

There are two main benefits to working with an alternative lender. The first is that the approval rates are much higher than a traditional lenders and the second is the fast approval and funding time frame. As an independent entity, there is not the mile of red tape to slog through with most alternative resources so borrowers enjoy a much better customer service experience for the most part and a higher success rate.

When alternative lenders offer business loans, Arizona borrowers will discover that the lenders tend to be more flexible on terms as well as qualifications for the loans. Alternative loans are therefore a good option for a business looking to finance inventory or for working capital which is not something that banks will approve. In addition, the alternative lender is not as likely to require that the business owner use personal assets as collateral for the loan. Which offers the borrowers more confidence in the lender and personal security as well.

Personal Credit is Not an Issue

Poor personal credit is often a factor that will derail business loans Arizona business owners are seeking. Banks are not willing to process a business loan without a deep dive into the personal financial status of the company owners and even some of the other major officers of the company. That is not an issue for alternative lenders as they are primarily interested in the merits of the business and not the owner’s personal finances.

Time is On Your Side

Anyone who has applied for any type of loan from a bank knows that the process can be long and arduous. A personal mortgage loan can take weeks to process. But a business loan application can actually drag out for more than three months. By the time a bank is willing to fund a business loan, the need for the money could be gone, the opportunity could be lost and the business could even be floundering. Business deals are often time sensitive, but traditional lenders tend to overlook that fact. Great opportunities to grow a business don’t appear every day, so business owners need to be prepared to act when the opportunity arises. Securing a loan from an alternative lender is a great way for an Arizona business owner to maximize an opportunity to expand, diversify or land a huge client that might otherwise have gotten away.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, April 7, 2018

The Difference in Hard Money Loans

Many people, before they delve into the world of real estate investments, think of hard money loans as those you obtain only if you have poor credit and are desperate. Those that have been in the business for a while understand that they are an important lender to have in your lending portfolio and that many have different requirements and protocol.

Hard money loans are often obtained from private individuals that specialize in various types of real estate loans. The rates they offer vary dramatically and can range anywhere from 10 percent and 1- or 2-point origination fees, depending on your terms, to 18 percent interest on a short term loan with a 5- percent origination fee. An origination fee is designed to cover the cost of entering into and processing the loan agreement. Some lenders will roll your origination fee into the loan balance while others require payment upfront. Compare loan APRs along with fees in order to determine who is offering you the best loan.

You’ll find underwriting processes, or loan determinations, very different among lenders of hard money loans. For many, creditworthiness and credit scores are not even considered in the approval process. For others, it is an important consideration. When evaluating what you bring to the table, which includes your down payment as well as your collateral, some will only consider the LTV or loan-to-value ratio while others consider the ARV or after-repair-value. If you’re looking for a loan amount based on the after-value, you will need to come to the table with a solid background in your chosen real estate investment as well as budget and expenses that includes contractor fees.

Some hard money lenders specialize in specific types of properties. For instance, you will find hard money loans specifically for fix-and-flip models while others are solely investing in manufactured homes with land. Obviously, it’s important to find out what types of investments they are willing to loan on before wasting any time with a lender that does not specialize in the type of loan that you need. Generally speaking, most will not lend on an owner-occupied residential property thanks to Dodd-Frank regulations.

The Main Reason Real Estate Investors Choose Hard Money Loans

One of the main reasons real estate investors choose hard money loans is because they are often quick to fund. Many of these types of lenders will fund in as little as a week or less, in comparison to the month or two that traditional lenders take due to underwriting processes and extended time to funding. If an investor finds themselves in a bidding war, having cash on hand can often mean the difference between starting their next renovation or still searching for that ideal property.

At Level 4 funding, we provide funding for all types of real estate investments including multifamily, construction, business and office.

We offer loans with no prepayment penalties and with terms that can be extended. Our popular construction loans start at 9.5 percent APR with 24-month terms and convenient monthly draws. Call us for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, March 26, 2018

How to Qualify for a Commercial Real Estate Loan

With all the varying requirements, it can be confusing understanding what one needs to do and expect when trying to qualify for a commercial real estate loan. Here’s a few of the basic documents and experience you need when applying for a loan.

No matter which type of lender you are working with, most will prefer that the borrower focus on a property when assessing a loan. This information should include the address and location, purchase price, intended use of structure, amount and scope of work, timeline for rehab, contractor bids and projected after-repair-value (ARV). The more information you can bring to the table, the better, such as drawings and environmental analysis.

The financial information regarding the project includes the rent roll or schedule of leases which basically amounts to the amount of income that can be expected from the property. If the property is under construction, a lender will want to see the general health of the particular market including the area’s vacancy rates and your plan for obtaining tenants. Having pre-leasing in place can be a big checkmark on the “yes” side when trying to obtain a commercial real estate loan.

They will also want to know what type of experience you have and any past investment projects in this specific segment of real estate. Some lenders will check the borrower’s qualifications such as credit history and bank statements. They will want to know your financial situation. Do you have other projects currently in the pipeline? If so, just how much debt are you currently faced with? If you have partners, the lender will want information on them as well. This will be their go-to in case of default.

Pro Forma

Other lenders require a pro forma for a commercial real estate loan. This includes the net operating income (NOI). Also known as EBIT or Earnings Before Interest and Taxes, it is, just that, and helps lenders understand what kind of cash flow you’ll be expecting. It equals all revenue from the property minus all operating expenses. The debt-service-coverage ratio (DSCR) is also part of this documentation and is calculated by dividing the Net Operating Income by the Annual Debt Obligation. The internal rate of return and cap rate are the final pieces of the pro forma puzzle. The internal rate of return is the rate of growth a project is expected to generate while the cap rate is the ratio of Net Operating Income to property asset value.

Conventional commercial real estate loans from banks and credit unions must adhere to strict rules and guidelines when it comes to financing an investment. For this reason, they are often more difficult to obtain loans from than one provided by a private hard money lender.

Traditional lenders will need to check your credit score as well as your creditworthiness. Hard money lenders, on the other hand, do not require income verification or credit references. These short-term loans usually fall into the one to three-year mark, though some will issue loans up to 5 years and allow extensions. Some lenders assess a prepayment penalty, usually 1 to 3 percent, while others do not—Important considerations when funding your project. It is much easier to qualify and faster to obtain funding for hard money real estate loans making them the loan of choice for many investors.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, March 21, 2018

Understanding the Logic behind the Process of Commercial Real Estate Loans

Getting approved for your first commercial mortgage can be a challenge. The best way to ensure a successful loan application is to have a good knowledge of commercial real estate loans.

There is a lot more to obtaining commercial real estate loans than you might first think. The process is more complicated and lengthy than even the most difficult residential home purchase. But because of the significant amount of money involved and the added risks, lenders are much more selective when it comes to approving an application.

Technically, commercial real estate loans are secured by liens on the property which is being purchased. That property is the lenders security and ability to recover their money if you default on the loan. But there are additional factors which make commercial real estate loans much more risky than a residential loan. First, commercial real estate values can fluctuate very rapidly. This can leave a lender repossessing a property which is worth far less than the remaining balance on the loan. In addition, the business which is purchasing the property has a greater chance than a consumer of suffering financial hardship as a result of a sudden change in the economy.

Because of the increased risk that the lender is facing, interest rates are higher and loan terms are shorter on a commercial loan than they would be on a consumer loan. Most commercial loans are for a ten year period or less as opposed to a residential mortgage which can range from 15 years to 40 years in some cases. And even with these shorter terms the interest rate for a commercial loan is about 1% higher. Commercial lenders also require a 20% down payment in most cases. This gives the added security that the property will always remain greater in value than the amount of the outstanding balance of the loan.

The Application Process

When applying for a home mortgage, borrowers must be able to demonstrate that they have the ability to afford the monthly payments and that they have steady income. Commercial borrowers much also prove that there is a means of making the loan payments. But because a business is more reliant on the overall economy, they must show that the business is in good financial health, that it is being managed well and that it has sufficient cash reserves to weather a financial down turn or hardship. In some cases, the owners must also include their personal financial documentation if the business has poor credit, no credit or has not been in operating for more than 5 years.

Understanding the Lending Process

All lenders are in business to make money. Understanding that fact makes it easier to understand why commercial lending can be difficult to secure. The increased risk that the lender faces needs to be rewarded with higher interest and shorter repayment terms. In addition, the lenders are more careful about the creditworthiness and the financial health of the borrowers. With the economy having a bigger impact on businesses, lenders want to verify that a business is stable enough to survive a short economic crunch or down turn in business. Know this information and creating a loan application package that demonstrates your financial stability will greatly increase your opportunities for commercial financing.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, March 19, 2018

Benefits of Non-Recourse Commercial Loans

There are many options to explore when seeking commercial loans. One of the factors which can reduce personal liability and risk of assets is a non-recourse loan.

As you begin to explore the options for commercial loans you will quickly find that there are two main categories for these loans, recourse and non-recourse. The more common of the two is the recourse loan which requires the borrower or borrowers to personally sign as the guarantor of the loan. This simply means that in the event of business failure or inability of the business to make the loan payments for any reason, then the guarantor is personally responsible to make the payments. Obviously, this presents a significant personal financial risk to the guarantor.

Non-recourse commercial loans do not require the borrowers to become personal guarantors of the loan. Therefore, these loans do not require the risk of the personal assets of the borrowers. This is one of the biggest advantages for any borrower. Knowing that a business failure means the loss of income is bad enough but to also be faced with the responsibility of personal liability on a commercial loan can be devastating. No business owner ever chooses to take out a loan which they believe the business will default on but there is always that rare possibility, and the added stress of personal liability. But a non-recourse loan eliminates that stress and potential issue.

An additional benefit is that non-recourse loans are assumable. This can be a huge advantage if you plan to sell the property in a few years or if a situation changes and you need to sell the property quickly. Currently, commercial lending rates are very favorable, but they are expected to increase. So the current loan rate is likely to be much lower than a rate which will be offered on a loan in a few years. So when you do decide to sell the property, you have the ability to offer to have the buyer assume your loan. This will be a great incentive for the buyers as the interest rate could be significantly lower than the current rate.

The Perfect Non-Recourse Loan Candidate

Non-recourse loans are most often used to purchase properties which provide a strong cash flow as the property is the only collateral. This means that even if the property is not the more visually appealing or if it needs a face lift, it could still be a candidate for a non-recourse loan. The critical factor is the cash flow. As long as the property is generating 1.25 times the proposed payment of the loan then lenders will be eager to offer this financing solution.

Great Benefits if the Fit is Right

Non-recourse commercial loans can offer a huge benefit for the right borrower and the right commercial property. Knowing that the property does generate a strong and steady cash flow allows the borrower to get a great loan and rate without having to personally guarantee the loan in the event of a business failure. It also provides added benefits to the borrower when it is time to sell the building by allowing the buyer to take advantage of a lower interest rate on the assumed loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, September 19, 2016

California Private Money – Rehab Loans

If you know a thing or two about California private money then you probably know that there are several different types of loans that you can get with this particular kind of financing. For instance, if you are looking for a rehab loan then your best bet in securing that loan is either via a private lender or a lender that offers hard money financing.

Rehab loans are essentially loans that allow you to modify an existing commercial property in order to increase the overall value or worth of the property. These particular kinds of loans are typically not so easy to come by even when dealing with private niche lenders that thoroughly understand your goal and business vision. But, just because it is more challenging to secure rehab loans with California private money does not mean it is impossible.

In fact, if you do your research you can find a few reputable private niche lenders that are willing to lend a helping hand. Generally, one of the best ways to find these kinds of lenders or any lenders for that matter is to first do an extensive search via your state’s lender directory or you can start small even by doing a cursory online search of private rehab lenders. With the online lender directory, you will be able to narrow down your list of potential lenders based on the loan amount desired, the type of project i.e. industrial, commercial, land or multi-family, etc. If on the other hand, you choose to do a cursory search via a search engine such as Bing or Google, you will find a variety of local niche lenders that may be of use to you. Moreover, you can also find your future private lender by referral if you are looking for options closer to home or without the hard money middle man i.e. obtaining financing from a business associate or family member, etc.

Regardless, of where or how you find your potential niche lenders, it is important to know what each specific lender expects. In other words, you may have found a few good California private money lending options that will ultimately result in you securing a rehab loan, so make sure you know what is required of you so your business remodel is quickly funded.

Rehab Lender Expectations

Of course, it’s important to note that private money, in general, is more flexible. Consequently, what one rehab lender will require or need from you another rehab lender more than likely will not. With that being said, it is still in your best interest to learn up front what each potential lender does or doesn’t need from you.

Things to Consider with Rehab Lenders

Lastly, when dealing with your private lender remember that they generally want to some protections in place just in case you do not make the agreed-to improvements. You should also consider the extent of the project, the upside to the remodel, your personal financials and the possible prepay penalties that your private lender has a right to impose if they so choose.

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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Monday, September 12, 2016

How to Fix & Flip Homes - 8 Things You Must Do To Be A Successful Home Flipper

1. Calculate your profit before you purchase the home.

The old saying is “you make your profit when you purchase the home not when you sell it”. This means calculating a profit and lost analysis on the Fix & Flip project before you purchase. Determine the profit before you purchase – work backwards. Don’t do a project unless there is a clear profit potential. Calculate your profit/Loss. Sales price less costs is your profit.

1. Costs for Fix & Flip

Acquisition
Purchase Price

Back Taxes and other liens

HOA Fees

Keys

Bid or Real Estate Fees

Closing Costs

Repairs

Contractor or do it yourself

Appliances + much more

Holding

Cost of capital to hold

Payments on hard money loan

Utilities
Insurance

Maintenance

Selling

Real Estate Commissions

Staging

Title closing costs

Marketing Plans

Administration

Bookkeeping accounting

Other non-related expenses

2. Have a good team of Contractors/others to do the work.

Suppliers

Real Estate Agent (hopefully it will be you)

Hard Money Lenders (give me a call)

Insurance agents

3. Get educated.

Don’t start buying homes without knowing the process. The best way to get started is to get your Real Estate license. Yes, it’s work, but it will give you the knowledge you need to understand how homes are transferred and the laws associated with real estate. Also, you will have access to the multiple listing service, which is invaluable for your research. Plus you can avoid the partial cost of the seller commission since you will be the listing agent. Every successful flipper I’ve ever meet had their real estate license.

4. Be patient.

There used to be a lot of homes being sold on the court room steps, sometimes a 1,000 homes per day. Today there are a lot less homes to purchase. You need to look at other ways of purchasing and finding deals. It’s going to take time to find, fix and sell. You can do it, but it’s going to take time. In the real estate investment world, timing is everything.

5. Have Money.

Don’t believe those people on the radio that say you can buy homes for no cash down. It’s not true.

You are going to have to have cash, skin in the game to purchase the home. Private hard money will require a down payment of 20-30% of the purchase price. And it’s not going to be cheap when you start. Rates vary from 9-18%. Don’t forget to calculate the cost of Hard Money in your profit and loss in item 1 above. Some hard money lenders market their loans as having the potential to fund an investment at 100% LTC (Loan-To-Cost), meaning a borrower won’t have to put a dime into the project. Although there are some scenarios where this is true, it’s very rare. There are some lenders that will participate in the deal. These lenders will fund the deal and share in the profit when the deal is completed. However, all of the participating lenders put a great deal of their decision on working with you on your response to #3 above and still require 10% of your money in the deal.

6. Don’t buy something you can’t fix or ever sell.

There are a lot of deals out there and they are deals for a reason. Some are in a situation, so bad, no matter how much money and work you put into the home, you will never sell it. For example a home built on top a land fill, or next to a dump, or sewage treatment facility, or the final approach to an major airport. You are not going to be able to fix these problems.

7. Buy your project through your LLC.

There is a lot of tax and liability reasons to do this. Plus, private lenders prefer to lend to LLCs.

8. It’s going to be work.

Don’t believe what you see on those flipping shows. You will have to work at it and it will take time. You need to visit the property and make sure the work is progressing correctly. After the home is completed and on the market, you will need to walk the property daily. So where do you start? I suggest that you start with #3 Get Educated. However, don’t go and pay for those weekend training seminars that cost 1,000s of dollars. Start at your local Real Estate School and get your State License.

About ME.

Hi, my name is Dennis Love.

I’m a business owner like you with over 40 years of business experience helping business owners around the world, including 7-figure businesses, small businesses and startup businesses that now make millions of dollars per year.

But the question is why do I do this? Personally, I had a very special person do something for me in the past to help me in my life. That person help me to grow to be the best that I could possibly be. This person sacrificed everything to help me to the point that in their efforts they died for me. It’s hard to understand this amount of sacrifice. It’s hard to swallow, but I learned from sacrifice of this special person that living is not taking but that in giving to others is when you really achieve true purpose and happiness. That’s why I do this. I want to be of service to you so you can achieve the dreams, success and happiness that you long for in your business.

Servicing others is the true wealth and the path for happiness. When you are successful, I’m successful. So with that let me tell you about my recent struggles.

I have personally helped business owners who were on the verge of going out of business to making a profit in as little as a few weeks.

But you want to know something interesting? Just a few years ago my wife and I were homeless and living in the van and sleeping in the office. That’s true! After 30 years my business was failing and I was laying off 100’s of employees. I was losing $250,000 per month and was going down in flaming colors. The only cash I had remaining was the credit line on my credit card, and after I maxed this out I had nothing but the van and luckily a wife who still had faith in me. Creditors were calling; I was being sued and hauled into court to stand before the judge subject to debtor exams. I had judgments filed against me, and creditors coming to the office and seizing assets. I tried everything but nothing worked. I just kept going losing money, more money and more money --- till it was all gone. I lost my business, cars, airplane, and even the home I was living in.

Everything gone!

No matter how hard I tried flipping homes, even though I worked 14 hours per day, nothing was working. I was so stressed that I ground down my teeth down and cracked every tooth. I had to find another way of making money flipping homes that would not cost me 1000’s of dollars. I could no longer spend thousands of dollars which I no longer had, on the old school approach that that cost 1000’s had returned nothing.

Finally late one night I found myself sitting on the edge of the bed with a gun in my hand and the memories’ of the business past. Than I had an awakening.

I heard a voice that said “what you think and feel is not reality; flipping homes is not brain surgery; it really is easy; you can do it.”

How hard can it be!

You just need to get educated and find out how other companies are making money flipping homes.

So after many failures I figured it out. I wrote this basic guide to help you. Servicing others is the true wealth and the path for happiness. When you are successful, I’m successful.

Dennis Love, DennisLove.com are spoke persons or trademarks of Lever 4 Funding LLC an Arizona Limited Liability Company. This is for educational purposes and you should contact competent individuals such as Attorneys, CPA, Real Estate Brokers for expert advice. Information presented is not considered accurate and complete. To the extent this message includes any tax or legal

Technorati Tags: california hard money lender,private hard money california

Friday, September 9, 2016

California Private Money Construction Loans

California private money financing can be used for a variety of business purpose such as new construction or remodeling/updating your current commercial property. So let’s go over a few important details when it comes to using private financing for construction loans.

California private money construction loans are generally the way to go when your new business venture is one of construction or remodeling. It is the way to go because, as anyone in the commercial real estate business will tell you traditional financing avenues are less likely to approve loans for construction purpose. This somewhat reason change in lending doesn’t mean that California private money construction loans are instantly approved but rather that non-bank lenders are willing to fund these kinds of loans if they meet the necessary requirements.

Typically, these requirements allow non-bank lenders to feel more confident in their assumed risk. Therefore, when dealing with these lenders, it is important to keep in mind several key factors that have the ability to make or break your new construction or remodeling funding. One key factor, in particular, that you should make note is your desired location for your project or if you are remodeling an existing commercial property make note of the actual benefit of the upgrades to your business. Remember, your lender has to be comfortable with what you are using, in essence, their money for.

Another important key factor here is the overall process of the construction i.e. the actual draw process of your builder, if applicable to your situation. In other words, if your lender is insisting that the builder is paid via the title company—you need to understand how that process works. You also need to understand California state lien laws. Similarly, it is important to know where your lender stands in regard to the lot cost/lien when dealing with new construction.

Other Things to Consider

Unsurprisingly, other things you should be considering are your potential lender’s down payment requirements. As you are more likely already aware of, there are state regulations that affect your lender’s requirements, rates and fees. But, with that being said, there is a wealth of non-bank lenders, especially in California. Consequently, as long as non-bank lenders abide by the set state regulations, there is still some wiggle room i.e. lenders rates can still vary as long as they do not exceed a certain percent amount. So be clear on what you need as well as how much of a deposit you are able to come up with and do not forget to do your research so you are clear on general terms/fees.

New Construction Dreams come true

Ultimately, if you are prepared and keep in mind the above-mentioned important key factors, getting approved for non-bank funded construction loan should not be extremely difficult. Lastly, if your project calls for more than one construction loan as in the case of real estate development projects do not be discouraged many non-bank lenders are willing to work with you and allow you to have more than one active loan at a time.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Wednesday, September 7, 2016

California Private Hard Money Lender Requirements and Regulations

When dealing with a California private hard money lender there are several things you need to know to ensure that you are not falling victim to predatory lending. Moreover, let’s go over a few tips so you are not just borrowing blindly.

As you are probably already aware, hard money lenders, in essence, are still private money lenders. This means that your potential California private hard money lender is a non-bank lender. Historically, non-bank lenders have been able to lend money with limited regulations. Originally, this flexibility with California private hard money lender requirements made sense as the government shouldn’t be able to tell your father that he cannot lend you some cash for your start-up.

But, now financial reforms which were absolutely necessary after the real estate collapse means that there are some requirements when it comes to non-bank lending. For instance, the issue of mortgage licensing was not applicable to non-banker lenders i.e. individuals, companies and so on. Moreover, due to the almost overwhelming number of non-bank lenders in California, these new requirements have a lot of weight.

So what exactly do new regulations and requirements for potential borrowers and you? Well, for starters, there is now a fixed interest rate (the Usury law ensure that you will not be charge excessively high rates) that applies to these particular types of loans. In California, that “usury rate” is a maximum of ten percent per year. In addition to making sure that you aren’t financially drowning due to a commercial purchase or business purpose loan, etc., as previously mentioned, the issue of mortgage licensing now affects what type of property you can use hard money financing for. You also now need more documentation in order to properly secure your hard money loan than you once did.

The Real Deal with Licensing

The real deal with mortgage licensing (Real Estate Broker License) is it may or may not apply to your particular business venture. In other words, depending on the property type your lender may need to be licensed or they may not. This means if your next business venture is multi-family residential property your lender will most likely need to be licensed( depending on the particular state your potential property is located in also factors in as laws and requirements vary per state). Furthermore, it is important to note that what truly determines whether or not a broker license is required is actually your intended use of the financing.

Your Win-win Solution

Ultimately, it pays to do your research and figure out what your state requirements are. Furthermore, if your business venture ends up being a cross-state transaction you should be aware of the fact that both states regulations and requirements are applicable. With that being said, if you are looking for a non-bank lender, then make sure that you ask around i.e. get references, especially if you are not sure on whether or not you needed a licensed non-bank lender. You can also find reputable lenders by attending real estate events in your area or by networking with other real estate investors.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.