Beretta Only

Wednesday, March 28, 2018

How to Make Money Using Hard Money Loans

Hard money loans are not suitable for every borrowers needs but they are perfect to meet some specific needs. Using this loan correctly can be a great way to grow your wealth.

Nothing in this world is perfect and likewise, there is no single type of loan that is perfect for every scenario. But there are several situations which are tailor made for hard money loans. Understanding the correct time to select a non-traditional loan is the first step to using this financial tool to generate financial security for yourself and your family.

In general, hard money loans have a higher interest rate and therefore the money is costing the borrower more than a traditional loan. But for every negative there is also a positive. And in the case of these private loans, the positive comes in several forms. The first of which is that the loan approval is based on the value of the collateral unlike a traditional loan which requires good credit scores and a strong credit history to secure a loan. Not only does this fact reduce the amount of documentation that a borrower needs to provide but it also streamlines the lenders approval time. All the lender needs to do is establish the current market value of the collateral to determine if the loan will be funded or rejected. This time savings can be critical when you are trying to purchase a property before another buyer makes a better offer.

Private lending options offer borrowers a faster turnaround time, less paperwork and do not rely on personal credit or financial stability. All of these facets of private lending make this a very viable solution when considering deals such as fix and flips, land loans or construction loans. In all three of these cases it can be very difficult to secure traditional finding. And without funding, it is impossible to make these deals and reap the rewards once the project is completed. But using a private lender will allow you to complete the funding and the deal to realize the profit in the end.

How and Why It Works

As you might have noticed, all of these potential money makers are short term investments which are time sensitive. It can be very difficult to secure a loan fast enough to purchase a great fixer upper to flip or to purchase unimproved land for a new construction project. Banks are not willing to lend money for these more risky ventures nor are they willing to expedite your request. But a private lender is willing to work with you to provide more flexible terms and a faster approval and funding to allow you to meet the shorter time line. Then, with the property secured, you can invest some time in finding less costly financing and refinance or you can make the necessary improvements and flip the property quickly for a large profit.

Making Private Loans Work for You

Hard money loans are not the solution for every deal or opportunity. But they do offer certain features which can make them the perfect financial tool to use to make money and increase your financial security. When used properly by a borrower who understands the process, the risks and the rewards, this type of loan offers a great return on investment.

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

OCC Study reveals risks from Commercial loans

The OCC warns in its semi-annual risk report that relaxed underwriting standards may be putting some commercial loans at risk of default. Should you be worried?

The report warns that specific influences on the credit market may be causing some banks to lower borrower standards. "The credit market continues to be influenced by strong competition, particularly from non - bank lenders, and heightened asset valuations," the report claims. In effect, strong competition for new loans may be pressuring some banks to lower standards on borrowers.

The report also warns that the recent economic boom may be making some lenders complacent and that lenders may need to take greater caution in case of an economic downturn. "In addition, the long economic recovery and expansion may collectively increase lender complacency. In this environment, lenders need to focus on maintaining sound credit standards within risk tolerances and understanding the potential credit risks that may be exposed under less benign economic conditions."

The report claims banks need to be cautious and may need to diversify their lending activities. The authors of the report, the National Risk Coalition, cite commercial mortgage growth as a specific area of concern. The NRC claims,"increasing concentrations of commercial real estate (CCRE)loans highlight the need for sound risk management processes and the effectiveness in managing concentration risk for some banks."

In spite of the dangers key commercial loan metrics remain are strong

The report claims that key metrics of commercial credit quality such as delinquencies, nonperforming loans, and net charge-offs remain positive. These key measures improved over the second half of last year and remain elevated above historical averages. Commercial credit quality is stronger than any time since the 1980s according to the statistics. New business loans have moderated from the 25% growth levels seen in recent years but remain above GDP according to the report. Non-depository groups such as investment firms and finance companies receive the majority of these new loans.

Smaller banks may be relaxing underwriting standards to fuel commercial loan growth, which could be a dangerous trend should an economic slowdown occur

Assessments by OCC evaluators reveal a gradual easing of borrower standards at many banks. Since the first quarter of 2016, the majority of banks have relaxed lending standards, rather than tightening them. The trend reflects a gradual easing of underwriting standards which began in 2013, as the economy started to recover from the recession. Even though banks are relaxing their standards, the report concludes that the majority of banks are still lending within their risk tolerances and are maintaining relatively safe underwriting practices.

However, there remains a concern that the growth in commercial mortgages may be putting some lenders at risk. Specifically smaller banks with less than a 1 billion dollars or less in assets. While business lending declined overall last year, the majority of new business loans originated from these smaller banks. Data indicates that these groups are supplementing a declining volume of residential mortgages with commercial mortgages. This narrow and specific focus on commercial mortgages may put these smaller financial institutions at risk if economic conditions change and more borrowers default.

However, the report also claims underwriting standards remain reasonable, credit quality is high, and that the economy is strong. Whether banks will heed the conclusions of the report remains to be seen.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, March 27, 2018

Triple Your Chances for Getting Hard Money Loans

Using a few tips can greatly improve your chances for securing hard money loans. You might also find that these same tips will increase your profit as well.

Applying for any type of loan can be stressful, and one of the best ways to avoid that unnecessary stress is to be well prepared. Knowing what to expect and how to best present your request can not only reduce your stress level but can increase your chances of getting hard money loans.

The first item that you need to understand is that a lender is only going to consider the loan request if the amount is within the industry standard 65-75% loan to value range. This means that the loan cannot exceed 75% of the value of the property. With that in mind, you need to be prepared to pay any additional cost above that 75% in cash. Understanding the LTV concept allows you to ask for a reasonable loan amount and also prepares you for the down payment which will be required. You will appear very well prepared and professional when the lender mentions the down payment amount and you tell the lender that you already have those funds available.

Another important question that you need to be ready to answer is about your exit strategy. Every lender wants to know what your plan is for the property and how you plan to achieve your goal. This could be completing a renovation and then renting the property or it could mean selling it after a renovation. But this is basically you explanation about how you plan to be able to repay the loan.

Compare Your Offers

The final strategy is to seek several hard money loans in an effort to have multiple offers to choose from. This is the same method that you would use to select any service provider and it allows you to shop for the best terms and overall cost of the loan. Be sure to calculate any loan origination fee, funding fee or early payment penalty that might be included in the terms of each offer to determine the true cost of each option.

Improve Your Chance for Success

There is a lot of information that you need to understand before securing hard money loans. But if you are willing to invest the time, then you can secure multiple offers. This allows you to select the best loan offer to meet your needs. In addition, preparing to answer the questions of the lender about your exit strategy and down payment funds is a good opportunity to fine tune your business plan for the project. Planning for the down payment and your exit are both smart business decisions that will help you to land a loan as well as increasing your potential profit at the end of the deal. It can be tempting to rush into a purchase when you find a great property with a lot of potential. But investing a little time in the planning phase will provide a great foundation for the project and better potential for your return on investment.

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

Leasing vs. Flipping: Two tactics to use your commercial loan

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Leasing and flipping are two of the most common ways to invest in a piece of commercial real estate. Every investor wants to make money, but an investor who leases commercial real estate intends to earn a steady stream of income.

The investor needs to purchase the property, so both approaches have the same upfront costs. Leasing allows investors to maximize the long-term potential of property with minimal risk. If one tenant leaves, another one should be not hard to find in most cases.Renting out commercial real estate is an ideal strategy in areas where the supply of commercial property is low, and demand is high.When it comes to leasing, additional returns can be earned as property values in the area improve, and rents appreciate.

However before committing to leasing as a strategy consider the commitment of time that is involved. Leases can include complex negotiations, require regular property maintenance and resolution of issues among individual tenants. Professional property management companies can alleviate some of these problems, but the added cost can stifle potential returns.

In contrast, flipping commercial property offers a quick profit and a minimal commitment of time

You can use a commercial loan to flip your investment property, but you should throughly understand the market

Flipping is the opposite of leasing commercial property and involves quickly selling a property for maximum profit. With this strategy purchase a commercial property that is substantially undervalued. The lower a properties initial purchase price, the higher the potential for profit.

But commercial real estate valuations are far more nuanced than residential valuations. Savvy investors should know how renovations on commercial property could impact its value. The wrong type of improvements on a property can restrict potential buyers and detract it’s marketability. For example, by converting a storefront into a restaurant space, buyers will be limited only to those who want to open up a restaurant. But the right type of renovations can significantly improve a properties ability to generate income and therefore substantially increase it’s value.

A thorough understanding of the local commercial real estate market, the types of businesses that are opening nearby and other types of due diligence are needed to flip commercial real estate successfully.

There are obvious risks involved in using a commercial loan to flip commercial property, consider these risks before closing an investment strategy

When it comes to commercial real estate leasing is usually a safer investment strategy. Tenants should not be hard to find if the property is in decent shape and in an ideal location. Depending on the terms of the lease tenants can take on the expense of improving the property themselves.

Flipping commercial real estate entails that an investor takes on the cost of the renovations themselves and any improvements can be costly and could restrict potential buyers. Additionally commercial properties are subject to a longer sales cycle. There is a chance that any renovated property could sit on the market for many months, or in the worst case years.

But as with any investment strategy, the higher risks involved with flipping commercial real estate can also offer greater rewards. Consider the market, understand commercial real estate valuations and perform the necessary due diligence when choosing whether to lease or flip a commercial property.

In summary, leasing is a good bet when property values are steadily increasing, while flipping is best in cases where a low-cost renovation can immediately raise a properties value.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, March 25, 2018

Can you make money by investing in hard money loans?

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

Deeds of trust may be an unfamiliar concept for many first-time real estate investors. A deed of trust is a promissory note in which a borrower promises to pay back the lender (i.e., you the investor). Your investment goes to the borrower in the form of a loan, and the borrower's property acts as collateral in case of default. You earn both the interest payments and any portion of the principle the borrower manages to pay off throughout the term of the loan. Because a real property secures them, deeds trust are relatively safe and can offer steady returns to novice real estate investors.

Investing in a deed of trust is also a great way to diversify your portfolio. A deed of trust investment allows you to act as a passive owner and earn income from a property without owning it outright. You also save money because you will not need to purchase the entire property upfront and you avoid the hassle of maintaining the property yourself. Deeds of trust can also offer higher returns over an ordinary saving or an investment account.

Use a hard money lender to get the help you need when it comes to investing in deeds of trust

Trust deed investment companies (TDIC's) connect investors with deeds of trust and usually known as "hard money" lenders. The loans issued by these groups are secured by the value of the "hard" asset which the borrower wants to finance. Often TDIC's use deed of trust investments as a way to raise capital for the loans they issue to prospective borrowers.

Some may consider merely acting as private lenders on their own behalf. If you have the money and you want to earn interest, you could always lend the money yourself.

Working with a TDIC allows you to benefit from their knowledge and experience when it comes to the real estate market and the rules and regulations related to lending. The lender can underwrite the loan, take care of legal obstacles, perform the necessary due diligence and in some cases service the mortgage directly.

Level 4 Funding is an Arizona based hard money lender and can guide you through the process of investing in deeds of trust

Level 4 funding will perform the necessary due diligence on any deed of trust investment, ensuring any mortgage you invest in is of the highest quality. Level 4 funding differs from other TDIC's. Because Level 4 has already issued any mortgage you invest in whereas competitors may need your investment to fully finance their loans. With Level 4 Funding you have added the safety of knowing that any loan invest in already has a steady payment history.

To qualify you will need to make a minimum investment of 50,000 dollars, and your investment cannot exceed 10 percent of your total net worth or annual income. For more information about a deed of trust investment at Level 4 funding click here.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Reasons to use a hard money loan for your next fix and flip project

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

Fixing and flipping single-family homes is the subject of many popular television programs and no doubt most readers will be familiar with the process. An investor purchases a single family home, upgrades and repairs it and then sells it for a profit. Every fix and flip project has the same goals, to maximize market value, minimize the cost of renovations and to sell the property in the shortest time possible. But starting any fix and flip project also comes with the added cost of the financing.

Consider using a "hard" money loan to finance your fix and flip project. The value of the investment property secures this type of loan. This type of lender is likely to consider the potential value you can achieve with your project, instead of your credit score. Hard money loans can clear within a matter of days, which makes them ideal when you need to act quickly on a great investment opportunity.

A hard money loan can be the ideal financing solution for your house flipping project

A traditional mortgage will be hard to secure if your investment property is particularly distressed.The majority of regular banks fund their loans by selling them to Fannie Mae or Freddie Mac.More than likely your property will fall short of FHA guidelines, making the sale of the mortgage to Fannie or Freddie impossible.

Traditional lenders are also wary about the potential for default should your project not go according to plan. Generally it is not worth the effort for a regular lender to underwrite your loan or to thoughtfully consider your proposals.

Most asset-based lenders consider the potential of your project rather than your credit score or your properties current condition. If you are a seasoned house flipper, or you can talk up your specific plans, more than likely you can qualify for a asset based loan. Asset-based loans can also close quickly which allows you to take advantage of immediate investment opportunities.

If you intend to flip a home in Arizona consider using Level Four Funding as your hard money lender

Level 4 Funding offers short-term financing which is ideal for house flipping projects. Levels 4 offers interest-only loans which gives you the benefit of lower monthly payments. Level 4 Funding can also finance to 85 percent of your next house flipping project, whereas most other asset-based lenders usually only offer up to 75 percent. With Level 4 Funding you'll need to spend less of your own money up front to get your project started. Level 4 Funding offers flexible loan terms, with a minimum term of less than a month allowing you to pay off the loan at your convenience.Level 4 Funding can also close loans within a matter of days, which will help you get your project started quickly.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Beretta Only

Wednesday, March 28, 2018

How to Make Money Using Hard Money Loans

Hard money loans are not suitable for every borrowers needs but they are perfect to meet some specific needs. Using this loan correctly can be a great way to grow your wealth.

How and Why It Works

Making Private Loans Work for You

OCC Study reveals risks from Commercial loans

The OCC warns in its semi-annual risk report that relaxed underwriting standards may be putting some commercial loans at risk of default. Should you be worried?

Tuesday, March 27, 2018

Triple Your Chances for Getting Hard Money Loans

Using a few tips can greatly improve your chances for securing hard money loans. You might also find that these same tips will increase your profit as well.

Compare Your Offers

Improve Your Chance for Success

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.

Leasing vs. Flipping: Two tactics to use your commercial loan

Learn which strategy is right for you when it comes to using commercial loan proceeds.

Sunday, March 25, 2018

Can you make money by investing in hard money loans?

Consider using a deed of trust investment. A deed of trust investment allows you to earn steady returns and interest payments on the loans distributed by hard money lenders.

Reasons to use a hard money loan for your next fix and flip project

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

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