Beretta Only

Saturday, March 31, 2018

Invest 5 Minutes to Learn How Hard Money Loans Can Work for You

By understanding the process of hard money loans, you will see the benefits that they offer. Then you can use this financial tool to make money.

Hard money loans are non-traditional loans, meaning that they are funded not by banks or lending institutions but by private sources. These sources can be a private individual or a group of people who are working together to fund loans. In most cases, the loans are short term and are used to purchase investment properties. The other key feature for these loans is the qualification process.

In the case of a conventional loan, a borrower must complete a loan application and submit it to the traditional lender. This document can be very in depth and tedious to complete. And then the lender begins the process of verifying the information to determine if the borrower is a good risk. The lender considers the borrowers credit score, credit history and overall financial well-being to decide if they will grant the request for funds. In short, the approval is based on the borrower’s current finances. But for hard money loans, the lender is basing the approval on a totally different criteria. The lender is only interested in the current market value of the collateral being offered for the loan. Collateral is something of value which is pledged as a form of security on the repayment of a loan. In this case the collateral is most often the property being purchased. If the borrower fails to make the payments on the loan then the lender is able to sell the collateral to recover their money. The lender is not even really interested in the borrower’s credit or financial position, only the collaterals value.

Understanding this single point is critical to making money using hard money loans. What this means is that you do not need to have great credit or a strong credit history to be able to fund an investment property. You only need to have found a property which has a value greater than the amount that you need to borrow. This single fact opens up investment real estate to an entire segment of the population who might not qualify for a traditional loan due to past credit issues.

Use This Knowledge

Knowing that private lenders are willing to extend loans to borrowers without perfect credit means that anyone can invest in real estate and benefit from this potentially huge profitability. Fix and flip purchases have become very popular in the past 5 years. Buying a property which needs work is a great way to buy cheap, invest sweat equity and then sell for a large profit. Using hard money allows anyone who is willing to invest the time and work needed to improve the property to make a profit on this short term investment.

Invest in Your Future

Not everyone has great credit or can qualify for a second traditional mortgage for an investment property. But using a private lender is a great way to get a short term loan to begin your path to financial freedom as a real estate investor.

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

How to Benefit From Hard Money Loans

Though many borrowers are unfamiliar with the concept, hard money loans offer many benefits to certain borrowers. Understanding how these loans work can make them a great financial tool to have at your disposal.)

Hard money loans are simply short term loans which are secured by real estate. The loans are often referred to as non-conventional as they are provided by private lenders rather than traditional lenders or banks. Unlike the more traditional loans offered by banks, there are much less stringent requirements to qualify for these private loans. This is one of the main reasons that many borrowers elect to use a private lender and hard money.

As a rule, private hard money is seen as a faster and less difficult solution for many real estate investors. With less documentation required for the application, not only is this a less stressful process for the borrower but it is also faster for the lender. For these types of loans, the lender is primarily interested in the value of the property which is going to be used as the collateral on the loan and not the borrower’s financial health. So rather than spending days or weeks verifying credit history and credit reports, the lender is only seeking the current market value of that one property. If the loan amount is less than 70% of the property value then the lender is most likely ready to draw up the agreement and fund the loan.

Who Benefits from Hard Money Loans?

There are four main ways that hard money loans can be used to a great benefit for borrowers. The first is in the case of flippers. This is an investor who is buying a house that needs work and will be completing a renovation with the intent of selling the property for a profit and in a very short time. A private loan is much faster and easier for this process. Builders will also use this type of loan to purchase a lot to build on. Once the structure is complete, they sell it and pay off the private lender with the profit from the sale. Investors also favor a private loan when they are in need of funding very quickly. Opportunities can be very time sensitive and making the initial purchase using a private loan is much faster. Then the investor has the option of securing a traditional loan to lower their interest costs once they have ownership of the property.

A Final Benefactor

The last type of situation which can require a private loan of this nature is a person who has bad credit. There are occasions when a person has saved enough for the down payment on a property but is still unable to secure a traditional loan for the purchase. Their credit is too bad or they have no credit history. In this case, they can use the private lender to secure the property and then refinance later when they are able to qualify for a traditional loan. All of these situations are clearly good options to take advantage of an opportunity that would otherwise be lost.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Evaluate Hard Money Lenders

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

It can be very easy to get nervous when you are looking for a lender of any type. After all, you are going to ask this person or institution for money and that just makes most people uncomfortable and nervous. But the key to a successful search for conventional lenders or hard money lenders is remembering that you are their customer and that they are in business to offer you a service. Even if you are seeking a private lender because you have been rejected by a traditional bank, do not rush to accept the first loan offer that you get.

Start your search in the same manner that most of the world uses to find anything, the Internet. Does the lender have a legitimate website? Some websites are simply portals which are gathering information and then sending it off to potential lenders. This is not what you are looking for. A legitimate private lender will have a professional site which will provide you with contact information, general information about the lender, information about the type and size of the loans that they offer and their criteria for lending.

Once you have compiled a list of hard money lenders that you would like to speak to, take an additional step and check them out further. Search to see if they have any litigation pending against them or if there are issues pending with any investors which they might have. In some cases you can also learn what other borrowers have said by doing a google search of each lender. There are numerous sites where consumers report poor service or poor business practices by just about any service provider that you can think of.

As long as you have not uncovered any red flags, then contact each lender to set up an appointment to speak in person or a call if they are not local. At this time it is a good idea to have prepared a list of questions to ask each lender. These answers will allow you to compare each lender on the same criteria. You might ask what type of loans they most often fund or what dollar amount is their average loan. You will also want to inquire about their time frame for funding the request and their criteria for approval of the loan request.

Once you have gathered all of your information, you will want to calculate the total cost of each loan offer. Be sure to consider loan origination or processing fees and any other fees such as an early repayment penalty. This total cost should be your main criteria for selecting any hard money lenders. If you have two lenders who’s offers are the same then you can use more personal characteristics in your decision making process such as who you think will be the easiest to work with or who is located closer for more easy access. But be mindful of cost and the fact that you are going to be the customer.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, March 30, 2018

Why Understanding the Basics Helps to Avoid Red Flags on Commercial Loans

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Understanding the basics of commercial loans is critical to completing a loan application correctly and not raising unnecessary red flags which will slow down or stop the application evaluation process. Most commercial loans are offered for between 5 and 10 years but the amortization period is up to 25 years. Requesting a loan for a longer period of time is not normally an option but can indicate to lenders that you might be concerned about your ability to pay the loan in full in the allotted time frame. A standard down payment of 20% to 25% is expected on commercial loans. Again, this is a fairly non-negotiable fact as is a loan to value ratio of 80% or less.

One of the first red flags that a borrower can trigger is by demanding an unreasonably fast loan approval process. Some loans and lenders require 90 days or more to process and fund a loan. In a best case, it will require at least 6 weeks to process a loan application even if you have previously worked with the lender and been successfully awarded funds. An experienced and confident borrower knows the timeframe involved and has planned accordingly. Trying to rush the process indicates either inexperience which could jeopardize your approval or that your financial situation is about to change and you want to get approved before your creditworthiness drops.

Another red flag jumps out if you appear to be withholding information or are intentionally providing vague answers. A lag in response time might not be because you are trying to hide information but even if it is because you are not well prepared or are disorganized, the result is still a negative mark against you. Requiring continued requests for the same information is not going to make the lender bored and cause them to stop asking. It is going to make them worried or more curious and they are going to dig even deeper to find the reason for your secrecy.

Be Realistic

Finally, requesting a loan which is in excess of the 80% loan to value standard is going to create unneeded issues. The first thought is that you have not completed you due diligence and you are unaware of the actual property value. This makes you look ill prepared and unprofessional. The other thought is that you are simply disregarding the standards set by the industry. This makes you appear to be unrealistic and also self-absorbed as if the rules do not apply to you. Neither of these will create a positive image for you with the lender.

Avoid Any Unnecessary Issues

Most commercial lenders adhere fairly closely to the industry standards for loan terms. Understanding these terms and being realistic with your request will keep the process moving at or ahead of the average pace. But trying to rush or refusing to honestly answer legitimate questions posed by the lender will only cause unnecessary questioning of your business and financial stability which could eliminate your chance of securing a loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Thursday, March 29, 2018

How to Get the Most Benefit from Hard Money Loans

Understanding how hard money loans function is critical to using them successfully. By understanding just a few facts, these private loans can be the key to your financial success.

Most borrowers know very little about the process and characteristics of hard money loans. They understand that the money is provided by a private lender or a group of private lenders and not a traditional bank or lending institution. And they are also aware that the money carries a higher interest rate than traditional loans. But with that very limited bit of information, most borrowers turn away from this very viable and potentially profitable source of funding.

It is very true that hard money loans can carry interest rates in the double digits which is considered to be high. But what most borrowers are not considering is that these types of loans are much more accessible than traditional loans. Long processing time frames, stringent qualification standards and predetermined terms are all facts of life when seeking traditional funding. But a non-traditional loan can offer a much less difficult process for most borrowers.

A private lender is not going to require but a fraction of the documentation that a traditional lender demands during the loan application process. Banks want to see credit history, bank statements, other loan documents, income statements and even documents defining your business and the relationship of the owners of the business. But a private lender is not focusing on that information to determine the risk of your request. So there is much less paperwork involved and therefore much less time wasted during the application and approval process. Borrowers can often have funds in hand in a week or two when working with a private lender.

What Determines a Good Risk?

A private lender is also not going to focus on the borrower’s financial stability when considering a loan request. This opens the door of opportunity for borrowers who have low credit scores or have a high debt to income ratio. What a private lender is going to base the loan approval or rejection on is the value of the collateral for the loan. In most cases the collateral is the property being purchased with the loan funds. The lender needs to be assured that the collateral will always have a greater value than the outstanding loan balance. In the event that the borrower defaults the lender must be able to take possession of the collateral and sell it to recover their investment. For this reason, most hard money loans cannot exceed 70% of the value of the collateral.

Making Private Loans Make You Money

Clearly, private loans can be obtained in a very short time as compared to traditional loans. And these loans can also be obtained with less than perfect credit. If you are willing to pay a little higher interest rate, then a privately funded loan is an option for a borrower who has been denied due to a low credit score or who needs funding quickly to secure a great deal. There is always the option to refinance later at a lower interest rate from a traditional lender. But private lenders can be the answer when time is critical to closing a deal and not missing out on a great money making opportunity.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Get the Most Benefit from Hard Money Loans

Understanding how hard money loans function is critical to using them successfully. By understanding just a few facts, these private loans can be the key to your financial success.

What Determines a Good Risk?

Making Private Loans Make You Money

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Real Estate Lenders

Shopping malls are turning into mixed-use developments and online shopping has increased the demand for distribution centers. Investors in this segment are looking for commercial real estate lenders that are familiar with this segment of CRE.

We’ve all seen the boarded-up shopping malls with empty parking lots and decaying signs. And so have commercial real estate lenders. Sears, J.C. Penney, Macy’s, CVS and RadioShack have all reported bankruptcies and store closures, leaving lenders looking for a different venue, or at least a different take on an old classic. Shopping malls have become mixed-use developments that include housing, boutiques, outside concert venues and chef-driven restaurants. And maybe a golf course or two.

The truth is that several of the major delinquent loans are backed by shopping centers. According to REBusinessonline, “Major loans that have fallen past maturity in the past year include several that are backed by shopping centers formerly owned by the Westfield Corporation that were later sold to other REITs.”

This includes the $240 million Westfield Centro Portfolio, the $140 million Westfield Chesterfield and the $110 million Westfield Shoppingtown Independence. Rouse Properties purchased Independence Mall after a few years of foreclosure proceedings. Their goal is to create an “open-air retail destination” with a focus on upscale dining and a grocery market as an anchor. This shopping center giant has been in a restructuring mode since 2014 and just recently announced its sale to a French company. Unibail-Rodamco will reportedly pay $15.7 billion to take over Westfield Corp. It will operate as a REIT in France, the Netherlands, the United Kingdom, and the U.S. Its uncertain if Westfield’s previous plans to seek approval to flatten the Promenade Mall in Woodland Hills, CA and build residences, offices, boutiques, restaurants, hotels and a concert venue is still on target, though chances are the French global property leader will have a similar remodeling plan in mind.

From Retail to Warehouses

Some have blamed the demise in retail and shopping centers on the online giants such as Amazon. But this expanding trail that leads from brick and mortar to mouse and keyboard has left an interesting opportunity for commercial real estate lenders and investors—industrial warehouse and distribution centers. According to American Banker, e-commerce sales are expected to reach $700 billion by 2022. And all those online purchases need a home. While most distribution centers are built on demand, there is a growing number of commercial lenders shelling out the bucks for speculative centers—centers that are selling just as fast as they can be built. In fact, with increasing demand, building in this sector is booming, vacancies are at an almost record low, and rents are rising. Mini-distribution hubs are on the rise as well. Atlanta, Dallas-Fort Worth and Chicago all made the top five in the amount of construction space geared for new warehouse and distribution centers.

Those in the business are looking for commercial real estate lenders who understand the business.

Level 4 Funding has been in the industrial/warehouse segment for over 20 years. We work with over 200 private investors and understand the sectors that they specialize in. With this type of rolodex, we can get you the loan you need at the best possible rate. Closing can occur in as little as a few days, giving you the money you need to purchase that next warehouse, build a distribution center, or develop a mixed-use supercenter in record time. Call us for a no-obligation quote.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Beretta Only

Saturday, March 31, 2018

Invest 5 Minutes to Learn How Hard Money Loans Can Work for You

By understanding the process of hard money loans, you will see the benefits that they offer. Then you can use this financial tool to make money.

Use This Knowledge

Invest in Your Future

How to Benefit From Hard Money Loans

Though many borrowers are unfamiliar with the concept, hard money loans offer many benefits to certain borrowers. Understanding how these loans work can make them a great financial tool to have at your disposal.)

Who Benefits from Hard Money Loans?

A Final Benefactor

How to Evaluate Hard Money Lenders

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

Friday, March 30, 2018

Why Understanding the Basics Helps to Avoid Red Flags on Commercial Loans

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Be Realistic

Avoid Any Unnecessary Issues

Thursday, March 29, 2018

How to Get the Most Benefit from Hard Money Loans

Understanding how hard money loans function is critical to using them successfully. By understanding just a few facts, these private loans can be the key to your financial success.

What Determines a Good Risk?

Making Private Loans Make You Money

How to Get the Most Benefit from Hard Money Loans

Understanding how hard money loans function is critical to using them successfully. By understanding just a few facts, these private loans can be the key to your financial success.

What Determines a Good Risk?

Making Private Loans Make You Money

Commercial Real Estate Lenders

Shopping malls are turning into mixed-use developments and online shopping has increased the demand for distribution centers. Investors in this segment are looking for commercial real estate lenders that are familiar with this segment of CRE.

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