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Saturday, March 31, 2018

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Many borrowers are facing the challenge of less than perfect credit or a low credit score. And sadly, these people are under the assumption that they have not alternative to traditional lenders and banks. They are unaware of the service which is provided by hard money lenders. Though these loans are called non-traditional, they are still a very viable option for anyone who is unable to qualify for a traditional loan. But it is critical that a borrower learn how to select a good private lender to work with.

The first step might sound overly simplified but it is valid. Select a firm or individual who specializes in lending hard money. This ensures that you are working with a knowledgeable lender and one who can offer you terms which will fully meet your needs. You can learn a great deal about a lender by reading comments from other borrowers and investigating the lenders reputation. Any reputable lender will do what is best for his or her clients.

If you are new to private lending, it will also be helpful to limit your search to local resources. Working in-person will allow you to ask questions and establish a good working relationship with the lender as you learn the processes and intricacies of hard money. In addition, it will be much easier for you to check out the licensing information for local hard money lenders. This is an important step that should never be overlooked even if the firm is large and appears to be well known.

Seek Openness

As with any business, there will be certain privileged or proprietary information that the lender might not be willing to share with you. But all parties should have access to the loan information during the origination process. Be sure that your lender is willing to provide this transparency and that you are not getting a higher rate than originally promised. As you invest more time in speaking to the lender, you should not feel like some questions are being skirted or that there are aspects of the loan process the lender is not willing to discuss fully and openly.

Due Diligence Pay Dividends

Learning any new process takes time and effort. And working with hard money lenders is no different. You need to be willing to invest your time in learning the process as well as getting to know the lenders. Working with local lenders allows for a shorter learning curve and also gives you more peace of mind as you have been able to actually meet the lender and their staff. As you progress into more loans, seeking national lenders is a viable option to increase your opportunities and to locate more diverse loan options and offers. Be certain to carefully evaluate all of the lenders and all of the loan offers that you receive. Look for a lender who you feel comfortable working with and find very trustworthy.

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

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Qualify for Commercial Real Estate Loans

Understand that commercial real estate loans are nothing like residential loans, which means that the qualifications are drastically different as well. Understanding the qualifications before you apply for a loan is critical to securing the fund that you need.

First, it is important to grasp that commercial real estate loans and residential real estate loans have nothing really in common other than the word loans. The comparison is similar to that of a paper airplane and a jumbo jet; yes they both fly. So be prepared to learn about an entirely new set of loan qualifications before you embark on your first commercial loan application.

Lenders base a huge portion of their decision on your personal credit score when you are seeking a residential loan. And it is always good to have a respectable credit score, but it is not as critical when seeking a commercial loan. A credit score of below 600 will require an explanation but it is not a deal breaker. But a credit score of under 500 is likely to reduce your opportunities quite a bit. What lenders will be looking for to approve commercial real estate loans is a solid net worth. In general, lenders would like to see a net worth equal to the amount of the loan you are requesting.

Another important factor to qualify for commercial real estate loans is liquidity. The standard for liquidity varies among lenders but the rough average is 10-20% of the loan amount. What lenders don’t want to see is a borrower who scrapes up every last dollar that they have to make a down payment. Being cash poor could have catastrophic results if there is an unexpected expense which arises or some other type of emergency.

Your Experience

Your experience will also be a key factor in your approval. Demonstrating that you have the ability to manage the new property successfully means that you are most likely going to be able to make you payments on time and for the life of the loan. And if the property is quite large, the lender wants to know that you have the resources and staff in place to handle the management and ownership responsibilities associated with the property.

Income

As with any loan, there is a certain expectation for income. You need to have the income to pay the loan payment each month. This might be in the form of rental income once the property is up and functioning or it could be revenue from the business which is housed on the property, but the cash flow needs to be there to make the payments. Unlike on a residential loan, there is not real ratio such as debt to income that the industry uses as a standard. But you do need to demonstrate that there will be some type of cash flow to cover the loan payments for the life of the loan. All of these factors are blended to determine your ability to make the monthly payments on the loan that you are requesting unlike in a residential loan application where most of the weight rests on your income alone.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

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.

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

Beretta Only

Saturday, March 31, 2018

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

Learn How to Select Hard Money Lenders

For many borrowers working with hard money lenders is a new concept. Borrowers are not familiar with the process or how to select a good lender.

Seek Openness

Due Diligence Pay Dividends

How to Qualify for Commercial Real Estate Loans

Understand that commercial real estate loans are nothing like residential loans, which means that the qualifications are drastically different as well. Understanding the qualifications before you apply for a loan is critical to securing the fund that you need.

Your Experience

Income

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

About Me

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