Beretta Only

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

5 Tips to Successful Hard Money Loans

Hard money loans are a great way to begin a successful career in real estate. Following a few tips will ensure your success.

Any borrowing experience can be stressful if you are not well prepared. But understanding the process and knowing about a few tips to follow can make your first experience with hard money loans simple and successful. Even without personal experience this information will give you a confidence that you are making good choices and will have success with your project.

Picking the right lender is a very important first step in the process. You will want to do some research to make sure that the lender has a good reputation and has experience working with borrowers. You will also want to be sure that you are comfortable working with the lender and within the standard terms that the lender offers. Equally important is selecting the right property. You need to be sure that the numbers work on any property that you are considering. Remember that this is a business deal and there should be no emotional attachment to the property. If the numbers won’t end with you making a profit then it is not the right deal for you.

Being Prepared Is Critical To Your Success

Even with the fast funding of hard money loans, you need to have been planning for your purchase for a considerable amount of time. The loan is likely to be limited to 75% of the cost of the property so you will need to have access to the remaining cash. This down payment is your “skin in the game” and also represents your equity in the property. Having the time to save the 25% down payment also relieves the added stress that will occur if you are using another unsecure resource to borrow additional money. You will also want to be sure that you have carefully prepared all of your paperwork. This can include research on the property and your business plan for buying, improving and selling the property. Some lenders will also want to see documentation showing your cash reserve for any repairs or operating costs and proof of the down payment funds. Having your financials ready can help to reduce the time that it takes you to be ready to seek a loan when you find the perfect property.

Manage Your Expectations

It is critical that you begin each real estate purchase and project with a realistic time line. It can be easy to get over excited on the first few projects and start to believe that the work can be completed more quickly than you first estimated. But in almost every case, you will find that the initial time estimate is shorter than the time required to complete the entire project. Be sure to build in a little extra time as a buffer. This will allow you to complete the project without the added worry of defaulting on the terms of your loan. Hard money loans are a great tool to begin real estate investing but you must be sure to make good decisions and maintain realistic expectations throughout the process.

Commercial Real Estate Loan Rates

Do you have an office building, a rehab, or a multi-unit apartment building? With commercial real estate loan rates at one of their lowest, now may be the right time to consider a loan for your next real estate investment.

If you are an owner or looking to purchase a commercial property, there’s good news to be had: Commercial loan rates remain at an all-time low. With the Federal Reserve promising four rate hikes this year, this may not be so in the future. For this reason, this may be the perfect time for you to purchase or refinance a commercial property. Level 4 Funding has the team that can help guide you through the process and help you feel like a well-informed purchaser. Let’s take a look at how commercial real estate loan rates work and the interest rates the different types of lenders charge.

If your Credit Score is 680, you’ve been in business in 2-plus years, and plan on occupying 51% of the building, you may qualify for a SBA 7 (a) loan. If your project is between $2 and $3 million dollars you may want to explore the opportunities for financing from insurance companies and conduit lenders.

Commercial Real Estate loans have lower interest rates because they are collateralized by the commercial property. There are four factors that affect the interest rates for the Commercial loan. They are:

1) The Business and Customer creditworthiness: Your rate will be determined by the credit score of the customer and business, the higher credit score the lower rate.

2) Is the commercial real estate loan fixed or variable? A fixed rate loan is a loan that has a fixed rate for the term of the loan. The variable rate loan is reset from 1 to 5 years and will be adjusted based on current rates. Most people will not qualify for fixed rates.

3) What is the term and size of the loan? Hard money lenders offer loans with higher rates and shorter terms while conventional lenders offer longer loans with lower rates.

4) Prevailing Market Rates: Interest rates move up and down based on the government bond market. Keep informed about the movement in the government bond market and how they will affect your rate.

The Lender Has the Biggest Impact on your Rate

1) SBA loans--rates run 4.75% to 9.25%, the 504 loans are best for loans over $1, 000,000 and come in three parts: 50% from the bank, 40% from the SBA and 10% from the borrower. You will need a credit score of 680+.

2) Hard Money Loans--Rate run 10% to 18% and covers about 20% of the market. The rates are high because the loan is not based on the credit worthiness of the borrower but the value of the property. The loan-to-value runs around 55% for many hard money lenders.

3) Other Lenders--Only a small amount of loans come from Insurance companies and Conduits.

Commercial loans can be structured in three ways: fully amortized loans, interest rates resets, and balloon payments.

You may want to purchase commercial Real Estate or refinance a commercial property. There are wide varieties available for high credit scores and lower credit scores. Call and counsel with Level 4 Funding to find what works best for you in your situation. We offer rates as low as 7.99 percent.

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

Friday, April 13, 2018

Hard Money Lenders: What Rehabbers Need to Know

You find a house that you would like to rehab and flip, but you have never done this type of project before. This is what you need to know when considering getting a loan through a hard money lender.

Time is of the essence when purchasing a property. Especially in today’s market when many sellers are faced with multiple offers. It’s important to have a lender you can work with in a moment’s notice and one that you can develop a long-term relationship with. Various lenders have different requirements. Hard money lenders will either loan on appraised value after repairs or others will loan on the purchase price. You want to find the lender that will loan on the appraised value. A breakdown of the fees will be given to you by the lender, some of them are loan points; closing fees that can include escrow amount, document fees and notary fees; and the interest amount.

Once the hard money lender decides to proceed on your opportunity, you will have a response such as: “We will lend you 60% of the ARV (appraised repair value), 5 points, 500 document fees, 6-month balloon payment loan at 10%.”

Assuming the property is appraised at $200,000, then your loan will be 60% or $120,000. Upfront costs are $6,000 points plus $500 doc fees. $1,167.60 is the loan payment until the property is sold or 6 months is up.

The Lending Process

1) Talk to the lender to see what they require and what you will need

2) Find a proper deal and put it under contract

3) Contact the lender again and inform them about the property you found, repair costs and what you think the ARV is

4) Have the appraiser value the property, either from the loan company or a list that the lender has supplied you

5) If the lender requires, place the documents they need in Escrow

6) The lender will inform you if they will or will not fund the loan, at what amount, and under what terms

7) You set the date to close the loan, either at the title company or the lawyer’s office. The loan company will issue the checks. If the buyer has cash coming back, the loan company will issue this check as well

In recapping, a hard money loan can be used to acquire distressed properties. The speed of the loan is much faster than conventional financing, usually 2-3 days compared to 30-60 days.

The hard money loans are for terms of 1 to 5 years with interest rates of between 10% to 20% and points between 4% to 7%. The advantage of using a hard money lender is that there is a low threshold for the securing of the loan. It is based mainly on the property value and not your credit or income. A drawback is that, with some lenders, you will need to have the cash to do the repairs and either flip the house or rent it within 6 months. Contact Level 4 Funding to talk with the people who know how to guide you through the process. It’s important to consult with experts as you move forward, especially if this is your first adventure into rehabbing.

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

Thursday, April 5, 2018

Important Considerations when Choosing a Hard Money Lender

Hard money lenders are many real estate investors choice for funding, yet many just getting into the field know little to nothing about this lending option. Let’s take a look at what this type of lender can bring to the table.

Hard money lenders are not held by the same regulations that banks and credit unions must operate under. Because of this, they can offer loans to individuals and businesses with less than stellar credit. Many are private individuals who specialize in several types of real estate investment strategies from multifamily to office to the fix-and-flip model. These types of loans are asset based, meaning that the lender will look at your collateral as the prominent element of the loan. These types of loans are good for investors just getting in to the real estate investment model.

Another positive to those that operate under less regulation is that they are much quicker to funding. This becomes important when an investor is looking to get into a property, do some quick renovations, raise the property value, and get it on the market or obtain a loan from a traditional lender that is based on the property’s new value. If you end up developing a long-term relation with a hard money lender, you will find that you can often receive the funds you need for that next investment property in as little as a few days, compared to a month or more from other types of lenders.

Be sure to check the small print. Are you working with a hard money lender that offers a no-penalty clause for early payments? A pre-payment penalty states if you pay your loan back in full before the actual due date, a penalty will be assessed. The fee is percentage-based or the amount in interest that you would have paid for a set number of months. This can lead to tens of thousands of dollars. If you have an existing loan with a pre-payment penalty, be sure to assess fees before paying off the loan in full to determine if this is the right strategy for you.

Know Your Exit Strategy

While your property may be acting as collateral, hard money lenders do not want to be in a position of laying claim and having to foreclose on a property due to unpaid debt. For this reason, they will want to know your exit strategy. An exit strategy is how you plan on paying off the debt. Most of these loans are short-term, anywhere from 3 months to five years, making this component an important consideration for both the lender and the borrower. A few options are to refinance with a commercial mortgage, renovate and sell, or pay the debt off with business capital.

Know your exit strategy before considering a hard money lender. Going in with strong collateral and a good exit strategy are keys when considering going after a hard money loan.

At Level 4 Funding, we work with hundreds of private hard money lenders. Our rates start as low as 7.99 percent with terms that run anywhere from 3 months to 5 years. Call us to see if we are the right brokers for your next real estate investment deal.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Beretta Only

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?

Saturday, April 14, 2018

5 Tips to Successful Hard Money Loans

Hard money loans are a great way to begin a successful career in real estate. Following a few tips will ensure your success.

Being Prepared Is Critical To Your Success

Manage Your Expectations

Commercial Real Estate Loan Rates

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.

Personal Credit is Not an Issue

Time is On Your Side

Friday, April 13, 2018

Hard Money Lenders: What Rehabbers Need to Know

Saturday, April 7, 2018

The Difference in Hard Money Loans

Thursday, April 5, 2018

Important Considerations when Choosing a Hard Money Lender

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