Thursday, May 3, 2018

Why Hard Money Lenders Are So Helpful For Investors

There are many benefits to using hard money lenders when purchasing an investment property. Level 4 Funding shares reasons this type of loan can benefit you.

While many beginner investors typically want to go the route of seeking a loan from a traditional lender such as a bank or other financial institution, they may not realize hard money lenders can help them obtain short-term loans that are much simpler, faster and a great way to get a loan without having perfect (or close to perfect) credit.

For real estate investors, hard money lenders are looking at one main thing — collateral. So instead of having to complete a complication application, provide a lot of personal financial statements and documentation for conventional lenders, these lenders offer a quicker and less stressful way to obtain the funding they need.

These lenders are mostly interested in the property, which is many times used as collateral for the loan. This is a much more direct way to get the loan because it sometimes takes weeks (or longer) for traditional lenders to verify credit scores, reports and history and approve the loan application.

The property’s current market value is the main thing.

The lender is going to want to help the investor make the purchase if the loan amount is approximately 70 percent less than the value of the property in question to purchase. If that is the case, hard money lenders will typically look at this as a good investment and ready to create a contract and repayment schedule agreement.

This type of loan is a win-win situation for the borrower and the lender.

Everyone involved typically benefits from this type of short-term loans. For investors that are looking to “fix and flip” buildings or homes, for homebuyers that will need to make a lot of home improvements on their new abode or for first-time investors, these loans are the way to go. And for those that have poor credit or dings on their history, this does not really even factor in to whether or not their loan will be approved. They get cash in hand, fast, and with few complications. The borrower can even opt to secure a conventional loan with lower interest rates once they own the property outright. The lender benefits as well because the repayment schedule is short, and the interest is generally higher than a typical long-term conventional loan, so they begin to see the return of investment almost immediately. All in all, this is a great type of loan and really does offer a multitude of benefits for all parties involved. Level 4 Funding is available to help investors with a variety of loan needs. With a bit of help and advice from an experienced and professional lender, borrowers can make their investment dreams come true and start building an investment career that can be very financially lucrative – making any future loan needs in the future much easier to obtain.

How to Understand Hard Money Loans

If you learn about the process of hard money loans, you can figure out how to get the best loan to suit your business needs. Level 4 Funding shows you how.

When it comes to learning about hard money loans, it helps to start at the very beginning, with what they actually are. These are unconventional loans that are not reliant on banks or traditional lending institutions for funding. Private sources fund these types of loans, whether it be an individual or a group that helps assist with the funding. Most often, these loans have a short repayment term cycle and are typically used by the borrower to purchase investment properties.

The qualification process for hard money loans it totally different than applying and approval for a traditional loan. In the latter, a borrower needs to complete and submit an application process to the bank or other conventional lender. The process is often very detailed and lots of documentation is required of the borrower. The borrower must also share credit score and history, and provide details about their financial status in order to be considered for the loan.

For unconventional loans, the process is based upon collateral, and the current market value of whatever collateral the borrower is able to provide. Collateral is the value the borrow puts up as a way to offer the lender security of the loan. This could be a car, the person’s home, another building or event the building/property that is being purchased, for example. The lender requires this as security that if for some reason the borrower can’t make payments, than the lender takes over the collateral and can sell it to recover their funds. In this type of loan, the funding individual or group is less interested in the borrower’s credit score or even their currently financial situation. It’s all about collateral.

This is important for borrowers that have less than ideal credit scores or have a ding in the credit history somewhere along the line that makes it difficult for them to obtain a conventional loan. The value of the collateral or the property in mind to purchase needs to have value equal (or likely higher) than the amount that is being requested to borrow. This gives people breaking into the world of investment property purchases a good place to start.

Now that you know…

This is a huge benefit of hard money loans that people don’t often realize at first. While conventional lenders can often be intimidating and the loan applications very challenging, the process of this type of loan is very straightforward. Investment properties, fix-and-flip homes and other property purchases are all great for this type of loan. It offers the cash upfront (and fast!) to make the purchase happen. Then it’s up to the borrower to take their investment purchase to the next level in order to profit to the maximum.

Working with this type of loan has great potential

For those without stellar credit or even those that are just starting to establish their business credit scores, these loans are the way to go. A private lender such as Level 4 Funding can help beginner investors with a short-term loan to build their investor career.

Tuesday, May 1, 2018

What You need to Know About Getting Business Loans Arizona

Obtaining business loans Arizona gives borrowers the chance to get money for their businesses for a variety of uses such as equipment, property, and improvements, to name a few. Level 4 Funding explains the process of applying for this type of loan in the state.

Whether a first time borrower or a multiple time borrower of business loans Arizona, it’s crucial to understand how these loans are different from a loan to purchase a residential home or property, for example. These loans can be very beneficial for business owners that need more cash flow to grow and build their businesses. It can really provide an opportunity for companies in a number of ways. However, preparation is essential.

When preparing to apply for business loans Arizona, you should get your most current credit score report and full credit history to submit to the lender. You should also put together a business plan that details the marketing strategies, analytics of the industry and other statistics that the lender might find helpful in making his decision to approve your loan.

It’s also a good idea to organize both personal and business financial statements and documentation and any other paperwork that the lender advises you to obtain for your business loans Arizona. If you give yourself a head start on preparation, the application process will go much more smoothly and quickly. It’s also important to read through the agreement very thoroughly. Sometimes there are hidden clauses, fees or other verbiage included that you might pass by on the first read. The lender will not take it lightly if you can’t make your payments, so you shouldn’t take this binding contract lightly either.

It’s critical that you know the repercussions of not being able to meet the terms of the agreement.

If you become in breech of that contract, the lender has the right to take ownership of the collateral you put up to secure the loan. This could be your car, your home or your business or you could face foreclosure on your property. Make sure before you agree to a repayment schedule that you really can make those payments, on time, every time.

You might be responsible for other fees when you obtain the loan too.

When you get approved for a loan, there may be charges or other fees that apply, even appraisal costs, etc. that you might not have taken into consideration. The down payment you’ll be required to make is somewhere between 20 to 30 percent (give or take as it relates to the current health of the economy). So above all, double check your finances and budget before signing to make sure you can handle these payments. When seeking a lender in Arizona, Level 4 Funding is your go-to expert for business loans to help you take your business to the next level. Our experts are always available to help you find the loan that will work for you. Call today.

Monday, April 30, 2018

How to Evaluate a Property for Hard Money Loans

Real estate property purchases will benefit by knowing some ways to evaluate a property to best obtain hard money loans. Level 4 Funding offers the following tips to best evaluate the property you wish to get a loan for.

When entering the commercial or residential real estate market with the intent to purchase properties, fix them and then sell them for a profit, there are some things you should consider… Especially if you are looking to obtain hard money loans to fund the purchase. The better you are able to evaluate the value and prospective value of the property, the easier time you’ll have persuading lenders to fund your loan.

While unconventional or private lenders that provide investors with hard money loans are primarily interested in the collateral for borrower has to offer. In the case of real estate investors, this is typically the property that is intended to be purchased with the loan.

So it’s important to know what these lenders are going to be looking at when it comes to the property at hand. If you can pre-evaluate these things with a “lender’s eye” you may have an easier time getting approval. Level 4 Funding provides the following criteria: protective equity, which offers investors protection again payment defaults, fluctuations in the market and devaluation of the property; mortgage to value ratio, the property’s percentage of appraised value or quick-sale value – the lower the mortgage amount to the value of the property, the better; resale probability (the quicker the better); the condition of the property – which can affect how much investment will be needed to put into it to make it resalable; and location. The latter is one of the most important aspects of real estate — “location, location, location.” Consider the location of the property above all things.

There are many factors to consider, and each lender may consider some factors more important than others.

While the above are just a few of the major ones, there is a multitude of things that need to be taken into consideration when looking at an investment property. Lenders may be able to advise you as to which they consider to be most important as it related to the current market conditions.

When looking at an investment property, evaluation is a major part of the process.

With certain properties that go on the market, particularly foreclosures, time is of the essence. However, it’s more important to make a complete and unbiased evaluation of the property before jumping in “blind.” By considering all angles and factors, you can make a more education decision as to whether or not this property will be a good investment, and if you will be able to obtain hard money loans based on its current condition. Level 4 Funding can help real estate investors evaluate their property purchases to order to come to a loan agreement for the right property. Call Level 4 Funding today to see how they can help you find the investment property that will become an investment in your success.

Sunday, April 29, 2018

Tactics to negotiate a better hard money deal

You may be seeking a hard money loan and looking for the lowest possible interest rate, but there may be additional costs you could be unaware of beyond the interest rate. You will be at a disadvantage if you aren't aware of these expenses and don't try to negotiate with your lender.

Some private lenders may earn their profits by charging fees rather than collecting interest payments. In the worst case scenario, an unscrupulous lender could lure in borrowers by advertising a low-interest rate, all the while charging them exorbitant fees. Even if a lender is reputable, borrowers should be aware of any additional expenses when it comes to their loan.

Private asset based lenders are business savvy and approach each loan as a business deal. There is always room to negotiate the terms of any business deal, and the same holds true for your loan.

The most apparent expense on an asset based loan is the point fee, which is a percentage of the loan amount which is paid by the borrower up front. You should do your best to negotiate the point fee because depending on the size of your loan this cost can be considerable.

You as a borrower need to be aware of the cost of your loan in points and any other fees that may apply.

Which fees can you negotiate when it comes to hard money loans?

In the first place, there's the underwriting fee, which is the cost of a lender's due diligence. The cost of underwriting can range from 750 to 2,500 dollars depending on an individual deals complexity. In addition depending on your circumstances the cost of servicing your loan could also be a factor. Loan service fees cover the cost of recording payments and generating reports, and this price can be considerable. A lender may charge a fixed monthly payment or charge a given percentage of the loan amount annually.

In addition, be aware of any late fees, or any potential change in your interest rate if you miss a payment. You will want to keep these fees as low as possible because if you miss a payment due to financial difficulties, higher interest rates and late fees will make it harder to catch up.

The main advantage of asset based lenders over traditional banks is that they are flexible and that their is always room to negotiate the terms of your loan. If you don't try to negotiate these additional fees you may be taking on an unnecessary expense.

Take advantage of the flexibility offered by hard money lenders

Some of the fees mentioned before may or may not apply in your case. But you should try to take advantage of the flexibility offered by private lenders. If you are a borrower with considerable experience and strong collateral on hand, in most cases your private lender will work with you to negotiate any fees.

In short don't look at an attractive interest rate when shopping for a loan. If you want to get the best deal possible, know the fees that are being charged and to do your best to negotiate.

How to find the right hard money lender for your next project

Just because you cant secure a traditional bank loan doesn't mean you don't have other options, you may have considered a hard money lender but where do you start? What should you expect from a potential lender, and what will a lender expect from you?

A quick google search for private lenders should turn up an endless array of financing options. Because you might need a specific type of lender to match your particular project an online search can prove to be a little overwhelming. You could always try to be more exact with your search terms, trying things like ‘private rehab loans,' or ‘private construction loans.' Being specific with your online searches may help you find the lender that is right for you, but this isn't always the case.

Consider using one numerous lender databases available online to narrow down your financing options. The ideal database would allow you to aim your search for lenders based on the amount of financing you need or will enable you to search for lenders based on your specific project, (i.e., Renovation, construction, commercial, etc).

If you'd rather avoid the hassle of searching for a lender on your own, you could seek out a referral from a licensed mortgage broker. Local real estate investment groups could also put you in touch with lenders they have worked with in the past.

If you find the right lender, the question then becomes what should expect from them and how do you know you're getting the best possible deal.

What should you expect from a potential hard money lender during the application process?

Search relevant government databases to ensure your lender is licensed. Your lender should also be transparent throughout the process. Ensure that they meet their published guidelines related to fees and closing costs. You should also be wary of teaser rates offered by unscrupulous lenders.

Know that every private lender is different and will have their criteria when it comes what they expect from you as a borrower.Ask your lender to be transparent about any documentation you might need throughout the loan application process.

Know what your hard money lender expects from you to get the best deal possible

This type of loan is often used to finance rehabilitation and construction projects.If your seeking financing for renovation or construction, a lender will want to ensure that you are competent and knowledgeable about your project. In these cases, before approaching any lender, have details about the property you wish to purchase, a budget for your renovations and thorough projections about the future profitability of your project. You build up your lenders confidence and gain room to negotiate by demonstrating your understanding of a project's potential.

You need to have a detailed understanding of what your property is worth to qualify for the best possible loan. A private lender usually bases the amount of financing offered on the market value of the property you are purchasing. You won't qualify the largest possible loan if you don't have a good sense of what your property is worth.

Thursday, April 26, 2018

Which type of Hard money loan is right for you?

The "hard "asset being financed secures a typical hard money loan. But there are different types of asset-based loans, so how can you figure out which one is right for given your specific circumstances?

Asset- based lenders consider the value of the property which secures the loan rather than a borrowers credit score, so this type of loan can be more accessible for some borrowers.

The application process is easier than a traditional bank loan as borrowers don't need to provide extensive financial documentation in most cases.

Typical types of asset-based loans include commercial, renovation and cash-out refinance loans. Businesses rather than individuals take out commercial loans.This type of loan is short term, and it is not typically used to purchase real estate or to make long-term investments. Instead commercial loans should be used to cover short-term costs like equipment or inventory.

Borrowers use renovation loans to improve a property and then resell it for a profit. Refinance loans allow borrowers to quickly purchase a property and then later refinance to a traditional mortgage.

So what are some specific situations and how do they relate to these particular types of asset-based loans?

Evaluate your situation to determine which type of hard money loan is right for you

An asset-based loan could be a good solution if your business has sufficient collateral and you cant secure financing from a regular bank. If you want to renovate a distressed property, an asset-based lender is your best bet. Few banks are willing to issue renovation loans because raising the required capital is made difficult by government regulations. Traditional lenders also deem such projects too risky because there is a high risk of default if the borrower's project doesn't go according to plan.

A cash-out refinance loan can be ideal if you want to purchase an investment property quickly. A traditional mortgage can take several months to close. A cash-out refinance loan allows you to make the initial purchase while giving you the option to refinance to a long-term mortgage at a later date.

Whatever circumstances asset-based loans provide you with flexibility, but any lender you approach should be transparent and willing to offer advice.

Beware of hard money lenders that cant offer you specific advice about which loan is right for you

There are other types of asset-based loans of course, but a good lender will carefully consider your situation to find the option that can best meet your needs. You should look elsewhere if a lender isn't transparent or is unable to give you insight into your specific situation.

A commercial loan can be great for businesses owners with a lot of collateral, but who are ineligible for regular financing. A renovation loan can allows you to improve and resell a distressed property, and a cash out-refinance loan allows you to complete time-sensitive transactions. In short, asset-based loans are easier to qualify for, can be used to make speculative investments and can close quickly to complete time-sensitive purchases. Carefully consider your specific situation to find the type of loan to meet your financing needs.

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.

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