Beretta Only

Monday, September 17, 2018

Why New Fix-and-Flippers Get Denied by Hard Money Lenders (And What You Can Do About It)

People new to the home rehab business often make fatal mistakes that impact their ability to get funding. If you’re preparing to approach hard money lenders, you’ll need to have a few things in place to get approval.

It seems like today we have a fix-and-flip culture. There are TV shows designed around it and almost everyone knows someone who has done a flip before. Unfortunately, those just getting into the field can sometimes take this to mean that it’s easy or that it will generate millions for them overnight. While it can be quite lucrative, you’ll need to know the numbers and have a strategy in place before you can consider it a side-hustle or career.

One of the biggest issues is failure to consider additional cash needs. No matter how great of a deal you’re getting, you’ll need some kind of cash to get going. Although some will provide you with 80% or more of the value of the home, you’ll need to be able to pay the remainder on your own. Moreover, there will be expenses associated with the repairs and that’s not typically part of the initial loan. Those just getting into the business can really benefit from having a trusted inspector visit the home in advance of a purchase to help determine what repairs will be necessary.

The second major issue is failure to have a solid plan. If you have a little experience with home renovations, it’s easy to look a home over and make a mental assessment of the work and costs, but that doesn’t constitute a plan. They’re taking a risk on you, so hard money lenders will want to know everything from your timeline through costs and exit strategy. Don’t think this means you have to take everything on alone, though. You can build a network of professionals and bring them in to consult on your projects or see if a seasoned home rehabber will mentor you.

Are There Other Things That May Stand in the Way of Becoming Successful?

Even experienced home flippers run into a bump or two on each project. It’s their ability to anticipate issues and set aside the time and money to deal with them at the onset of a project which helps ensure they achieve what they set out to. If you’re told “no” by hard money lenders at first, don’t be dejected. Instead, ask questions to find out what you can do to improve the odds next time around.

Every HML has different guidelines, so the best way to know if you qualify is to get in contact.

The better your planning is and the more numbers you crunch, the greater your odds are of getting a green light on a project. Hard money lenders simply want to know they’re investing in you wisely, and although the value of the home is arguably the biggest factor for most, each uses a different set of criteria to judge. At Level 4 Funding, we’ve heard stories from our own clients about how other companies have dropped the ball and cost a client a property, and while we can sympathize, our ability to help where others don’t, and low-rate guarantee are things we’re proud to offer because it sets us apart from the pack. While we enjoy working with home rehabbers who have an established track record, we help newcomers too. If you’ve got a solid plan for a fix-and-flip, give us a call today.

Dennis Dahlberg Broker RI/Level 4 Funding LLC Privatae hard Money loans Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

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: owner occupied home loans,private hard money lender

Sunday, August 26, 2018

Why Investors Choose Hard Money Loans

There are many advantages to using hard money loans that make the higher cost of the loan less of an issue for investors as well as homeowners.

When most people think about taking out a loan, the first concern is what it will cost to borrow the money that they need. But even as counterintuitive as it may sound, in the business world there are factors that end up being more critical than money. Which is why many investors gladly choose to use hard money loan over more traditional types of loans from a bank or mortgage company.

One huge benefit to using hard money is that the loan approval is based on the value of the property that is being used as collateral, which is almost always the property being purchased. This eliminates the worries about personal credit scores, debt to income ratios and the issues of other outstanding loans. The only factor that is considered in most hard money lending transactions is the current market value of the property. And as long as the loan amount is under 70% of the current value then the loan is almost assured of being approved. Investors have the ability to secure funding for multiple properties without the lenders being concerned about the debt load. This keeps the investors happy because more deals mean a greater profit.

Flexibility is another great feature of hard money loans that appeal to investors. A bank is always very riged about the terms of a loan and their policies regarding length of term and fee structure. But a lender who works with hard money is not required to operate under the same stringent guidelines that govern banks and other lending institutions. Hard money lender have the ability to work with a borrower to create terms which are mutually beneficial.

Time is Money

One factor that is often even more important than money in the business world is time. When an investor finds a great deal on a property, there are sure to be other investors making offers and trying to steal the deal. So for an investor to make an offer that is being funded via hard money, sells see that as a major advantage. The seller knows that the funding will occur quickly and that they will not be a lot of red tape or the potential for the deal to fall through. Sellers also know that a potential buyer who is willing to use hard money to make a purchase is serious about the property and will complete the transaction as quickly as possible.

Hard money loans are a wise option

Most real estate investors are well aware of the benefits of using hard money from the fast funding to the added flexibility in terms. And due to all of these benefits, investors are very willing to pay a higher interest rate and even a few added fees to use this nontraditional lending resource. Faster funding means more investments can be made in a short period of time and will create a greater return on investment.

Technorati Tags: owner occupied home loans,private hard money lender

Friday, August 24, 2018

Why Borrowers Choose Hard Money Lender

There are many options for borrowers who are seeking a loan. But choosing to work with hard money lenders is a great option for several reasons.

Hard money lender offer many benefits that are not available from the traditional banks and mortgage lenders of the world. Some borrowers discover that they have no choice but to work with hard money lender due to their low credit score or lack of credit history. But many other borrowers choose these nontraditional lenders because they are a better fit to meet their borrowing needs.

Traditional banks, credit unions and mortgage companies are very regimented and only offer a few types of loans. And the loans that they do offer have no real flexibility. So borrowers are forced to take the terms and rate that is offered or find another lender. But hard money lenders are able to work with a borrower to create a customized loan that meets the needs of the borrower. Loans come in all shapes and sizes so hard money is a great option of a person purchasing a home or the investor who is interested in buying a property to flip or even an entire rental complex.

Getting approved for a traditional loan can be difficult. Not only is it important that you meet the credit score and income criteria but you also need to be able to provide detailed documentation to prove your earnings and debt. So it is stressful and time-consuming. But these lenders are more interested in the current market value of the property than the personal financial history of the borrower. This is because the approval of the loan is based on a comparison of the loan amount being requested and the property value. The term is loan to value. In most cases a lender is only comfortable lending up to about 70% of the current market value of the property. They use this number so that there will always be some equity in the property and in the event of the borrower defaulting on the loan, the lender can sell the property to recover his or her investment.

Timing Can Be Critical For Hard Money Lender

In some cases, getting a fast loan is more important than getting the very cheapest loan. A buyer might be trying to purchase a home which is very competitively priced, meaning there will be a lot of bids on the house. So by submitting an offer noting that the funding is in the form of hard money is a big benefit. The sellers will know that if selected, that buyer will have funding quickly to close the deal. The same is true for an investor who finds a great deal but wants to make the purchase before other investors discover it. The fast funding of hard money can be all that makes a great deal work.

Making a Deal with a Person

Borrowing from a nontraditional lender is much more personal than borrowing from a huge corporation. You are actually working with a local person in most cases and can ask questions, make requests and even get a great deal of education on the art of hard money deals. Many borrowers are happy to have the option to work with an individual or small group rather than a huge company with impersonal service. All of this personal service and the potential to customize a loan makes hard money a great option for many borrowers.

Technorati Tags: owner occupied home loans,private hard money lender

Who Can Benefit From Hard Money Loans

Hard money loans are not or everyone or every situation. But there are several cases where hard money is the best solution.

Hard money loans are loans that are funded by individuals or small groups rather than from a bank or other lending institution. For this reason, these loans are often referred to as non-traditional loans. Because the finding is not coming from a bank, there is more opportunity for flexibility on the terms of the loan which makes them well suited for certain borrowers specific needs. And in most cases, hard money is loaned for a short period of time which can typically range from a year or less to about five years. But again, these terms are all flexible and can be negotiated with the lender. So other important items to note about hard money loan are that the rates for the loan are higher and there can be additional fees charged for funding.

In most cases, it makes sense to assume every borrower would seek the lowest interest rate possible for every loan. But in the case of flippers or real estate investors who are renovating and then selling a property, speed and less hassle can be worth paying a few extra percentage points on the loan. Flippers are working in a very competitive market and need to act fast when a property with great potential comes on the market. Waiting 30 days to hear back from a bank about a 15-year mortgage is not going to meet this investor’s needs. But a turnaround of less than a week is definitely going to be helpful. And many sellers who are familiar with hard money look at an offer including hard money funding as a definite advantage. They know that the funding will occur quickly and the property will close in just days.

Builders are another group who are not interested in investing months in the application and approval process required by banks. Builders have no intention to keep a property for 15 years. The plan is to purchase the property, build the house and sell as soon as possible. This makes the fast turn around and easy application process of hard money loan a perfect choice.

Credit Issues are No Issue for Hard Money Loan

Not everyone has perfect credit and sometimes the cause was beyond the person’s control. Mounting medical bills, the loss of a job, divorce or a death in the family can all result in an inability to pay bills and the deterioration of good credit. But working all the way back to good credit can take many years. In the meantime, many consumers turn to hard money as a way to get a loan, get back on their feet and begin their financial recovery.

Hard Money Loans - Not For Everyone But Perfect For Some

Hard money is not a universal solution to money problems and if used improperly it can be very harmful. But there are many times when using hard money is the best option. The easy application and approval process and the fast funding made this alternative resource a great choice for many borrowers.

Technorati Tags: owner occupied home loans,private hard money lender

What Hard Money Lenders Are Looking For

Most borrowers assume that all loans hinge in having good credit. But understanding the criteria used by hard money lender can be life altering.

Traditional lenders are not the only game in town when it comes to securing a loan, which is good because not everyone can meet the criteria for those loans. One of the best features of hard money is that hard money lenders are using a different set of criteria and are making it possible for many more people to obtain a legitimate loan.

Credit history and credit score are always going to be reviewed when there is any type of loan application or request being made. But hard money lender are looking at a lot of other information as well. The approval is based more on the value of the property and the potential for the property than it is on the creditworthiness of the borrower. Other points of interest will include the borrower’s history in real estate investing, business background and the borrower’s willingness to invest his or her own money into the project. All of these are good indicators of how hard the borrower is willing to work to make the project a success and how much potential the borrower has as a smart real estate investor.

In addition, lenders in the hard money sector are trained to look at the potential of a property as well as its current condition and value. Investors are buying a property to improve it and increase its value and a smart lender will see the value in that as well. Taking the potential of a property into consideration often times means that the lender is willing to loan more on the property than the standard 70% of the loan to value ratio.

Tips For Landing Hard Money

Lenders are all interested in making money and the hard money sector is no different. So providing as much information to the lender as possible is always going to increase your chances of getting approved. Complete your due diligence of the property and be honest with the lender about your findings and your plans to increase the property value and make the money to pay back your loan. This includes providing a detailed exit strategy as well as a backup plan. Also detailing past experience in the real estate investment industry will help to demonstrate that you have the ability to complete the project in a timely and professional manner.

Be Honest

Lenders have a sense of who is being honest and who is trying to pull off a fast one. If you have credit issues or have no credit, then be honest and explain that. Even though the lender is not a bank, he or she will research you and your credit history. Issues that you think are hidden will likely pop up and can crush your credibility. But if you explain the past and map out your plan for the future, you have a much better chance of getting approval from hard money lender.

Technorati Tags: owner occupied home loans,private hard money lender

Friday, August 17, 2018

How to Select a Hard Money Lender

There are a lot of reasons why a consumer is unable to qualify for a residential mortgage. But owner occupied hard money loans offer them a great option.

There can be a great many reasons for a traditional lender such as a bank or credit union to deny a loan application. And after that happens many potential homeowners simply give up on their dream of homeownership. But what they don’t understand is that there is a non-traditional option available that might be a perfect fit for their lending needs. Owner occupied hard money loans are great for consumers who have certain financial issues which are precluding them from using a traditional loan.

Poor credit can be the result of many different issues. Sometimes it is simply due to poor financial choices but on other occasions, it is not due to a consumer’s mistakes. The loss of a major income is sometimes unforeseeable and can result in falling behind in household expenses. An accident or sudden illness can also be to blame as the consumer is buried under huge medical bills and is unable to make the required payments. Other times financial issues arise after a death in the family or divorce, but in all of these cases, the consumer’s credit becomes so bad that it is not possible to obtain a home loan even after years of work to correct credit issue. But hard money is an option for someone who is recovering from credit issues.

Another common issue for would be home buyers is erratic or short employment history. Banks want to see a long employment history and at least two years with the current employer. But not everyone works in an industry where that is possible. And who wouldn’t leave a job for better pay and benefits, just to maintain a longer work history to get a mortgage? That seems counterintuitive because the higher paying job would make it easier to pay a mortgage. But this can happen and a bank will deny a loan application. The solution for these borrowers is to seek owner occupied hard money loans.

The Self-Employment Drawback

Owning your own business is part of the American Dream. You work hard and achieve your goals as you create a business and even provide more jobs for hardworking people in your area. But banks are not fond of loan applications from the self-employed. Instead of just scrutinizing your personal financials now the bank wants to examine your business financials as well. And if you are not making a ton of money they are going to consider you a poor risk and deny your loan request. Again, the solution is simple, hard money.

Hard Money Offers Great Opportunities for Many

There are a lot of hardworking people out there who are reliable and can afford to pay a mortgage. But if they don’t fit into the bank’s idea of a perfect borrower, they are not going to get funding on a traditional loan. But owner occupied hard money loans are the perfect solution for those who are outside the box but still responsible and successful.

Happy senior business man making his notes at work Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Friday, August 10, 2018

Guide to Successfully Selecting a Hard Money Lender

Not everyone can qualify for a traditional home loan. But in some cases, hard money loans can be a solution for a new home purchase.

Not everyone can meet the standards of a traditional bank mortgage. The reason for the application denial can range from past credit issues to not enough time at your current employer. But if you are determined to purchase a new home and are willing to make a good-sized down payment, then hard money loans can make your dream come true.

Before jumping into hard money, you need to understand that these are loans funded by a private individual or a small group. And also know that the documents that you will sign for a hard money loan are as legally binding as any loan documents from a bank. The main difference in hard money loans and traditional loans is that the hard money lender is interested in the current market value of the property more than the borrower’s creditworthiness. The property is being used as collateral, so the lenders need to know that if the borrower default then he or she can sell the property to recover the initial investment.

Because the collateral is the lender’s safety net, he or she must be certain that the property always holds some equity. This is where your sizeable down payment comes into play. The lender will only loan up to about 70% of the cost of the property and you must pay for the other 30%. This creates that instant equity and makes the lender feel more secure about loaning you the money.

Good Will Is Not Free

The other important piece of information about hard money is that it is more costly to use than money from a traditional loan. The increased risk factor means that the lender is going to want to increase his or her earnings on the loan. In most cases, a borrower can expect to pay 10% to 15% roughly interest on hard money loans. In addition, there can be points and other fees for processing and funding the loan. But the benefit of the higher cost is that those with bad credit can get a loan.

Smart Uses Of Hard Money

Loans on hard money are for a shorter term than traditional loans and most people can’t pay off a mortgage in three to five years. But these non-traditional loans serve as a short-term solution while borrowers improve credit or establish a stronger employment history. Once that is accomplished, most borrowers refinance to a traditional loan after the term of the hard money is over. Non-traditional loans are also good for borrowers who are self-employed and need a few years to get their business established and profitable so as to qualify for a traditional loan. Short term hard money loans are not the perfect solution or even a solution for every borrower. But there are some specific cases where using hard money is the best solution for meeting your long-term goals.

Technorati Tags: private hard money lender,owner occupied home loans,hard money loans,hard money loan

Beretta Only

Monday, September 17, 2018

Why New Fix-and-Flippers Get Denied by Hard Money Lenders (And What You Can Do About It)

Are There Other Things That May Stand in the Way of Becoming Successful?

Every HML has different guidelines, so the best way to know if you qualify is to get in contact.

Sunday, August 26, 2018

Why Investors Choose Hard Money Loans

Time is Money

Hard money loans are a wise option

Friday, August 24, 2018

Why Borrowers Choose Hard Money Lender

Timing Can Be Critical For Hard Money Lender

Making a Deal with a Person

Who Can Benefit From Hard Money Loans

Credit Issues are No Issue for Hard Money Loan

Hard Money Loans - Not For Everyone But Perfect For Some

What Hard Money Lenders Are Looking For

Tips For Landing Hard Money

Be Honest

Friday, August 17, 2018

How to Select a Hard Money Lender

The Self-Employment Drawback

Hard Money Offers Great Opportunities for Many

Friday, August 10, 2018

Guide to Successfully Selecting a Hard Money Lender

Good Will Is Not Free

Smart Uses Of Hard Money

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