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Friday, January 11, 2019

Arizona Hard Money Loans: Why Short term isn’t always better

One of the biggest gripes most house flippers have in the case of hard money is that it is expensive. When it comes to Arizona Hard Money Loans, a shorter loan with smaller monthly payments is your best bet right? Well not always.

If you are in the flipping game, you want a short-term loan with monthly payments, right? A 340 K loan for 14 percent interest, well that will cost you about 4 thousand in monthly interest payments alone. Who wants that kind of obligation for longer than say six months?

Some advice when it comes to Arizona Hard Money Loans: never underestimate the scope of work involved

Say a rehab investors been in the business for a little under a year and while combing through the local listings he

spots a deal that is too good to pass up. The list price is 50 K and houses in the area usually go for 300. He doesn't need a calculator to spot the potential.

At such a steep discount, the house is a wreck. Inspection reveals only the frame of the house is worthy of being salvaged. But our investor remembers from previous deals, "a short-term loan means greater profits," and so sticking to his guns he takes out a six month 190 K loan at 11 percent with interest-only payments.

With his money in hand the work proceeds, rotten clapboard falls until the house is nothing but sticks. Then the floors removed, and he comes to find the house is tilting because the foundation has sunk. Our poor investor has to build a new house from scratch to rectify the issues with the foundation. Should take six months right? His contractor gives him no assurances.

But he has to see the project through because how else is he going to pay back that 190,000 if he doesn't sell the house?

The clock ticks down, work continues at a furious pace, but six months is just not enough time. Our investor can only pray that his lender will understand his difficulties and give him a bit more time before asking him to pay back the remaining 190 K in principle.

While long term Arizona Hard Money Loans might be more expensive they might be the help thats right for you

What went wrong?

The investor was naive. First, he let numbers tell him to get in on the deal, the lure of 100s of thousands in potential profit blinded him to the scope of work involved. Because he underestimated the extent of work required, he assumed an interest only short term hard money loan was right for him.

He might have paid more for a long-term hard money deal, but he would have had two things that are invaluable in the case of difficult flips: time and flexibility. A long-term hard money deal might be more expensive on the surface, but it might give you the time you need to finish your project.

If you sense a property might need a lot of work, you don't want to live under the threat of a looming balloon payment ready to pop at any moment.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC 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

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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Thursday, January 10, 2019

Arizona Fix and Flips Loans: Advice for Renovations

Use the proceeds of Arizona Fix and Flip Loans sparingly. Fix and flip financing is expensive, so avoid committing to projects that hinder resale of your home at all costs because you need to pay off your loan as soon as possible.

Just because you add something to a flip doesn't mean that something adds value. Keep your rehab projects as simple as possible, ensure that the result appeals to a wide range of buyers, and that you'll finish your rehab before your loan comes due.

If you don't keep the scope of your rehab as narrow as possible, disaster might be right around the corner.

With Arizona Fix and Flip Loans risk less by not wasting your money on the following:

• Fixed use rooms: Say a flipper has a property located in the yuppie section of town, the area's teeming with young professionals. The investor thinks adding an office would be nice. They spend about five grand on built-in desks and shelving. The room becomes a beautiful configuration of fixed geometry. The efficient and fixed storages solutions should appeal to buyers in the area, right? Well, not exactly. Most buyers gripe about the fact that they can't use the room as a bedroom, "we plan to have children, we can't have them bouncing their heads off of all these hard edges." Given the lack of an extra bedroom our flipper has to sell the home at a discount, the office didn’t add value. In fact it made his home harder to sell.

• Extensive reconfigurations: Say a rehabber wants to play architect. Her property has a generous section of vacant space at the end of the hallway. "Master bathroom? Everyone wants a master bathroom, right?" Images of dollar signs flash through her eyes, This reconfiguration will add 20 K to her total loan amount, but bullheaded she charges forward, knocking down various walls, diverting sewer lines, weeks and weeks pass, but things stay on schedule. But the ponderous city inspector has a problem, "the pipes you've installed are a centimeter too small. “Now to even list her home, she'll have to rip the walls apart again and start from scratch.so Its unlikely she will resell the house before her loan comes due.

She will have to pay back that loan, even though her property isn’t listed yet. The likely outcome is she will default.

Use Arizona Fix and Flip Loans on the most basic

renovations possible, to avoid the danger of default.

Are office conversions and luxurious master bathrooms inherently dangerous in and of themselves? Of course not. But do yourself a favor and follow a few basic rules when it comes to rehabs:

• Don't convert a room for a fixed use: Offices aren't inherently bad, but if you add built-in desks, or features that redefine the use of a room you narrow the number of potential buyers. Not only are such conversions expensive they rarely return much value when it comes to the resale value.

• Renovate only as necessary: So, a master ensuite is an essential convenience every buyer expects right? Not always. Updating existing bathrooms is one thing, but reconfiguring an entire layout, installing new plumbing and creating a new bathroom from scratch is quite another. Such an endeavor not only costs a pretty penny, but it also takes a long time, and it will probably add only a few extra thousand to the list price.

In short, avoid seemingly nice features might put off buyers and additional time-intensive projects will keep you from listing your home and thus paying back your loan.

So don't undertake renovations that restrict potential buyers, or projects that hinder your ability to list your house.

Arizona Fix and Flip Loans: Why you need to look past the property line

With Arizona Fix and Flip Loans, you don't want to borrow against a house won't sell in the end. Why don't you consider factors outside the house before you put in an offer? Looking past the front yard for things that could doom your project from the start.

No matter how good a deal might seem, and no matter how attractive the result of your rehab project, certain homes will only sell after pigs take flight. Location, location and location, yes this cardinal rule of real-estate holds for flips as well, but its more like location, location, and properties in specific areas will never sell.

Loans for Flipping Houses should never be taken out for certain types of properties:

• Properties next to ugly sights: Say a house flipper combs through the listings, and there's a foreclosed home listed at, only 75 thousand, He's looked over the description and seen some photos of the interior, the project should be short work. But when he pulls up, the looming sight of a half-naked woman proudly presenting a vodka bottle between her breasts blocks out the sun. Something the description didn't mention: the house has an east facing exposure to a garish billboard. No matter, he will go forward as the profit projections are just too good to pass up. After work he finishes work, trodding couples argue as husbands sneak glances up at the luminous sight, they never even look at the house. No one puts in a bid at his asking price so our flipper has to sell off the property at a steep discount.

• Properties next to deranged neighbors: Another flipper finds a prospective property that is selling for only 75 K when they regular price in the area is 300. Before putting in an offer, she visits the location only to discover something smells, a strange spectacled woman dressed in sackcloth has been emptying her litter boxes into the backyard of the house. Well, 225 in resale profits it seems to be deal is just too good to pass up. Our investor calls the police and the neighbor is promptly cited. Yes, the litter box disposal activities stop but now our investors made an enemy. After work on the house is done, and buyers begin to show up, the woman is dancing, menacingly half naked on the front lawn. She calls the police again, but the woman is not doing anything illegal, she's just humming spinning in circles, which isn't against the law.

Will the house sell? Well unless the neighbor is involuntarily committed, it seems unlikely.

With Arizona Fix and Flip Loans look beyond the

property line and try to find features that make a house unsellable before you apply.

If your browsing the internet and find a deal that seems too good to be true, it probably is. No property description is going to list features like "right next to scenic high-tension wires, neon billboards or demented neighbors." You can avoid all this risk by doing s+omething straightforward, walking through a house, even talking to the neighbors before committing to a project.

Commercial Arizona Fix and Flip Loans: How to Evaluate a Property

Before taking out Arizona Fix and Flip Loans on commercial properties, you need to get a sense of what a property might be worth after you've fixed it up. Welcome to the obscure and confusing world of commercial property valuations. This article will endeavor to explain in the simplest possible terms why you can't just rely on comps when it comes to commercial flips

If you are in the flipping game hopefully you know everything, there is to know about comps. You look for properties with similar features, see what they sold for and badda-bing you have a sense of a property’s potential.

Commercial property valuations are the subject of MBA dissertations, meaning they aren't simple. In the end, comparable sales won't give you a real sense of what a commercial property might be worth.

You might be prospecting through various listings and come across two apartments to flip, a 4-unit apartment building selling for 75 and a 5 unit one selling for 150. Conventional wisdom says one unit won't make much of a difference in the end, so the one listed at 75 is a better deal, right?

How to look beyond the comps before taking out Arizona Fix and Flip Loans

Commercial properties are valued based on the income generated, you can't just rely on comps; income must be accounted for to assess a property accurately. So how do you do that?

Using income to evaluate a property is done per the following formula:

Net Operating income/cap rate

What is a cap rate one may ask? Annual income/property value. But who determines the cap rate? No one knows precisely, owner set rents and therefore income and the market set the value of a property.

For the sake of illustration, let's say the cap rate for both properties is 7.7%, and the average rent in the area is 1,500 per unit. You may walk through and get the same estimate when it comes to repairs on both properties, 450 thousand.

The four-unit apartment still looks pretty attractive, but hold on let's use the formula:

4 unit building can earn, 72 K a year

72,000 /.077= 935,064-450= you'd earn 335 thousand dollars given the rehab. Well, that's good, and you might be asking yourself how much difference can a single apartment make?

The 5 unit building can earn, 90 K a year

90,000/.077= 1,168,831, you'd earn about 568,831 dollars on this deal basically an extra 200,000 dollars because of one apartment. Had you relied on conventional fix-n-flip wisdom, i.e., That a bedroom only adds so much value or that a lower sales price is always better, you would have missed out on 200 K in returns.

Use the income approach to get a sense of how much money you

can make before taking a commercial Arizona Fix and Flip Loans

Reality isn't as clear-cut as the examples above, but the message is clear, you can't evaluate the potential of a commercial flip based on comps.

Getting a sense of how much income a property can generate gives you a sense of its potential, use formula, NOI/cap rate. Set the NOI based on the average monthly rent that you could charge per unit and use the prevailing market cap rate. Perform these evaluations before you take out a loan. That one piddly apartment unit could result in 100's of thousands of extra dollars in returns on your next commercial flip.

Grow Your Business with 100% LTV Commercial Real Estate Financing

When the only way to make more money from your business is to expand, you can use 100% LTC commercial real estate financing to do it. Learn all about it to see if it’s right for you.

Successful small business owners who don’t have enough capital to expand their business can turn to 100% LTV commercial real estate financing to achieve their goals. This type of financing is one that many business owners have used successfully, and they are quick and easy.

Perks of Using 100% LTV Commercial Real Estate Financing

The biggest perk of using this type of real estate financing is that there is no down payment needed when purchasing a commercial property or having one constructed. The financing may even be able to cover closing costs, business debt and become working capital.

100% LTV commercial real estate financing are for “owner occupied” properties. The business occupies at least 51% of the property for it to apply.

When you use a private lender for this type of financing, you don’t have to deal with all of the red tape involved when you use a traditional lending institution. For instance, you don’t have to complete packets of paperwork to apply. You simply just need to provide a small amount of information, and that is sufficient for the private lender to determine if you qualify. With no underwriter involved, approval can be as quick as two business days or less. The money can be available within the week.

Another great perk about this type of financing is credit is not a big deal. The business is an asset, so that is enough to secure the loan. This is perfect for people who have had unfortunate situations happen to them or they made some financial mistakes in the past. It’s a way to resolve all of those issues, and get back on track to bigger and better profits.

Grow your business now with the capital you need.

It’s time to take your business to the next level of wealth. You can get your business out of debt and purchase another location to sell more of your products and services. You can do all of this with 100% LTV commercial real estate financing. All you need to do is take the first step.

Wednesday, January 9, 2019

Investing in New Construction with Spec Home Financing

If you’re looking to build new construction but don’t have the cash to do it, spec home financing may be able to help. Learn all about it here.

New construction is still doing well in the housing market. Experts report that this next year will be another amazing year for new construction sales. Many real estate investors are looking forward to another lucrative year because of it.

If you’ve always wondered about investing in new construction for either rental property or selling, this is your chance to do it. Not having the cash is not a problem. Spec home financing is all you need.

What Is Spec Home Financing

Spec means speculative. You are speculating a completed house when you’re done with the project. To finance that house, you can use this type of financing.

Since it can be hard to know how much you will need when building a house, lenders often loan a certain amount to get started. This cash is readily available to begin the project. As you go through the construction of the home, the construction costs may over exceed what you initially received, and we may need more to complete it. This can be done as long as it doesn’t go over the percentage you’ve been approved for of your asset’s value.

Spec home financing can make it possible for you to step into real estate investing successfully.

With financial help, you can fund new construction, which can then be sold for more than what you paid to build it. That’s how making money off this real estate investment works. If you spend $200,000 to build a house, and you sell it for $300,000, you end up with a profit of $100,000.

Some people walk away with their profit, while others roll it into another investment. It all depends on how much you truly want to make from real estate investing.

If you’ve ever wondered about making money in real estate, consider this option. Remember, you don’t need the cash in your hands right now. You can get that from the spec home financing. All you need to do is call us to start the process of getting one. It only takes a few minutes to provide the needed information and, in a day, you will find out if you’re approved.

Don’t let this investment opportunity pass you by. Isn’t it time to experience financial freedom?