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Monday, January 14, 2019

How to Make Money with Residential Hard Money Lenders in Arizona in 2019

Have you heard the housing market is cooling off? Freddie Mac’s Chief Economist says this isn’t so, meaning the outlook is good for those working with residential Hard Money Lenders in Arizona.

“I don't think the recovery is over,” Freddie Mac’s Chief Economist Sam Khater recently told reporters. “Economic growth is still very strong and essentially running at capacity.” This information came in amidst reports that the market was cooling, with slumps in home sales as evidence. Yet, Khater and other experts agree that demand for homes, both new and resale, is still quite strong.

Throughout 2018, many positive shifts impacted the housing market. For example, a stronger labor market paired with overall gains in the economy made it possible for more people to purchase homes. The natural result is diminishing housing stock, which means prices are rising. Adding to this, interest rates are climbing, construction of single-family homes has leveled out, and sales have dropped off.

“While the decline in home sales and deceleration in home price growth has been broad-based, the slowdown is more intense in the hot coastal markets -- which is a natural reaction to rapidly escalating home prices and higher rates versus a year ago,” he explained. One other area seeing a shift is the low-end of the market, with supplies dwindling and many would-be homebuyers being priced out of the market.

Projections Suggest a Shift in Strategy Will Lead to Greater Success

Whereas 2018 was a strong year to cash in on luxury properties due to the gains being seen, those doing fix-and-flips or fix-and-holds with the help of residential Hard Money Lenders in Arizona may do better to focus on the lower end of the market this coming year. The greatest demand is coming from people in search of affordable homes, so those who find properties with strong bones in need of TLC and make them move-in ready will have little trouble getting them resold upon completion. However, greater emphasis must be placed in choosing properties, as fix-and-flip pros will not be able to rely on market increases to yield gains as much as they have in the past. As noted by Khater, specific locations, such as coastal areas, are the hardest-hit by the shit, whereas inland markets are still seeing value gains. Equally, the surge in prices which has left many unable to purchase suggests 2019 will also be a strong year for those who work in fix-and-holds with residential Hard Money Lenders in Arizona, particularly when it comes to multi-family units.

Alternative lending is a boon for savvy entrepreneurs ready to capitalize on the changing market.

Due to diminished stock and increasing competition for affordable homes, home rehab pros will need to move quickly to grab up properties before the competition does. Negotiating better deals will also become more important due to the slower value gains. Those who work with residential Hard Money Lenders in Arizona will be at a distinct advantage in both these areas, as sellers will want sure bets with mortgage approvals being down and cash-in-hand will be king when sealing deals.

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.

Why Don’t Most Lenders Offer Owner Occupied Hard Money?

Finding someone who will provide Owner Occupied Hard Money In Arizona isn’t always easy. However, it’s still out there and you can get financed if you know where to look.

In order to understand why Owner Occupied Hard Money In Arizona is harder to come by, you have to break down what exactly it is, how it works, and who uses it. Unlike traditional loans which are essentially offered on a promise to repay and are based on a borrower’s good standing, hard money is collateral-based. That means the borrower has something of value and that item is used to secure the loan. In most cases, it’s a home or commercial property. Because of this, things like the borrower’s credit don’t impact approval a whole lot, so the loans are leveraged quite a bit by small-business owners and real estate investors.

The other big difference is that the funding typically comes from private investors rather than big banks, so the terms will be different as well. Oftentimes, alternative funding opens up doors for people because the terms are far more flexible than traditional loans.

The catch comes in when the owner intends to live on the property. That means it’s no longer a commercial loan for business purposes, but is more along the lines of a traditional mortgage. As such, the loan is subject to more regulations than it otherwise might have been. For example, a third party has to verify that the borrower has enough income to repay the loan, there’s greater tax and insurance oversight, and the full disclosure process must be seen to. This means that that’s normally a simple process that can be seen to in a matter of days could take a month or longer, and the work a lender must do is amplified quite a bit. So, it’s totally understandable that a whole lot of alternative lenders don’t want to get involved with them.

If You Have a Business Purpose, it’s Easier to Get Alternative Financing

That said, there are times you may still really want to use Owner Occupied Hard Money In Arizona. For example, if you’re doing a fix-and-flip, but plan to live in the home while you’re doing the work. It’s times like these that your project may genuinely be considered a commercial one, in which case, it’s easier to qualify.

Work with a broker who understands your goals and regulations to improve your chances of getting funded.

Although it may be harder to get Owner Occupied Hard Money In Arizona, it’s not unheard of. A seasoned broker will explore lots of options and will find a funding source that works for your needs. From going with a standard fix-and-flip loan through options like bridge loans and blanket loans, there are many methods to get your project off the ground, even if you plan to live in the house for the duration of the loan. Start by finding a broker who knows the industry well and works with a number of lenders and you’ll find a solution that’s right for you.

How Get an Airbnb Loan in Arizona and Work at Home in 2019

If you’ve always wanted to work at home, 2019 is the year to make it happen. Using an Airbnb Loan in Arizona, you can cash in on the trend and earn a solid income in short-term rentals.

Your future profits will hinge upon finding the ideal property, so start looking early. If you live in an area with lots of tourism, do your searches during the slow times, when homeowners aren’t likely to be using vacation properties and they won’t be rented out. This will give you more time to check out the inside of each and will give you a bit more wiggle room when negotiating a better purchase price. In most areas, the summer is tops for tourism, so you’ll want to start your research at the start of the year. The same rules apply even if you’re looking at properties in neighborhoods, as home sales peak during the summer because families tend to move when school is not in session.

Get to know the areas you’re considering. People who are only staying for a short period of time like to be close to activities and necessities. Check out how close each property is to things like airports, convention centers, cultural activities, entertainment venues, grocery stores, and the like. Whenever possible, visit the area at various times of the day to get a feel for what your renters will experience.

Check out the house and decide on a plan of action. You’ll have a myriad of options here, from determining what, if any, renovations you’ll make through how you’ll handle the upkeep. Nowadays, there are numerous services designed to clean and prepare rental homes for guests, but you can hire your own team or take care of the transitions on your own to keep more money in-house. You’ll also need to verify what kind of Airbnb Loan in Arizona you want. Bear in mind, banks will consider this a second property for your or will look at is as a commercial property, so you may need to have an alternative funding source, like a hard money lender, lined up to make the purchase.

If You Want an Extra $21,000+ Per Year, You Can Get It Through Vacation Rentals

According to research from Savills, the average income achieved through a second home is $21,000 per year. To be clear, that’s almost exactly what someone working full-time on minimum wage will earn in 2019 ($21,528) and is only a couple thousand shy of what the average part-time employee earns ($27,284). In other words, your Airbnb Loan in Arizona can give you the opportunity to almost effortlessly earn what other people make in their careers, all while sitting in your pajamas and sitting at your computer.

Work from home and build a successful portfolio to increase your wealth exponentially.

If the average vacation rental is netting its owner $21,000 per year, imagine what the top earners are getting or what you could get by operating several. When you’re ready to get approval for your first Airbnb Loan in Arizona, take time to create a comprehensive business plan, complete with details about the property, how it will generate cash, how much it will earn, and what your plans are for operation are. With a little bit of effort, you can create a solid secondary stream of income or wholly work from home in 2019, all through vacation rentals.

Sunday, January 13, 2019

3 Things TV Shows Don’t Tell You About Rehabs & Fix and flip loans in Arizona

While home rehab TV shows can be great entertainment and provide some insights into the industry, they don’t show the full picture. They’re missing key details on fix and flip loans in Arizona and projects that might change the way you look at the field.

1. Market research matters. In all fairness, someone scouring spreadsheets and pulling up data online doesn’t make for particularly good entertainment, so it’s no surprise most TV shows leave this component out. However, a significant portion of any project’s success is completed before the rehabber even sets foot on a property or picks up a hammer. A successful rehabber invests time in researching which cities and neighborhoods are best, then explores the needs and potential of several properties before digging in.

2. Not all restorations provide ROI. We all love seeing a gorgeous house with wow-factor and curb appeal. Potential buyers love it too. It’s the little touches a rehabber adds that create an emotional connection with buyers, so they picture themselves living in it and are willing to pay more for the home. However, there are many things that will not result in profits. According to MoneyWise, adding a backyard patio or sunroom will return less than half your investment to you. Adding an upscale master suite or bath will only give you 55-56% of your investment back. A full kitchen remodel will, in all likelihood, only give you 59% returns at best. These are things you’ll commonly see done in TV shows, but they don’t typically result in real-world profits.

3. Finding financing isn’t always straightforward when you’re not a celeb. It’s pretty rare for TV shows to even talk about financing. That may be because it rarely adds entertainment value or it could be because it’s just not a concern for them. In some cases, the network funds the flips, while in others, the stars have income from the show, so they can either pay for the projects outright or can use their cash flows to demonstrate they have the bandwidth to pay a conventional mortgage. In the real world, many rehabbers use fix and flip loans in Arizona, which are relatively easy to get, even if you don’t have celebrity income, a network funding you, or great credit.

If You Can Address the Behind-the-Scenes Issues, You Will Be More Successful

Even though TV shows don’t usually cover the legwork done before a project starts, it’s things like fix and flip loans in Arizona and crunching the numbers associated with ROI and market conditions hat play a major role in the outcome of a project. If you’re just getting into the biz, you’ll need to do some homework to ensure your rehab project is profitable.

Build a team of pros who are there when you need them.

One thing shows get right, however, is that it takes a team to make things happen. Shows like to highlight the unique dynamics of each relationship because it adds drama and entertainment value. In some cases, the disputes between parties keeps viewers tuned in, while the dynamics of a happy couple seeing to a joint project gives the empowering feeling that anyone can achieve the same. The latter is more true to life, but the real team expands beyond those seen on screen. There are always contractors, subcontractors, brokers, lenders of fix and flip loans in Arizona, and more involved, so if you’re getting into the biz, building your dream team is a good place to start.

How to Vet Contractors When You’re Using Loans to Flip Houses in Arizona

The criteria used to assess whether contractors and subcontractors are a good fit for your project change a bit when you’re working on an investment property versus your own. If you’re using Loans to Flip Houses in Arizona , make sure your team is up to the task.

1. Make sure they have experience with fix-and-flips. When a traditional homeowner hires a contractor to perform repairs or remodel, it’s usually just an annoyance if it takes longer than initially planned. If you’re in the rehab business, a sluggish contractor or delays can derail a whole project, particularly if numerous tradesmen are involved and their work hinges upon someone else’s work being complete. Even a delay of a day can send the tradesman onto his next project, leaving your project undone until he has time to come back. When you’re using Loans to Flip Houses in Arizona , you’ve got an exit plan and need to stick to your timeline. You need someone who has a proven track record of doing so in order to ensure your project moves forward without costly delays.

2. Get recommendations from other rehabbers and investment property pros. While you can check out general review sites, most are geared toward the consumer market. There’s a big difference in the types of requests a homeowner has and what a rehabber expects, and that ranges from the types of projects completed through the materials used. Your average homeowner may fixate on which shade of beige to paint the walls, which is fine because they’re the ones staring at it for years to come. A good contractor will roll with these types of things and be at least somewhat patient. That’s what’ll get him a good review with a consumer. A rehabber wants a contractor who can make a quick assessment and move on. The mindset is different. In other words, you don’t necessarily want to go with review sites, but rather get recommendations from other rehabbers and people in the industry.

3. Verify they’re insured. Uninsured contractors may do the work for less, but what happens if one puts his foot through the ceiling while working in the attic? What happens if one doesn’t seal a pipe joint properly and it leaks? The list goes on. Uninsured contractors can wind up being a costly proposition that will eat through your budget and then some with a single error or misstep. A true professional has insurance.

Get Multiple Bids to Make Evaluating Contractors Easier

Getting multiple bids lets you see the full range, so it’s easier to see if someone is gouging you or is likely to take shortcuts. It also means several highly-trained eyes will be checking out your property, so you’re more-likely to catch all the issues and hear multiple ways to address each. Getting multiple bids will also help you maximize your return on investment—an absolute must when using Loans to Flip Houses in Arizona .

If you’ve got cash in hand, you may be able to negotiate better too.

It’s generally unwise to prepay for services, as this can actually make the team work slower. However, letting your contractor know you’re using Loans to Flip Houses in Arizona may make him more willing to cut you a better deal. It provides reassurance that he’ll be paid swiftly and, if the project goes smoothly, that you’ll probably hire him next time too. Once you’ve found your ideal contractor, use your funding as leverage to negotiate better rates. By applying these tips, your projects will be smoother and you’ll see greater returns.

How to Evaluate if Commercial Hard Money Loans in Arizona are Right for You

You still have options if the banks won’t fund your business mortgage. If you’ve got a solid business plan, commercial Hard Money Loans in Arizona are a great way to get your project off the ground.

Big banks reject a lot of small-business owners because their projects tend to come with greater risk. They prefer to have sure bets, so they heavily weigh things like credit scores, years in business, and revenue. Worse yet, having your score checked repeatedly, regardless of whether you’re denied or decide not to take the offer you’re given, can hurt your chances of getting approved later, so it’s important to evaluate all your options before moving forward with any one choice. If the banks won’t play ball, there are three main alternatives to look into; credit unions, regional banks, and commercial Hard Money Loans in Arizona .

Credit unions can work if you’re just shy of qualifying with a big bank or you aren’t being offered good terms. You do have to qualify to join one before applying and the criteria will vary based on the institution. Many have higher approval rates and, because they’re non-profit organizations, you’ll likely see lower fees and interest rates. However, if you’ve got rotten credit, don’t live near a credit union, or don’t qualify to join one, you’ll likely need to explore other options.

Regional banks can be another alternative. According to Yardi Matrix Director of Research Paul Fiorilla, they’ve seen the greatest growth when it comes to commercial and multifamily mortgages, which suggests approval rates are slightly higher. “Generally, the smaller the bank, the larger the concentration of commercial mortgages,” he says. While this may be good news right now, he adds that “historically, small banks have played a major role in some of the markets biggest busts,” and expresses concerns that the density seen with smaller banks could spell out trouble in the near future; both for the banks and hopeful borrowers. Moreover, many tend to focus on niche businesses that they know and trust, so the banks in your area may not be big on your preferred property, and some are moving away from fixed-rate solutions to protect themselves from Federal Reserve interest rate hikes.

Private and Hard Money Provide Options and Relationships

Doors really start to open when you explore commercial Hard Money Loans in Arizona . It’s no longer a matter of having a perfect credit score or fitting into a specific niche, but rather having a good business plan and connecting with an experienced broker. Your broker will get to know you and your plans and will then find a private lender who likes to fund projects like yours. Because the approach differs, approvals increase and you’ll likely be offered better or more flexible terms.

There are fewer regulations with private lending, so there’s less red tape and you can get funded faster.

Part of the flexibility afforded by commercial Hard Money Loans in Arizona comes from the fact that they’re not subject to the same regulations conventional mortgages are. This also means the process is streamlined and you can be fully-funded in a matter of days, not a month or more like you’d probably experience with a credit union or regional bank. So, if speed, credit, and denials are getting in the way of funding your business mortgage, touch base with an experienced broker to find out what terms you’ll qualify for with a private lender.